Brussels, 22/02/2013 (Agence Europe) - Alongside sending five member states to the European Court of Justice over infringement of EU tax rules (see EUROPE 10792), on Thursday 21 February the European Commission also sent reasoned opinions (warning letters) to Belgium, Poland, Spain and Romania over tax infringements.
Belgium is asked to change: - its 'winwinlening' risk capital rules in the Flanders region that gives a tax reduction for loans from residents and companies in the region. The measure is felt to be discriminatory in terms of the free circulation of workers and the freedom of establishment, because people not living in Flanders but who are paid in Belgium are not eligible; - its rules on tax on interest paid to foreign investment companies and also the rules about securities lodged or credited to the accounts of financial institutions not registered in Belgium, because similar interest paid to Belgian investment companies or relating to securities lodged or credited to financial bodies registered in Belgium are exempt and therefore the rule is felt to be discriminatory in terms of the free movement of capital. Poland is asked to change its rules for reduced-rate VAT on fire protection goods because such equipment is not included in the Annex III list of the VAT Directive for which reduced VAT may be applied. Spain has been asked to change its rules on inheritance and gift tax in the Basque country, whereby bonds issued by local authorities are not subject to as much inheritance tax as other bonds. This introduces discrimination against investment in other public debt bonds issued in the European Economic Area. Romania has been asked to change its rules whereby foreign companies with several establishments in the country pay company tax on each one separately, although they do not have separate “legal personality.” The fact that a foreign tax-payer cannot consolidate the profits and losses of their establishments in Romania means that they pay more tax or are subject to a tax-flow disadvantage, a restriction of the freedom of establishment, says the Commission.
The four countries now have two months to bring their rules into line with EU legislation or face being sent to the European Court of Justice. (FG/transl.fl)