European Commission to use state aid powers to scrutinise aggressive tax planning

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An important message to all tax planners: the European Commission’s directorate-general for competition has declared war on ‘fiscal optimisation’. It intends to use the antitrust stick to overcome the lack of tax harmonisation at member-state level.

At the recent European Competition Forum in Brussels, competition commissioner Joaquin Almunia declared that he is ready to use the European Commission’s far-reaching state aid powers against ‘aggressive tax planning’ because such planning is — in commissioner Almunia’s view — contrary to the principles of the single market.

The European Competition Forum is an annual event that enables the European Commission to communicate its agenda for future action to all stakeholders concerned. According to Almunia, member-state tax legislation with fiscal loopholes attracts investment to the detriment of other member states and thus is akin to a ‘subsidy race’, which the EU state aid rules are designed to prevent…

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