2003/27/EC: Commission Decision of 11 July 2001 on the State aid scheme implemented by Spain for firms in Vizcaya in the form of a tax credit amounting to 45 % of investments (notified under document number C(2001) 1765) (Text with EEA relevance)

• Published date: 22 January 2003
• Date of Signature: 14 March 2003
• Subject Matter: aiuti degli Stati,ayudas concedidas por los Estados,aides accordées par les États,Legislación fitosanitaria,relaciones exteriores,Acuerdo de Asociación
• Official Gazette Publication: Gazzetta ufficiale dell’Unione europea, L 17, 22 gennaio 2003,Diario Oficial de la Unión Europea, L 17, 22 de enero de 2003,Journal officiel de l’Union européenne, L 17, 22 janvier 2003,Diario Oficial de la Unión Europea, L 137, 05 de junio de 2003

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2003/27/EC: Commission Decision of 11 July 2001 on the State aid scheme implemented by Spain for firms in Vizcaya in the form of a tax credit amounting to 45 % of investments (notified under document number C(2001) 1765) (Text with EEA relevance)

Official Journal L 017 , 22/01/2003 P. 0001 - 0019

Commission Decision

of 11 July 2001

on the State aid scheme implemented by Spain for firms in Vizcaya in the form of a tax credit amounting to 45 % of investments

(notified under document number C(2001) 1765)

(Only the Spanish version is authentic)

(Text with EEA relevance)

(2003/27/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Community, and in particular the first subparagraph of Article 88(2) thereof,

Having regard to the Agreement on the European Economic Area, and in particular Article 62(1)(a) thereof,

Having, in accordance with the abovementioned Articles, called on interested parties to submit their comments(1), and having regard to those comments,

Whereas:

I. PROCEDURE

(1) As a result of the information received in response to the proceedings initiated following complaints about State aid granted to Daewoo Electronics Manufacturing España SA(2) and to Ramondín SA and Ramondín Cápsulas SA(3), the Commission learned of the existence of a scheme of non-notified tax aid for investments in Spain, in the Province of Álava, in the form of a 45 % tax credit. It also received informal information that similar measures existed in the Province of Vizcaya, since that territory enjoys the same tax autonomy as Álava. The Commission therefore sent a letter to the Spanish Permanent Representation on 15 March 1999 requesting information on the matter. By letters dated 13 April and 17 May 1999 from its Permanent Representation, Spain requested successive extensions of the deadline for replying. By letter of 25 May 1999 the Commission refused to grant a second extension under Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for the application of Article 93 of the EC Treaty(4). Finally, by letter of 2 June 1999 from its Permanent Representation, Spain provided information on the tax incentive in question.

(2) By letter SG(99) D/6871 dated 17 August 1999 the Commission informed Spain of its decision to initiate in respect of this aid the procedure laid down in Article 88(2) of the Treaty.

(3) By letter from the Permanent Representation dated 9 November 1999, registered on 12 November 1999, the Spanish authorities submitted their comments under the abovementioned procedure.

(4) The Commission's decision to initiate the procedure was published in the Official Journal of the European Communities(5). The Commission invited interested parties to submit their comments on the aid within one month of the date of publication.

(5) Comments were received from: the Autonomous Community of Castile-Leon, on 3 January 2000; the Basque Business Confederation (Confederación Empresarial Vasca/Euskal Entrepresarien Konfederakuntza) (hereinafter Confebask), on 4 January 2000, plus, outside the time limit, supplementary comments by letter dated 29 December 2000, registered on 3 January 2001; the Rioja Regional Government, on 5 January 2000; the Basque Economists Association (Colegio Vasco de Economistas/Ekonomilarien Euskal Elkargoa), on 5 January 2000; the Basque Business Circle (Círculo de Empresarios Vascos), on 5 January 2000; the Bilbao Chamber of Commerce (Cámara de Comercio de Bilbao/Bilboko Erkataritza Ganbera), on 5 January 2000; and the Professional Association of Tax Advisers of the Autonomous Community of the Basque Country (Asociación Profesional de Asesores Fiscales de la Comunidad del País Vasco), on 7 January 2000. By letter dated 1 March 2000 (2000 D/50912), the Commission sent these comments to Spain, asking for observations; it received only a request for a 20-day extension of the deadline for replying.

(6) Provincial Law (Norma Foral) No 7/2000 of 19 July 2000(6) repealed the fourth additional provision of Vizcaya Provincial Law No 7/1996 of 26 December 1996(7), which formed the legal basis for the 45 % tax credit.

