Brussels, 15 th December 2009
After an in-depth investigation opened in February 2009 (see ), the European Commission has found that a tax exemption the Dutch State intends to grant for natural gas used in installations for the production of ceramic products would be in breach of EU state aid rules and therefore cannot be implemented. In particular, the Commission found that the tax exemption would provide a selective advantage to the Dutch ceramic sector and so constitute operating aid. Such aid can be authorised only if it furthers, at least indirectly, environmental objectives, in line with the requirements of the EU Guidelines on State Aid for Environmental Protection. As The Netherlands has not demonstrated how the measure would comply with the relevant provisions of these Guidelines, the Commission has concluded that the measure would be incompatible with the EU state aid rules.
Competition Commissioner Neelie Kroes said: "The Commission’s decision sends a clear signal: energy tax exemptions that merely subsidise selected companies' operating costs without pursuing any environmental objective are illegal under EU state aid rules and will not be tolerated"
The Commission's in-depth investigation found that the proposed tax exemption did not stem from the basic, guiding principles of the Dutch system on the taxation of energy products. The proposed tax exemption would only apply to natural gas used by the Dutch ceramic industry for production purposes and would not apply to gas used for any other mineralogical processes, which might be in a comparable situation as regards the use of energy products in their production processes. The Commission therefore concluded that the measure would confer a selective advantage on the Dutch ceramic industry and would thus constitute state aid.
The proposed aid was examined under the terms of the EU Guidelines on State Aid for Environmental Protection (see and ). Reductions or exemptions from environmental taxes concerning certain sectors or categories of undertakings may make it feasible to adopt higher taxes for other undertakings, thus resulting in an overall improvement of environmental cost internalisation, and to create further incentives to improve on environmental protection. The Guidelines allow tax exemptions, under certain conditions, where a tax without reduction would lead to a substantial increase in production costs which cannot be passed on to customers without causing important sales reductions (the necessity test).
For its assessment of the measure, the Commission requested The Netherlands to supply relevant information, in particular regarding the necessity and proportionality of the aid.
The Commission found that the environmental tax without reduction would indeed lead to a substantial cost increase, but the Dutch authorities have not submitted conclusive evidence on the lack of possibility to pass on the cost increase. Furthermore, by fully exempting certain companies from the tax without requiring any counterpart in return, the measure would not comply with the requirements of the Environmental Aid Guidelines. As the measure has not yet been implemented, it is not necessary to order the repayment of aid.
The non-confidential version of the decision will be made available under the case number C 5/2009 in the State Aid Register on the DG Competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News .