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Bulgaria Seeks EU Intervention On New Greek Tax

Tatiana Smolenskaya, Tax-News.com, Moscow

31 March 2015

The Bulgarian Minister of Finance, Vladislav Goranov, has asked the European Tax Commissioner, Pierre Moscovici, to review the legality of a new Greek tax charge, which affects Bulgaria, Cyprus, and Ireland.

An amendment to the Greek Income Tax Code introduces a withholding tax (WHT) of 26 percent on all outbound transactions from the three countries, with the rate in line with Greece's corporate tax rate. The WHT is being introduced in Greece on the basis that the countries have "preferential" tax regimes.

Goranov said the charge contravenes EU law as it discriminates against other EU nations. In his letter to Moscovici, he said the tax "is discriminatory and disproportionate to the pursued goal. Thus it is assumed by presumption that the transactions are performed with the purpose of tax fraud or tax evasion only on the basis of the fact that the corporate taxation regimes in these three countries are more favorable than the taxation regime in Greece."

"The corporate income taxation cannot be considered as an isolated issue as it is part of the tax system model that each member state establishes in accordance with national and common European goals and priorities while complying with the EU law. Allowing EU member state to have such a practice would have an extremely strong negative effect and would undermine the overall functioning of the Community internal market."

TAGS: Finance | tax | European Commission | Ireland | law | Bulgaria | tax rates | Cyprus | Greece | regulation | European Union (EU) | Europe | Tax

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