• Service: Tax, International Tax
  • Type: Regulatory update
  • Date: 10/16/2013

Slovakia - Allowing write-off of tax debt violates EU rules 

October 16:  The European Commission (EC) today issued a release announcing that, by allowing a Slovak producer and distributor of beverages to “write off” a €11 million tax debt, Slovakia effectively provided a benefit to the taxpayer that was incompatible with EU state aid rules.

The Slovak tax administration in 2004 allowed the taxpayer to write off 65% of its tax debt. The EC concluded that a higher percentage of taxes could have been recovered in bankruptcy.

As explained in today’s EC release, the non-payment of taxes (i.e., taxes that competitors had to bear) afforded the taxpayer an “undue economic advantage” and that the Slovak company must pay the tax amounts due, with interest, in order to redress the distortion of competition caused by the debt write-off, the company has to pay the due amounts with interest.

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