They denied stoutly the points I made from the documentation of this Committee. When we got the man from the Commission along he confirmed that the Committee was perfectly right, that he had been, indeed, pushing this point at the Commission. I think the British more recently have come around on this topic. The problem with withholding tax is that most of the continental countries have one already and all this does is harmonise the rates. In addition, continental countries have an excellent scheme from the point of view of taxpayers that no one knows who owns shares. In general they are not registered and this being so, they are not liable to pay tax, which, of course, is the basis for this Directive. This does not affect us or the British.
The Commission official we were talking to—he could not give any undertaking—gave his personal view that the Commission might be willing to agree to an amendment to this, on the basis that each Government can exempt its own nationals. In other words, the Irish Government can say that tax will not be withheld under this Directive from Irish firms. Equally, the British Government can do the same. He said the Commission might be willing to agree to a sort of a joint arrangement between the Irish and British Governments whereby English shareholders in Irish companies would be exempt, and vice versa. So that at least so far as Ireland and Britain are concerned there would be a joint agreement in regard to withholding tax. He felt that, perhaps, if it was proposed, that the Commission might agree to this. Perhaps there is something to be said for incorporating in this Report a recommendation to this effect. It might be easier to put the point across at the European Parliament and the Commission and, indeed by our own Council Member. It does seem a proposal that might solve most of our problems because there are not that many continental shareholders in Irish companies.
On the other question of the various tax reliefs that we allow, this is a problem for us that does not relate to other countries in the same way. One assumes that the Commission has no intention of ending these and that they would agree to allow them to continue. Quite obviously, we cannot tolerate a situation where what has been allowed us as a derogation under Articles 92 to 94 of the EEC Treaty would now become a situation where, at the whim of the Commission, this could not be allowed to continue. By a simple amendment incorporated in our Report it would be possible to correct this. Something in the nature of: " this Directive shall not apply in any instance where its provisions conflict with the derogation which has been agreed to under the provisions of Articles 92 to 94 of the EEC Treaty." It is clear that there is no connection at all between the kind of provisions laid down in this Directive and the derogations under Articles 92 to 94 of the EEC Treaty. They are two totally separate matters which should not be confused in this way. The Commission have, I think by accident, brought these derogations into the scope of this Directive. It is clear that they ought not to be there. I think one might be able to deal with it by suggesting that anywhere there is a conflict the derogations under the Treaty will apply. I do not know whether they would agree with this, but it seems reasonable that they probably would. Anyway our Government certainly insist very strongly on this.
