EU court orders France Télécom to pay overdue taxes of 1140 million EUR

The European Court of Appeals has confirmed a Commission decision to order the recovery of aid granted to France Télécom in the form of tax breaks. Over a 12-year period, France Télécom benefited from state aid amounting to a potential sum of EUR 1,140 million.

The Luxembourg-based Court of First instance's ruling backing the Commission decision comes after an  in-depth examination of  two separate illicit tax schemes that France Télécom were found to be involved in. The Court found that both the amount of state aid and the manner in which it was being delivered were against common market rules.

The Commission had in 2004 ruled against the publicly-listed French company - the main provider of electronic communication in France - ordering the return of an undisclosed amount to the French state. The decision was made on grounds that  the amount paid in levies to the French state did not offset the amount received by France Télécom in tax breaks - a ruling that was upheld by the Court of First Instance on 30 November 2009.

The initial tax scheme, in which France Télécom was not liable to pay corporate taxes or local taxes (including business tax), was in operation between 1991 and 1993. In exchange for the tax exemptions France Télécom had to pay an annually fixed levy to the French state.

The definitive tax scheme, that was in operation between 1994 and 2002, implied that France Télécom was subject to the ordinary tax system, bar local taxes.With respect to those direct local taxes, special conditions were laid down regarding the rate, the base and the taxation arrangements.

European Court of Justice - Justice and Application - full text