The European Commission has issued two injunctions ordering Estonia and Poland to deliver within one month information requested by the Commission on their tax rulings practice. Both countries have to-date refused to respond in full to previous information requests. Should any of the two fail to deliver the missing information within one month, the Commission may refer that Member State to the EU Court of Justice...
The previous information requests to Estonia and Poland were sent as part of the Commission extending its state aid enquiry into national tax ruling practices to cover all EU Member States in December 2014. The enquiry is aimed at clarifying allegations that tax rulings may constitute state aid and to allow the Commission to take an informed view of the practices of all Member States. With the exception of Estonia and Poland, all EU countries have cooperated and provided the required information in full. On the basis of the information received, the Commission will today ask 15 Member States to provide a substantial number of individual tax rulings. Requesting these tax rulings does not prejudge whether this will lead to individual state aid investigations concerning the recipients of these tax rulings.
EU Commissioner in charge of competition policy Margrethe Vestager said: "We are putting together the puzzle of tax ruling practices in the EU. Sometimes we had to ask Member States twice – or more – to provide information. Still, there are pieces missing: To have a complete overview we also need full information from Estonia and Poland. But based on the replies we have now received, I am today asking for tax rulings from 15 countries. We want to analyse them carefully to find out whether Member States employ tax rulings to grant companies selective tax advantages that breach EU state aid rules."
Tax rulings are comfort letters issued by tax authorities to an individual company on a specific tax matter. They are not as such a problem under EU state aid rules. However, if a tax ruling results in a Member State providing selective advantages to specific companies or groups of companies, this distorts competition in the Single Market in breach of EU state aid rules.
EU Commissioner in charge of competition policy Margrethe Vestager said: "We are putting together the puzzle of tax ruling practices in the EU. Sometimes we had to ask Member States twice – or more – to provide information. Still, there are pieces missing: To have a complete overview we also need full information from Estonia and Poland. But based on the replies we have now received, I am today asking for tax rulings from 15 countries. We want to analyse them carefully to find out whether Member States employ tax rulings to grant companies selective tax advantages that breach EU state aid rules."
Tax rulings are comfort letters issued by tax authorities to an individual company on a specific tax matter. They are not as such a problem under EU state aid rules. However, if a tax ruling results in a Member State providing selective advantages to specific companies or groups of companies, this distorts competition in the Single Market in breach of EU state aid rules.
To-date, Estonia and Poland have failed to adequately respond to the request for information, arguing fiscal secrecy and the principle of proportionality. They have only submitted general information but refused to provide a specific and detailed overview of tax rulings issued from 2010 to 2013.However, the Commission is legally entitled to request any information it deems necessary for a state aid investigation, and Member States are under a legal obligation to respond. Confidential fiscal information remains adequately protected, as the Commission is itself bound by rules of confidentiality.
