Mr. Robert G. HughesTo ask the Chancellor of the Exchequer if he will make a statement on the tax rules for European economic interest groupings.
§ Mr. Norman LamontUnder the terms of European Council regulation EEC No. 2137/85, European economic interest groupings may be set up. The regulation is directly applicable under Community law throughout the European Community and has effect from 1 July 1989. However, certain articles are not completely self-executing, and in order to make the regulation fully effective in the United Kingdom, domestic legislation will be required. For taxation purposes, EEIGs will be fiscally transparent; profits will be taxable and losses allowable only at the level 621W of their members. After consultations with interested parties, my right hon. Friend the Chancellor of the Exchequer intends to bring forward proposals covering the tax position of EEIGs in the 1990 Finance Bill. However, these will be effective from 1 July 1989.
Other rules, for example on the method of registering EEIGs, which will be needed to make the regulation fully effective in Great Britain will be contained in regulations which my right hon. and noble Friend the Secretary of State for Trade and Industry intends to lay before the Houses of Parliament on 19 April 1989.