EU Commission tells Greece to change tax amnesty

BRUSSELS Wed Feb 16, 2011 7:38am EST

BRUSSELS Feb 16 (Reuters) - The European Commission told Greece on Wednesday to change tax amnesty legislation that discriminates against funds held abroad by Greek residents, or face being taken to the EU's highest court.

Under the amnesty, Greek taxpayers who voluntarily disclose funds held abroad and transfer them to a Greek bank account are taxed on those funds at a lower rate than money kept outside Greece.

Taxpayers who keep their transferred cash in a Greek account for at least a year are meant to pay a 5 percent tax on the investment, compared to 8 percent for funds held abroad.

"The Commission considers these discriminatory provisions to be incompatible with the freedom to provide services and with the free movement of capital," the EU executive said in a statement.

The Commission said if it did not receive a satisfactory response from Greece within two months it could take the case to the EU's top court, the European Court of Justice.

Greece has implemented tax amnesty measures to help bring more taxpayers into the fiscal net and increase revenues as it aims to meet budget targets agreed under the terms of emergency funding from the EU and the International Monetary Fund.