Irish tax advantages may be banned under new EU rules

Ireland will be forced to ban many of the tax advantages it offers multinationals under proposals to be published by the European Commission tomorrow. This is the first step in an effort to have all EU countries introduce similar tax rules to prevent companies in the 28 member states avoiding as much as €70bn a year in tax.

The Dutch who hold the EU presidency for the first half of this year and like Ireland have a tax system much favoured by multinationals, say they hope to have agreement by July.

The proposed directive would ensure that companies cannot shift high-interest inter-company loans to subsidiaries in high-tax countries, allowing them to offset it against their tax liability.