European Commission orders Estonia to deliver missing information on tax practices

Estonian and EU flags in front of the Ministry of Foreign Affairs. (Postimees/Scanpix)
6/9/2015 11:47 AM
Category: Politics

The European Commission (EC) has issued two injunctions, ordering Estonia and Poland to deliver within one month information requested by the EC on their tax ruling practice. Both countries have so far refused to respond in full to previous information requests, the Commission claims.

In a very strict tone, the EC announced on Monday that should Estonia fail to deliver the missing information within one month, the EC may refer the country to the EU Court of Justice.

The previous information requests to Estonia and Poland were sent as part of the EC extending its state aid enquiry into national tax ruling practices to cover all EU member states in December 2014.

The inquiry is aimed at clarifying allegations that tax rulings may constitute state aid. The EC said that with the exception of Estonia and Poland, all EU countries have cooperated and provided the required information in full.

"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,” EU Commissioner in charge of competition policy Margrethe Vestager said.

The EC explained that 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 European single market, in breach of the EU state aid rules.

The EC said that Estonia and Poland have failed to adequately respond to the request for information, arguing fiscal secrecy and the principle of proportionality. “Estonia and Poland have only submitted general information, but refused to provide a specific and detailed overview of tax rulings issued from 2010 to 2013,” adding that the EC is legally entitled to request any information it deems necessary for a state aid investigation.

When asked for a comment, a spokeswoman from the Estonian Ministry of Finance said that they received a letter from EC on Tuesday and will decide an appropriate action in due course. "The Estonian legal framework does not allow beneficial treatment of businesses by tax rulings. We consider it very important to tax all taxpayers uniformly without any exception and to maintain a level playing field for all companies. Therefore, we certainly support all the initiatives that are necessary for removing any distortive state aid that might exist in the single market. We will carry out legal analyses once we have received the Commission`s letter and in particular will need to confirm the legal basis for sharing such information with the Commission."

S. Tambur

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