The EU wants to make it easier for member states to hand out tax credits to companies planning to boost green investment, as it seeks to hit back at the US following the passage of its $369bn Inflation Reduction Act.
Under a draft plan seen by the Financial Times, the European Commission will further loosen state aid rules to support investment into new production facilities in green sectors, including via the creation of tax benefits. Some of the €800bn in its NextGenerationEU Covid-19 recovery fund could also be redirected towards tax credits, according to the draft.
The proposed measures, which have yet to be finalised and could change, are part of a comprehensive Brussels plan to respond to the US legislation, which has provoked a flood of warnings that companies will decamp from the EU to the US to take advantage of the subsidies.