26/12/2013: Italy's Illegal Measure Takes a Shot at Corporate Tax Optimisation

Just when I thought we are safe from the 'Tax Haven Ireland' stories at least until the end of holidays, the latest instalment in the saga arrived… this time from Italy.

With this in mind, let's update the string of links covering the topic. You can follow earlier links from here: http://trueeconomics.blogspot.ie/2013/12/8122013-is-ireland-also-german-federal.html (see the bottom of the post).

I wrote before about Italy's plans to curb tax optimisation by web-based MNCs. Here's the latest announcement on the topic: http://www.bloomberg.com/news/2013-12-23/italy-approves-google-tax-on-internet-companies.html

So Italy now passed the 'Google Tax'. It aims to collect USD1.35 billion or EUR1 billion in tax revenues. The tax is utterly illegal under the EU rules.

The 1957 Treaty (of Rome) establishing a European Economic Community (EEC) Part 1, Art.3(c): “the abolition, as between Member States, of obstacles to freedom of movement for persons, services and capital”.
The Treaty (of Lisbon) on the Functioning of the European Union (TFEU): Art. 26 (2) “the internal market shall comprise an area without internal frontiers in which the free movement of goods, persons, services and capital is ensured…"

The point, however, is that the Italian parliament measure is putting added pressure on  the OECD, the EU and the national governments to deal with the problem of aggressive tax optimisation practices of some MNCs.