Brussels, 20 December 2001
Commission decides three tax-aid schemes in the Basque provinces are incompatible with the common market
The Commission has decided to adopt a negative decision in respect of three tax-aid schemes in the Basque provinces (Álava, Guipúzcoa, Viscaya). The three schemes, which give "tax holidays" to start-ups created prior to 31 December 1994 by exempting them from corporation tax during a ten-year period, are incompatible with the common market. The Spanish authorities must therefore abolish them, suspend payment of any aid outstanding and take all necessary measures to recover aid already granted.
In its decisions the Commission stresses that the measures constitute state aid, since they are financed from state resources, favour certain undertakings, distort competition and affect trade between Member States. Since the state aid has not been notified, it is illegal.
In its assessment of their compatibility, the Commission considered first that the three "tax holidays" (the beneficiaries are exempt from corporation tax for a period of ten consecutive years, from the year of start-up) constitute operating aid. They are intended to shield a company from the costs normally arising from its day-to-day management and ordinary activities. It then examined the measures for compliance with the Community rules on operating aid and, in particular, to see whether they were granted in regions eligible for exemption under Article 87(3)(a) EC. These are the only ones where regional operating aid may be regarded as compatible. At the end of the investigation, the Commission has concluded that the aid is not compatible with the common market, since the schemes do not comply with the rules concerned. The Commission has taken particular account of the fact that the three regions are not eligible for operating aid.
The schemes were in force from 1993 to 1995, and the procedures for examining them were initiated in October 2000. Today's final decisions follow those adopted on 11 July 2001 concerning the successor schemes to those of 1993.