In December 2015, the European Commission (the Commission) announced that it was investigating two Luxembourg rulings of a multinational company (MNC) involving a Luxembourg company with US and Swiss branches. On June 6, a non-confidential version of the letter (also referred to as the opening decision) was published, in which the Commission formally informed Luxembourg of its preliminary conclusion that the rulings constitute State aid. The investigation focuses on the exemption granted in respect of profits attributable to the US branch and, in particular, the fact that these profits are not currently subject to tax in the United States, which was disclosed and analyzed in detail in one of the rulings. The publication of the opening decision is not a new event as such, but a mere procedural step in the investigation process. At this stage, the Commission has not ultimately decided that State aid exists. It is expected that a final decision in the investigation will take a considerable period of time. Once the letter and accompanying summary have been published in the Official Journal of the European Union, interested parties will have one month to submit their comments directly to the Commission.

A Tax Alert prepared by EY's EU Tax Services group, and attached below, provides additional details.

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Full text of Tax Alert 2016-1031