December 01
Dolores Utrilla
7th May 2020
Competition & State Aid Covid-19 Tax

No COVID-19 State aid for companies in tax havens

A few days ago, the European Commission approved a Polish COVID-19 State aid scheme (SA.56996) in the form of repayable advances for micro, small and medium-sized enterprises (SMEs), on the basis of Article 107(3)(b) TFEU and of the State aid Temporary Framework to support the economy in the current COVID-19 outbreak, as amended on 3 April.

The decision has now been made public and it specifies that the beneficiaries of the scheme must reside for tax purposes in the European Economic Area (EEA). Furthermore, the main beneficial owner, within the meaning of Article 2(2)(1) of the Act on Counteracting Money Laundering (AML Act), cannot have tax residence in the so-called ‘tax havens’ within the meaning of the EU Council conclusions on the revised list of non cooperating countries for tax purposes. This list classifies as tax havens the following jurisdictions: American Samoa, Cayman Islands, Fiji, Guam, Oman, Palau, Panama, Samoa, Seychelles, Trinidad and Tobago, US Virgin Islands, and Vanuatu.

The Commission’s decision specifies that deviation from this rule is only possible if the aid beneficiary and/or its main beneficial owner commit to transfer their tax residence to the EEA within nine months from the date of granting aid under the measure.

This measure is in line with the approach of a growing number of Member States, which are refusing to grant public aid to businesses registered in tax havens and are making use of aid conditionality as an incentive for the enforcement of their fiscal rules. Poland and Denmark were the first EU countries to take steps in this regard within the ongoing pandemic, shortly followed by France.

This way, the Commission confirmed that EU State aid rules allow Member States to block COVID-19 aid from going to companies based in tax havens. National authorities have margin enough to design measures fit to achieve certain tax policy objectives such as to prevent fraud and tax evasion. However, it must be recalled that Member States are bound by the EU rules on free movement of capital rules, and therefore they cannot exclude companies from aid schemes on the basis of headquarters or tax residency in a different EU country.

The public version of the Commission’s decision is available here.


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