Rows overshadow key agreements

Date: 13/01/2000

By Tim Jones

IT IS a little known fact outside the confines of the EU's negotiating chambers, but one third of the tax package has already been signed off in principle.

Agreement on a common scheme to eliminate double taxation of interest and royalty payments made between associated companies in different Union countries has been overshadowed by the unending disputes over taxes on individual savings and fuel use. Yet, it is of growing importance as the number of cross-border mega-mergers swells.

The legislation is designed to prevent double taxation of multi-nationals' profits as their cash gains are moved around between 0subsidiaries and head offices.

EU finance ministers agreed the bulk of the deal in May last year and their experts subsequently crossed the 't's and dotted the 'i's, with the exception of requests from Greece and Portugal for transitional periods allowing them to cut such taxes gradually.

This is a request which is likely to be agreed during Portugal's presidency of the Union.