A news release from the EU on 25th July advised that the Commission is taking further steps to end illegal tax breaks in the yacht industries of Italy and Cyprus, first brought to light in the Paradise Papers leaks. The legal proceedings also form part of the Commission’s ongoing efforts to stamp out unfair tax avoidance practices in the EU. The Commission has decided to refer Italy to the CJEU for its failure to address an illegal system of exemptions for fuel used to power chartered yachts in EU waters. At the same time, the Commission has decided to send reasoned opinions to Italy and Cyprus for not levying the correct amount of VAT on the leasing of yachts. Tax breaks of this type can lead to major distortions of competition. If Cyprus and Italy do not act within the next 2 months on these reasoned opinions, the Commission may decide to bring the cases before the CJEU.
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