CONTINUEThis site uses cookies. By continuing to browse this site you are agreeing to our use of cookies. Find out more.
  1. Front Page
  2. News By Topic
  3. EFTA Issues State Aid Guidance On Tax Rulings

EFTA Issues State Aid Guidance On Tax Rulings

by Ulrika Lomas, Tax-News.com, Brussels

20 January 2017


The European Free Trade Association Surveillance Authority (EFTA Surv) has issued guidance designed to help public authorities and companies identify when public support measures can be granted free of state aid, including with regards to tax legislation and administrative rulings.

EFTA Surv is the equivalent of the European Commission for the EFTA member states, Liechtenstein, Norway, Iceland, and Switzerland.

The guidelines clarify the elements of state aid, such as the notion of economic activity, the origin of public funding, the granting of an advantage, the selective nature of the advantage, and the effects on competition and trade between European Economic Area (EEA) states.

According to EFTA Surv, in the area of taxation, public authorities are free to adopt tax measures concerning economic policy, as long as such legislation does not entail incompatible state aid, nor does it discriminate between comparable operators.

Significantly, the guidelines emphasize that administrative tax rulings between tax authorities and taxpayers must "respect the state aid rules," including in the area of transfer pricing.

"Where a tax ruling endorses a result that does not reflect in a reliable manner what would result from a normal application of the ordinary tax system, that ruling may confer a selective advantage upon the addressee, in so far as that selective treatment results in a lowering of that addressee's tax liability in the EEA State as compared to companies in a similar factual and legal situation," state the guidelines.

Referencing decisions by the European Court of Justice, the guidelines go on to state that intra-group transactions not undertaken at arm's length can be considered illegal state aid, "by virtue of the fact that its tax liability under the ordinary tax system is reduced as compared to independent companies which rely on their actually recorded profit to determine their taxable base."

"Accordingly, a tax ruling which endorses a transfer pricing methodology for determining a corporate group entity's taxable profit that does not result in a reliable approximation of a market-based outcome in line with the arm's length principle confers a selective advantage upon its recipient," say the guidelines.

TAGS: court | tax | Iceland | mining | Liechtenstein | Norway | legislation | transfer pricing | Switzerland | trade | European Union (EU) | Europe

To see today's news, click here.

Leave a comment

Read our Posting Guidelines

 






Close

Password Reminder

Please enter your email address to receive a password reminder.

 






Tax-News Reviews

Cyprus Review

A review and forecast of Cyprus's international business, legal and investment climate.

Visit Cyprus Review »

Malta Review

A review and forecast of Malta's international business, legal and investment climate.

Visit Malta Review »

Jersey Review

A review and forecast of Jersey's international business, legal and investment climate.

Visit Jersey Review »

Budget Review

A review of the latest budget news and government financial statements from around the world.

Visit Budget Review »



Tax-News+ Updates

Receive FREE daily updates from Tax-News.com, straight to your inbox. Register Now!

For a tailored solution, choose to receive selected news updates for your preferred jurisdictions and topics, with our enhanced Tax-News+ subscriber service. Read more...

 

Stay Updated

Please enter your email address to join the Tax-News.com mailing list. View previous newsletters.

By subscribing to our newsletter service, you agree to our Terms and Conditions and Privacy Policy.


To manage your mailing list preferences, please click here »