ENGI Engie

   By Max Bernhard and Pietro Lombardi 
 

The European Commission has ordered Luxembourg to recover about 120 million euros ($139 million) in unpaid taxes plus interest from Engie SA (ENGI.FR), after finding that the country allowed two of the French company's subsidiaries to dodge taxes on most of their profits for almost a decade.

"This is illegal under EU state aid rules because it gives Engie an undue advantage," the commission said in a statement on Wednesday.

An investigation concluded that two Luxembourg tax rulings "artificially lowered" Engie's tax burden in the country, the commission said.

"The rulings enabled Engie to avoid paying any tax on 99% of the profits generated by Engie LNG Supply and Engie Treasury Management in Luxembourg," it said.

The two Engie companies, Engie Treasury Management Sarl. and Engie LNG Supply SA, are both incorporated in Luxembourg.

The commission said that for almost a decade, Engie's effective tax rate for profits in the country was less than 0.3%.

Engie denied it had received any state aid from Luxembourg and said in a statement it "fully complied with the applicable tax legislation." The company added that it doesn't expect the decision to hit its 2018 results.

"Engie will assert all its rights to challenge the state aid classification considering that the commission did not demonstrate that a selective tax advantage was granted. Therefore, Engie will apply for annulment of the commission's decision before the competent courts," it said.

Total SA (FP.FR) agreed in November 2017 to acquire Engie's LNG business, including Engie LNG Supply.

Write to Max Bernhard at max.bernhard@dowjones.com; @mxbernhard

(END) Dow Jones Newswires

June 20, 2018 08:39 ET (12:39 GMT)

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