The European Commission (EC) today warned Ireland that it was discriminating by not allowing tax relief on gifts to charities in other EU member states.
Under Irish tax rules relief is available on charitable donations of €250 or more in a tax year but the recipient charities must be based in Ireland.
EU Commissioner Laszlo Kovacs
EU Commissioner Laszlo Kovacs said today: "Charities in other member states are excluded from the relief, and the Commission considers that this discrimination is contrary to the treaty.
"Gifts to bona fide charities in other Member States should get the same tax treatment as gifts made to domestic charities."
He referred to a reasoned opinion he sent to the UK in July in which he said the treatment of donations to charities in other member states was an obstacle to the free movement of capital. He noted at the time that cross-border gifts are explicitly mentioned in a council directive on capital movements.
He found that the discrimination also infringes on a person's right to freedom of movement in the EU. He said workers in particular would be discriminated against for making donations to the Member State where they came from.
Today he said concerns about what the donations are used for should be addressed to the relevant member state on the basis of the Mutual Assistance Directive, which requires co-operation between agencies on tax matters.
The commission could refer the case to the European Court of Justice for possible legal action if Ireland - and Poland, which was also warned on the issue - did not answer its objections within two months.
Fine Gael MEP Jim Higgins welcomed the EC request. "Irish people have a long history of giving generously to charity both at home and abroad," he said in a statement.
"However, while Ireland allows tax relief for gifts to charities this is only applicable if the charities are established in the State. At present charities in other member states are excluded from the relief, and the Commission believes that this discrimination is contrary to the EC Treaty.
"I welcome this formal request from the European Commission for Ireland to end this discrimination towards foreign charities," he said.