Brussels, 19/05/2011 (Agence Europe) - On Thursday 19 May, the European Commission took legal measures against four member states for infringing EU tax and customs rules, taking two countries to the European Court of Justice, namely France because it deducts 25% (or 15% in some cases where it has signed special agreements with the country in question) from dividends paid into foreign pension and investment funds, although this tax is not levied on dividends paid into French pension or investment funds. To remove this discrimination, France introduced a new system levying a 15% tax on all income paid to non-profit organisations in France or abroad, but has not yet introduced the new system. Following the sending of a reasoned opinion (warning) on 18 March 2010, the Commission argues that France violates EU rules on the free circulation of capital; - Spain has not taken action to comply with the reasoned opinion sent by the Commission on 24 November 2010, instructing it to stop applying reduced-rate VAT on medical equipment for general use, medical equipment used for handicapped animals and substances and chemicals used to produce medicine. The Commission says that Spain must remove this uneven playing field in the EU because these products are not included on the list of authorised products for reduced-rate VAT under the EU VAT directive and no exemptions have been granted. The Commission has sent a reasoned opinion (warning) to the United Kingdom because it continues to tax the profits in the UK of British companies registered in other countries of the European Economic Area despite the European Court of Justice ruling in the Cadbury Schweppes case (C-196/04), and also in violation of EU rules on the freedom of establishment and the free movement of capital; - Italy for its VAT exemption for commercial ships that do not sail on the high sea (the EU VAT directive provides for a VAT exemption only for ships sailing on the high seas), and ships and boats provided to public bodies. Italy is thereby creating unfair competition among member states by refusing to levy VAT because 1% of VAT is paid into the EU's budget; - Belgium which has tax legislation in the Wallonia and Brussels regions that treats less favourably donations of shares of companies if their seat of effective management is located in Norway, Iceland or Liechtenstein, than donations of shares of equivalent companies based in EU member states. Such discrimination infringes the free circulation of capital. (F.G./transl.fl)