On 19 July 2006, the European Commission announced that it had decided that the Luxembourg's tax-exempt "Milliardiare and 1929 holding companies" regime constitutes incompatible existing state aid. Previously, in June 2003, the Council of EU Finance Ministers had already considered the "Exempt Holding" exemption from dividends as harmful tax competition. The Commission concluded that the scheme grants unjustified tax advantages to providers of certain financial services that set up holding structures in Luxembourg. It distorts competition and trade between financial undertakings by inducing them to create holding structures in Luxembourg to reduce their current tax liabilities. The modifications introduced by...