France Telecom has been ordered to repay around EUR 1 billion (US$1.5 billion) of illegal state aid back to the French government. The actual ruling is for between EUR798 million and EUR 1.14 billion, but also includes interest charges since the state aid was offered.

France Telecom benefited from advantageous tax arrangements which offered lower rates on local business taxes between 1994 and 2002.

France Telecom benefited from advantageous tax arrangements between 1994-2002 where France Telecom was excepted from direct local taxes (including business tax). With respect to those direct local taxes, special conditions were laid down regarding the rate, the base and the taxation arrangements.

The Commission's Competition Commission ruled in 2004 that the tax arrangements were illegal, and in 2007 the European Court of Justice ruled that the government had failed to reclaim the monies as required.

The latest ruling comes from the Court of First Instance in Luxembourg. An appeal, limited to points of law only, may be brought before the Court of Justice within two months.