European Commission delays taking UK to court on tax relief

European Commission delays taking UK to court on tax relief


The European Commission (EC) has delayed a decision on whether to take the UK government to court over its refusal to allow tax relief on donations to foreign charities.

This is to allow for further discussions on a co-ordinated European response to the issue. 

In 2006 the EC sent the United Kingdom a formal request to end discrimination of foreign charities. The Commission says the government’s approach, where Gift Aid can only be claimed by charities registered in the UK, is discriminatory, and runs contrary to the EC Treaty.

A meeting instigated by the UK in November between the Commission and the countries involved, which includes Ireland and Belgium, failed to find a resolution, but the Commission has now agreed to wait to see if further discussions in March can find a co-ordinated solution to the problem.

The aim is to find a solution that would mean member states could comply with EU law while preventing tax abuse, criminal activities and terrorism.

Other countries have already moved to address the Commission’s concerns.  Finland has changed its law this year to become friendly to cross-border giving; cases already under way against Poland, the Netherlands and Slovenia have been set aside after the countries agreed to change their legislation to comply with EU principles; and Italy is understood to have made provisions in the law to do the same.