Brussels, 17 October 2006
The European Commission has sent Ireland and Poland formal requests to end discrimination of foreign charities. Both Member States allow tax relief for gifts to charities, but only if they are established in their own territory. Charities in other Member States are excluded from the relief and the Commission considers that this discrimination is contrary to the EC Treaty. The request is in the form of a ‘reasoned opinion’ under Article 226 of the EC Treaty. If Ireland and Poland do not reply satisfactorily to the reasoned opinion within two months the Commission may refer the matter to the European Court of Justice.
"As I said when the Commission sent a reasoned opinion to the United Kingdom (see IP/06/964) for the same issue, the rules of the Internal Market forbid discrimination of charities in other Member States." said EU Taxation and Customs Commissioner László Kovács. "Gifts to bona fide charities in other Member States should get the same tax treatment as gifts made to domestic charities."
Ireland and Poland offer tax relief for gifts to charities. However, this favourable tax treatment is only granted if the charity is established in their own territory.
The difference in treatment between gifts made to charities in their Member State and charities in other Member States is contrary to the EC Treaty. This was confirmed by the European Court of Justice in its ruling on Stauffer, Case C-386/04 of 14 September 2006.
If Ireland or Poland would like to check whether the assets and income of charities in other Member States are only used for charitable purposes, they can ask for assistance of the Member States where the charities are established on the basis of the Mutual Assistance Directive (77/799/EEC).
The Commission's case reference numbers are 2005/2430 for Ireland and
2005/2410 for Poland.