ECONOMY

A spate of reasoned opinions

The European Commission yesterday threatened to refer Greece, along with France, Italy and Portugal, to the European Court of Justice for breaching EU legislation regarding taxation on income from interest and royalties. The four governments are asked to submit any measures taken to transpose the EU directive for a common tax system for income from interest and royalties paid between connected companies in different member states. This directive aims at abolishing all taxes at the source of interest or royalty payments, when completed in another member state, securing equal taxation for national and cross-border transactions. States had to apply the directive by January 2004. After the four countries received a first warning in March, Greece, France and Portugal notified Brussels that their relevant bills were about to be approved, while Italy failed to respond. More warnings Greece received two more warnings from the Commission yesterday, over irregularities in technical assistance for farmers and the tender for building a fuel-fired power plant at Lavrion. The EU executive body pointed to legal violations in the award of contracts to provide technical assistance to Greek farmers. To help farmers benefit from EU support, the Greek government signed technical assistance contracts with specialist firms every year through a competitive procedure. However, from 2001 it directly awarded contracts to farmers for the management and implementation of framework programs for technical assistance, without following the procedures required by the EU directive. The Commission did not accept that Athens has complied by subjecting the contracts to competition in line with the directive and through the Agriculture Ministry issuing a circular. Brussels insists that claims that the contracts were opened up to competition after 2003 are true in theory only, since through various mechanisms, the same association of farmers has been awarded the contracts. On the construction of a thermoelectric plant at Lavrion, the Public Power Corporation (PPC) had launched a call for tenders, but the Commission considers that the two companies in the last phase of the procedure did not meet the conditions set out. One of the companies concerned did not have the requisite experience, while the bid submitted by the second company, which was in the end awarded the contract, did not comply with terms on the long-term maintenance agreement. By accepting these two companies for the final stage and awarding the contract to one of them, the Commission found that PPC infringed the relevant directive and ignored equal treatment of participants and transparency.