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European Commission - press release
State aid: the European Commission opens an investigation into the reduction of, or exemption from, a Danish tax on the protection of drinking water
Brussels, 21 March 2012 - The European Commission has decided to open a formal procedure under EU rules to investigate state aid for the reduction of, or exemption from, the Danish tax on the protection of drinking water in the farming sector. The Commission doubts whether this measure is compatible with EU law. The opening of a formal investigation authorises the Commission to examine this measure in a more detailed manner and provides interested parties with the opportunity to submit comments. It does not prejudice the outcome of the procedure.
The tax in question was introduced in 2009 to finance the management of water resources in Denmark and has to be collected until the end of 2017. It is payable in full by the owners of public water supply systems. However, users who hold a water-extraction permit for their own well (which is generally the case in the farming sector) are granted a reduction, or are fully exempt, if the permit is for less than 6 000 m³ a year.
At this stage, the Commission takes the view that the reduction or exemption is a measure comprising an element of state aid as it seems to be selective and not justified in terms of the logic of the Danish tax system. What is more, the aid seems at this stage to be difficult to justify in the light of the relevant competition rules.
The non-confidential version of the decision will be made available under the case number 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.