Sofia, August 17, 2015/ Independent Balkan News Agency
By Clive Leviev-Sawyer of The Sofia Globe
Bulgaria’s Finance Ministry said on August 17 that it welcomed Greece’s ratification of the new bailout agreement with the EU, which included dropping a controversial new tax threatening to strain cross-border transactions between the two neighbours.
Authorities in Sofia objected to Greek plans to levy a 26 per cent tax on all transactions carried out by Greek companies with firms in countries with “preferential tax regimes”, which is defined as countries with lower corporate tax rates than Greece. Greece’s list includes three EU member states – Bulgaria, Cyprus and Ireland – and Bulgaria’s Finance Ministry has argued that the Greek tax rules breached EU’s internal market rules, including the principle of free movement of capital.
The European Commission ruled in Bulgaria’s favour on August 3, which gave Bulgaria the grounds to begin litigation in the European Court of Justice, but the Bulgarian government opted against doing so after it was given assurances that the new tax would be scrapped, the Finance Ministry said in a statement.
“At the end of last week, the Greek Parliament passed the law to ratify the third bailout agreement, which included the cancellation of the provisions from Article 21 of Act 4321/2015, which satisfies the Bulgarian side,” the ministry said.
The controversial rules envisioned that the tax would have been levied upfront, giving companies conducting trans-border business three months to obtain a rebate by proving that the transaction was a routine commercial operation, rather than a deal meant to avoid paying taxes in Greece.
Bulgaria’s Finance Ministry had estimated that the introduction of the tax could reduce annual trade between the two countries – which stood at 2.8 billion euro in 2014, making Greece Bulgaria’s largest trade partner in the Balkans and the fifth-largest trade partner globally – by as much as 20 per cent.