If companies are fined for antitrust infringements, the question arises whether the fines are tax-deductible. Given the high amounts of fines imposed by the European Commission and the competition authorities of European Union (EU) Member States, the importance of the question is obvious.
In several EU Member States such as the Netherlands, France or the United Kingdom, the authorities have already made it clear that antitrust fines are not tax-deductible. This is also the view of the European Commission. However, the question has not yet been settled by the European Court of Justice and has now come up again in Belgium in a recent case.
In 2011 Tessenderlo S.A., a Belgian chemical company, was fined € 83.7 million by the European Commission for breach of EU antitrust rules in an animal feed phosphate cartel case. It now seeks to deduct the amount of the fine from its tax liabilities in Belgium, arguing that the fine amounts to business costs (frais professionnels). This was refused by the Belgian tax administration and Tessenderlo brought the matter to the Brussels first instance court (Tribunal de première instance de Bruxelles), which decided to refer the matter to the Constitutional Court.
The Brussels first instance court seeks to know whether the currently argued interpretation of Belgian tax law is compatible with the Belgian constitutional principle of equality. According to that interpretation, administrative fines such as antitrust fines are included in the list of tax-deductible business costs – as opposed to criminal fines. An official from the European Commission has announced that the Commission will file an amicus curiae brief before the Belgian Constitutional Court, arguing that the deduction of antitrust fines would undermine their deterrent effect.