The European Commission (EC) has published a proposal for a regulation on foreign subsidies that distort the internal market. The proposal aims to address the perception that foreign subsidies have created an uneven playing field for competition. The Commission notes that: ‘Such foreign subsidies can take different forms, such as zero-interest loans and other below-cost financing, unlimited state guarantees, zero-tax agreements or direct financial grants.’
EY notes that: ‘Tax is only mentioned in passing in the proposed regulation and accompanying documents, to the extent that certain types of tax measures (preferential tax treatment, tax credits, and zero-tax agreements) are given as potential examples of a foreign subsidy.’.
Media reports suggest the measures are particularly aimed at China, which signed an investment treaty with the EU in 2020.
There is no timetable set out for the introduction of the proposals, although law firm White & Case that they ‘will be the subject of significant debate during the legislative process under the ordinary legislative procedure between the European Parliament and the Council, which may take around two years.’
The European Commission (EC) has published a proposal for a regulation on foreign subsidies that distort the internal market. The proposal aims to address the perception that foreign subsidies have created an uneven playing field for competition. The Commission notes that: ‘Such foreign subsidies can take different forms, such as zero-interest loans and other below-cost financing, unlimited state guarantees, zero-tax agreements or direct financial grants.’
EY notes that: ‘Tax is only mentioned in passing in the proposed regulation and accompanying documents, to the extent that certain types of tax measures (preferential tax treatment, tax credits, and zero-tax agreements) are given as potential examples of a foreign subsidy.’.
Media reports suggest the measures are particularly aimed at China, which signed an investment treaty with the EU in 2020.
There is no timetable set out for the introduction of the proposals, although law firm White & Case that they ‘will be the subject of significant debate during the legislative process under the ordinary legislative procedure between the European Parliament and the Council, which may take around two years.’
