On 21 March 2007, the European Commission announced that it has started a formal investigation procedure under the EC State aid rules with respect to the Hungarian taxation of interest in the context of intra-group transactions. Details are summarized below. Under the Hungarian scheme on taxation of interest in the context of intra-group transactions, the taxable income or expenses are 50% of the balance of the interest received from or paid to affiliated group companies. When a company resident in Hungary has a positive balance of interest with its affiliated group companies, only 50% of the interest is taxed. If...