European Commission issues recommendation to disallow public funding for companies linked to financial crimes

13

The European Commission (EC) has issued a recommendation to discourage Member States from providing financial support to companies with links to countries that are on the EU’s list of non-cooperative tax jurisdictions. The EC also recommends similar restrictions on companies convicted of financial fraud, corruption, tax evasion or other financial crimes.

The recommendation is a guideline for the Member States so that public funds are not used for financial crimes. Meanwhile, there are also some exceptions to these restrictions so that honest taxpayers are not affected. Thus, even companies with links to non-cooperative tax jurisdictions can avail financial support under special conditions. However, the EC has advised Member States to impose regulations that prevent applicants from sharing false information.

Member States must also decide on the requirements for companies to prove that they are not linked to non-cooperative tax jurisdictions. EC’s recommendation also provides guidelines to help the Member States finalize these requirements. Lastly, the EC also wants the Member States to communicate how they plan on complying with its recommendation.