General corporate: Greece and Ireland under fire for tax rules

United Kingdom
Greece and Ireland under fire for tax rules

The ECJ ruled that Greece's tax regime is unlawful, while the Commission is concerned about that in Ireland.

Ireland grants a special tax rate of 10%, as opposed to the standard corporation tax of 38%, to companies starting-up manufacturing projects and international financial services. It is also planning to grant free-port status to Rosslare and the Shannon industrial zone. The Commission has warned that these concessions are likely to constitute State aid.

In response, the Irish finance minister has offered to raise the special tax rate to 12.5 or 13%. However, the new Irish government has pledged to set a standard corporate rate of just 10% for all business by 2010, a move which should silence complaints about State aid.

Meanwhile, the ECJ has condemned Greece for maintaining discriminatory taxes contrary to EC law. Greece does not allow imported second-hand cars equipped with anti-pollution technology to benefit from a special consumer tax which is applicable to domestic second-hand cars. This discriminates against imported cars. Greece will have to change its legislation.