Supplementing state aid: the EU Foreign Subsidies Regulation

The EU Foreign Subsidies Regulation imposes a mandatory notification obligation for proposed M&A and joint venture transactions involving EU entities if certain thresholds are met, to enable the European Commission to investigate whether any ‘foreign subsidy’ has been granted. Groups will need to consider whether ‘financial contributions’ have been provided by non-EU states to ascertain whether a notification is required and the information that must be disclosed. Little guidance is given on what that means in the tax context, but the concept is likely to capture a wide range of situations where reduced rates are applied or tax relief is given.