Supplementing state aid: tax and the EU Foreign Subsidies Regulation

The EU Foreign Subsidies Regulation imposes a mandatory notification obligation for proposed M&A and joint venture transactions involving EU entities if certain thresholds are met, to enable the European Commission to investigate whether any “foreign subsidy” has been granted.

The notification obligation is now live - it applies from 12 October 2023 to qualifying transactions signed on or after 12 July 2023 that have not already completed. Groups therefore now need to consider whether “financial contributions” have been provided by non-EU states to ascertain whether a notification is required and the information that must be disclosed.

In the article available at the link below, Sarah Bond, Rob Jones and Gabrielle Van der Haegen from our London Tax team discuss these new rules and the extent to which tax measures may fall within the scope of “financial contributions” for these purposes, noting that little guidance so far has been given on what that means in the tax context, but the concept is likely to capture a wide range of situations where reduced rates are applied or tax relief is given.

This article was originally published in Tax Journal on 6 October 2023.