In a judgment of 20 December 2012, the Belgian Constitutional Court held that the Belgian tax legislation had to be interpreted in accordance with EU law, which implied that fines imposed by the Commission for infringements of article 101 TFEU were not deductible costs.
Tessenderlo Chemie was the subject matter of a cartel investigation in 2004 and 2006. It made provisions in its accounts for a possible fine. Following a new circular of the Belgian tax authorities, these authorities considered that they could impose taxes on such provisions. Tessenderlo contested this point of view before the court of first instance in Brussels which referred a preliminary reference to the Constitutional Court. The court of first instance wished to know whether there would be a violation of the principle of non-discrimination in the Belgian Constitution when criminal pecuniary sanctions could not be deducted from professional income whereas administrative sanctions, such as fines from EU competition law infringements could. The court also whised to know whether there would be such violation if both pecuniary sanctions were not deductible even though they were of a different nature.
It is interesting that the Commission intervened in the national procedure. Referring to the judgment of the European Court of justice of 11 June 2009 (Case C-429/07, Inspecteur van de Belastingdienst/ X), the Constitutional Court held that the interpretation of the deductibility or not of the Commission’s fine touched upon the effectiveness of EU competition law. On that basis, the Constitutional Court held that the Commission had locus standi to intervene.
The Constitutional Court continued that on the basis of the same judgment, as well as on the basis of the duty of loyal cooperation between the EU and the Member States (as enshrined in Article 4(3) TFEU), it could only conclude that the national tax provision at stake had to be interpreted as meaning that the fines imposed by the Commission for infringements of competition law, were not deductible from professional income. This situation, according to the Constitutional Court, did not lead to a discrimination that would follow from the same treatment of two different categories: criminal sanctions versus administrative sanctions. It was precisely the need for an effective competition policy and the ensuing prohibition to deduct cartel fines, that offered a reasonable explanation of such similar treatment.
