BRUSSELS, Oct 1 (Reuters) - Germany's plan to give tax breaks to private investors that provide risk capital to companies won approval from European Union antitrust regulators but tax breaks for venture capitalists received a veto. Under the proposed law, known as MoRaKG, individuals investing in certain target companies will receive an income tax benefit if they make a capital gain on the sale of their investments.
The European Commission said the measure would boost risk capital investments by private investors without distorting the market. It ordered German authorities to bring the provision in line with the EU executive's risk capital guidelines.
"I am pleased that Germany intends to give tax breaks to stimulate private investors to offer more risk capital," Competition Commissioner Neelie Kroes said in a statement on Thursday.
"At the same time the Commission has to ensure that tax measures do not discriminate against companies based in other member states," she said.
The EU competition watchdog said planned tax breaks for venture capital companies and the right of target enterprises acquired by these companies to carry forward losses infringed the risk capital guidelines and could not be implemented. (Reporting by Foo Yun Chee; Editing by Dale Hudson)