EU Attacks on Harmful Tax Competition

The European Commission yesterday attacked 11 corporation tax schemes in 8 EU Member States as possible measures of illegal state aid. This is a sign that the EU Commission’s patience with Member States who are dragging their heels in phasing out the 66 harmful tax measures highlighted in the Primarolo Report of 2 years ago, is finally running out.

Mario Monti, the EU’s competition commissioner, said that the Commission would launch state aid investigations into schemes involving offshore companies (for example, Gibraltar) and special regimes for financial service companies. The measures under investigation include those for multinational or financial service companies in Germany, Spain, France, Ireland, Luxembourg, The Netherlands, Finland and the UK (Gibraltar).

Holding company regimes in these countries may therefore come under attack. Additionally, four further countries, being Belgium, Greece, Italy and Sweden are being targeted in this regard.

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