European Commission investigates Swedish plans to grant CO2 tax exemptions to companies

Nordic Business Report, Nov 8, 2006

NORDIC BUSINESS REPORT-8 November 2006-European Commission investigates Swedish plans to grant CO2 tax exemptions to companies(C)1994-2006 M2 COMMUNICATIONS LTD http://www.m2.com

The European Commission said on Wednesday (8 November) that it has opened a formal investigation into Sweden's plans to grant CO2 tax exemptions to companies participating in the EU's Emissions Trading Scheme (EU ETS).

The Commission said that the tax exemptions could be incompatible with the EU's state aid rules.

"The Commission is concerned that the measure might distort competition by increasing tax differentiation in an area where the EU has harmonised taxes in order to create a level playing field between companies. Furthermore, the Swedish measure might run against the 'polluter-pays' principle, a leading principle of the EU's environmental policy, as companies participating in the EU ETS have received the emission allowances for free," the Commission said.

The Commission stressed that the opening of a formal investigation does not prejudge the outcome of the procedure, but gives interested parties the opportunity to comment on the intended measures.

The European Commission is currently also investigating a similar case concerning Denmark.

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