17.08.2015

On 3 August 2015, by a reasoned opinion on the Republic of Bulgaria's complaint under Article 259 of the Treaty on the Functioning of the European Union (TFEU) against Greece regarding the Greek income tax legislation providing for a limitation on the acknowledgement for tax purposes of cross border expenses and their levy with a withholding tax of 26% the EC pronounced in favour of Bulgaria. The reasoned opinion has been sent to both parties.

The EC conclusion is that by introducing limitations on the acknowledgement for tax purposes of some cross border expenses the Hellenic Republic has not honoured its obligations under Article 34 (free movement of goods) and Article 56 (free provision of services) of TFEU.

After the receipt of the EC reasoned opinion Bulgaria could have referred the case to the Court if Greece has not revoked the provisions of Article 21 of Law 4321/2015 regulating the withholding tax as inconsistent with EU law. Despite the opportunity Bulgaria has not referred the case to the Court in Luxembourg because of the expected and stated intention of Greece to revoke the tax. At the end of last week the Greek Parliament has adopted a law ratifying the third bail-out plan, including revocation of the provisions of Article 21 of Law 4321/2015, which is satisfactory for Bulgaria.