Belgium had asked the court to suspend a European Commission decision about a programme that gave relief on “excess profits” made by Belgian companies that were piece of multinational groups.

The administrative burden of collecting the data needed, recalculating the tax that should own been paid and enforcing repayment with interest would harm a “relatively small nation” enjoy Belgium, it told the Court.

However, the Court rejected this, and saying that the nation’s government had failed to demonstrate how it would suffer “serious and irreparable harm”. The request to suspend the order should therefore be rejected for lack of “urgency”, it said.

The scheme, which has been running since 2005, allowed some multinational companies to reduce their corporate tax base by between 50% and 90% to permit for ‘excess profits’ that were considered to result from being piece of a multinational group.

below the tax rulings the actual recorded profit of a multinational was compared to the hypothetical profit of a standalone company in a similar position. The difference was then deemed to be ‘excess profit’ and the tax base reduced accordingly, the Commission said.

The Commission’s investigation found that this does not follow normal practice below Belgian rules nor the EU state aid ‘arm’s-length principle’, and is illegal below EU rules.

The Commission estimated at the season that the aid to be recovered would amount in total to around €700 million and that the Belgian authorities would own to deal with around 35 multinational companies.

State aid expert Caroline Ramsay of Pinsent Masons, the law firm behind Out-Law.com said: “Suspensions of claw behind orders in state aid cases are notoriously difficult to get so it is no grand surprise that this application failed.”

“This sends a strong signal to other companies subject to state aid tax investigations that, unless serious and irreparable harm of the aid recipient can be pointed to, it is likely that the claw behind order will be enforced pending the outcome of the appeal,” she said.

Competition law expert Caroline Janssens, also of Pinsent Masons, said: “The claw behind of unlawful aid comes with enormous complexities, and this is even more the case in the context of a state aid scheme. In this case, given the enormous number of companies involved, the process is very likely to grab multitudinous years, with damaging consequence for entire parties involved. A recovery order usually involves payment of the full amount of the tax advantage received, including interests at a high rate.”

“The organisations that own been awarded the unlawful state aid are likely to suffer severe financial consequences as, by repaying the aid, their cash flow or funds could be significantly reduced. When in receipt of a tax deal, especially if it looks particularly advantageous, companies require to be extremely attentive to state aid risk. The authority that granted the unlawful aid will undoubtedly suffer reputational damage, too,” she said.