A Project of the American Enterprise Institute and the Federalist Society

EU threatens Britain with court over charity taxes


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.

FAIR USE NOTICE. This document may contain copyrighted material whose use has not been specifically authorized by the copyright owner. NGOWatch is making this article available in our efforts to advance the understanding of NGO accountability, human rights, labor rights, social and environmental justice issues. We believe that this constitutes a 'fair use' of the copyrighted material as provided for in section 107 of the U.S. Copyright Law. If you wish to use this copyrighted material for purposes of your own that go beyond 'fair use,' you must obtain permission from the copyright owner.