Engie shares are lower Wednesday, as the European Commission has ruled the French electricity firm was in receipt of illegal tax subsidies from Luxembourg. The EU Commission said Luxembourg must now recover some €120 million from the business after granting it illegal tax benefits over the past decade.
The French energy firm also confirmed Wednesday, that it has sold off its shares in Glow and will completely withdraw from the coal-fired energy industry in Asia.
By 1240 BST, Engie shares were 0.15% lower at €13.18. The stock has been moving broadly lower for the past couple of months.
Luxembourg ordered to recover unpaid taxes from Engie
As the EU Commission continues to investigate unfair subsidies and loosely interpreted tax rules, its latest ruling states that Engie has avoided paying taxes on all their profits in Luxembourg for around ten years.
As a result of this finding, Luxembourg must now recover some €120 million from the French energy firm.
“Luxembourg gave illegal tax benefits to Engie,” Eu Commissioner, Margrethe Vestager Said. “Its tax rulings have endorsed two complex financing structures put in place by Engie that treat the same transaction in an inconsistent way, both as debt and as equity.”
“This artificially reduced the company's tax burden. As a result, Engie paid an effective corporate tax rate of 0.3% on certain profits in Luxembourg for about a decade. This selective tax treatment is illegal,” Vestager added.
Engie sells Glow stake
Separately, Engie said it has sold its entire 69.1% stake in Thailand based Glow, to Global Power Synergy Public Company, in a deal worth €2.6 billion to Engie.
“This disposal is in line with ENGIE’s strategy aiming at reducing the Group’s carbon footprint, to focus on low-carbon activities, global networks and client solutions,” the French energy firm said.
“With the disposal of its interests in Glow, ENGIE will no longer operate any coal-fired assets in Asia-Pacific and will reduce its global coal-fired generation installed capacity by 14%,” it added.