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EU probes Italy tax breaks for firms hit by disasters

Source: Thomson Reuters Foundation - Wed, 17 Oct 2012 11:58 GMT
Author: Reuters
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BRUSSELS, Oct 17 (Reuters) - The European Commission has launched a probe into tax breaks offered to Italian companies operating in areas hit by earthquakes and other natural disasters,

It suspects violations of its rules on state aid.

"The Commission fears that the breaks given are not just limited to compensate damage actually suffered," it said in a statement on Wednesday.

In May the northern Italian region of Emilia-Romagna was hit by a 6.0 magnitude quake and a number of aftershocks which killed 25 people and devastated many homes and businesses.

The quake was the most deadly to strike Italy since 2009 when a tremor partially destroyed the central city of L'Aquila killing about 300 people.

The Commission said Rome had not informed it of a series of measures introduced since 2002 which reduced taxes as well as welfare and insurance payments for companies in disaster-hit areas.

It asked the Italian government to halt the measures until it had ascertained whether they conformed to EU state aid regulations.

A spokesman for the city of Modena, which was close to the epicentre of the Emilia-Romgna quake, said he did not think the probe would affect companies in the area.

"Modena never asked for a no-tax area, all that companies got was a delay in paying housing and income taxes. Firms outside the epicentre could only ask for help if they had suffered actual damage," he said.

The probe will look at tax and welfare payment breaks of up to 90 percent that are not directly linked to a specific natural disaster, the Commission said.

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