II. DETAILED DESCRIPTION OF THE AID

(7) According to the information at the Commission's disposal, which has not been questioned by the Spanish authorities or by third parties, the tax incentive in question entered into force on 1 January 1997 pursuant to the fourth additional provision of Provincial Law No 7/1996 of 26 December 1996(8). Under that provision, the aid was payable in respect of certain investments made in 1997; it was subsequently extended for an indefinite period by the second provision of Provincial Law No 4/1998 of 2 April 1998(9).

(8) As regards the 45 % tax credit in force since 1 January 1997, the fourth additional provision of Provincial Law No 7/1996 of 26 December 1996 reads as follows:

"Investments in new tangible fixed assets made after 1 January 1997 and exceeding ESP 2500 million shall, by decision of the Vizcaya Provincial Council, give rise to a tax credit equal to 45 % of the amount of the investment, as determined by the latter, to be deducted from the amount of tax payable.

Any tax credit that is not used because it exceeds the final amount of tax payable may be carried over and used within five years following the year in which the decision is taken.

The date from which the time limit for using the tax credit starts to run may be postponed until the first year during the limitation period in which profits are made.

The decision referred to in the first paragraph shall lay down the time limits and restrictions applicable in each case.

Concessions granted under this provision may not be combined with any other tax concessions available in respect of the same investments.

The Vizcaya Provincial Council shall also determine the duration of the investment process, which may include investments made during the preparatory phase of the project giving rise to the investments."

(9) It is clear from the above provisions, in short, that the aid is granted in respect of investments in new tangible fixed assets made after 1 January 1997, as well as investment expenditure(10) incurred during the preparatory phase of the project giving rise to the investments, where such investments exceed ESP 2500 million.

(10) Since the scheme does not require the investment entitling firms to the aid to be located in Vizcaya, a firm resident there for tax purposes could obtain a tax credit equivalent to 45 % of the amount of investments made outside Vizcaya.

(11) The scheme is furthermore applicable to investments made in any sector and is not subject to any sectoral restriction such as those laid down in the Community sectoral rules applicable to the production, processing and marketing of the agricultural products in Article 1 to the Treaty, fisheries, coalmining, steelmaking, transport, shipbuilding, synthetic fibres and the motor industry.

(12) Furthermore, any firm may qualify for the 45 % tax credit in question irrespective of its economic and financial position, even if it is a firm in difficulty.

(13) Although the 45 % tax credit may not be combined with any other tax concessions that may be granted in respect of the same investment, combination with other, non-ax aid, including grants, subsidised loans, guarantees, equity purchases, etc., relating to the same investments is not ruled out.

(14) In its decision initiating the said procedure, the Commission pointed out that as far as the application of the Community State aid rules is concerned, the tax nature of the measures in question is irrelevant, since Article 87 of the Treaty applies to aid measures "in any form". The Commission also emphasised, however, that, to be regarded as aid, the measures must meet all four of the criteria set out in Article 87 and explained below.

(15) Firstly, the Commission pointed out, at that stage, that the tax credit confers on the recipients an advantage amounting to 45 % of the amount of the investments and relieves them of charges that are normally borne from their budgets through a partial reduction in their normal tax liability.

(16) Secondly, the Commission provisionally considered that the 45 % tax credit involves a loss of tax revenue and is therefore equivalent to the consumption of public resources in the form of fiscal expenditure.

(17) Thirdly, the Commission considered at that stage that the tax credit affects competition and trade between Member States. Since the recipients conduct business which may be the subject of intra-Community trade, the aid strengthens their position vis-à-vis competitors who are also involved in intra-Community trade and therefore affects such trade. Furthermore, the increase in recipient firms' net profit (profit after tax) improves their profitability. In this way they are more able to compete with firms which are not eligible for the aid.

(18) Lastly, the Commission considered, at that stage, that the 45 % tax credit is specific or selective in that it favours certain firms, being available only to firms investing more than ESP 2500 million (EUR 15025303). All other firms whose investments do not exceed the ESP 2500 million threshold are excluded.

(19) Furthermore, the Commission considered, at that stage, that the selective nature of the concession is also due to a discretionary power of the tax authorities: the Vizcaya provincial authorities have the power to determine, at their discretion, the duration of the investment process and that of the preparatory phase of the investment qualifying for the aid.

(20) In short, the Commission considered, at that stage, that the 45 % tax credit is State aid within the meaning of Article 87(1) of the Treaty and Article 61(1) of the Agreement on the European Economic Area, since it meets the cumulative criteria of constituting an advantage, being granted...