EC asks Ireland to change tax law

THE European Commission has formally requested Ireland to change its tax law where patent royalties are tax exempt only if research leading to the patent was carried out in Ireland.

It said the provision is incompatible with the freedom of establishment and the free movement of services. This provision dissuades Irish companies and individuals from contracting out research to institutions established elsewhere in the EU or in the EEA, the EC argues.

If there is no satisfactory reaction within two months, the commission may decide to refer the matter to the European Court of Justice.