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EU threatens Britain with court over charity taxes

Reuters

July 10, 2006

Britain could be taken to the European Court of Justice unless it offers tax relief on donations to charities based elsewhere in the European Union, the bloc's executive arm said on Monday.

The European Commission gave Britain a final warning over rules that allow tax relief only on gifts to domestic charities, which Brussels says discriminates against charities located in other member states.

If the United Kingdom does not respond satisfactorily within two months, the Commission may refer the matter to the European Court of Justice, the executive body said.

"Gifts to bona fide charities in other member states should get the same tax treatment as gifts made to domestic charities," EU Tax Commissioner Laszlo Kovacs said in a statement.

The discrimination breaks EU rules on the free movement of capital, persons and establishment as foreign charities are forced to set up branches in Britain to benefit from the tax relief on donations, the Commission said.

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