European Union competition commissioner Mario Monti is to ask his colleagues on the European Commission to ban two special tax regimes - in Netherlands and Belgium - while allowing a threatened taxation system in Ireland to continue.
His comments follow the completion of an investigation by his officials into whether these regimes broke EU state aid rules, which are designed to ensure that national governments do not unfairly subsidise businesses in their own jurisdictions.
These inquiries have concluded that the Belgian coordination centres scheme and the Dutch International Financing Activities scheme are actually illegal and so Monti wants the full College of Commissioners to ask the two low country governments to abolish the tax breaks that they offer.
However, because the Belgian scheme was initially approved by the Commission in 1984 and regarding the Dutch system ‘the beneficiaries had legitimate reasons to believe that the scheme was not illegal,’ Monti wants a transitional period to be ordered for the phasing out of the schemes.
Meanwhile Commission officials have decided that the Irish Foreign Income scheme does not entail the payment of illegal subsidies to benefiting companies.
Said Monti: ‘These decisions are part of an ambitious strategy against harmful tax competition, which the Commission launched in 1997 upon my proposal.’