Brussels, 17 July 2013
State aid: Commission calls for recovery of tax benefits granted by Spain to certain Economic Interest Groupings (EIG) and their investors.
After an in-depth investigation, the European Commission has concluded that a Spanish scheme for the purchase of ships involving leasing and financing through tax relief is partly incompatible with EU rules on state aid. This scheme, which was set up in 2002, conferred a selective advantage on economic interest groupings and their investors over their competitors. The Commission was not notified of the scheme for the purpose of prior authorisation as required. Under European rules, the beneficiaries must now repay the aid to the Spanish state. In accordance with the principle of legal certainty, the Commission will not require the repayment of aid granted between the start of the scheme in 2002 and April 2007, when the Commission publicly declared a similar French scheme incompatible.
Commission Vice-President Joaquín Almunia, responsible for competition, said: 'Economic interest groupings and their investors have benefited unlawfully from tax advantages which they must now repay to the Spanish state. As regards the future, there is a non-selective tax scheme which was approved by the Commission in November 2012 and which can be used, among other things, to finance the shipbuilding industry. This scheme is fully compatible with the European rules and therefore provides investors with all the legal certainty they require. I hope that all parties will be able to use it as soon as possible.'
Further to a series of complaints lodged mainly by shipbuilding operators in other Member States, in June 2011 the Commission launched an in-depth investigation into the Spanish scheme for leasing and financing through tax relief (see IP/11/825). Under this scheme, a maritime transport company can purchase a ship via a complex contractual and financial structure involving an economic interest grouping, an investment vehicle – with tax transparency - held by investors wishing to reduce their basic taxable amount, rather than directly from a shipyard.
In practice, the economic interest grouping acts on behalf of the maritime transport company purchasing the ship, acquires it on a financial leasing basis and pays it off in the three to five years after work starts on its construction. The economic interest grouping then benefits from taxation exclusively on the basis of tonnage, which is a special scheme applicable under the European rules to maritime transport companies, and hands the ship over to the transport company without paying capital gains tax. The maritime transport company acquires the ship with a reduction ranging from 20% to 30% on the purchase price charged by the shipyard. However, as this reduction is awarded by the economic interest grouping, not by the state, the Commission takes the view that it does not constitute state aid to the maritime transport company.
The Commission investigation found that the scheme had bestowed an unfair competitive advantage on the members of the economic interest groupings set up for these operations. Spain must how recover the state aid granted to these companies, except for the aid deemed compatible with the single market. In the Commission's view, the reduction passed on to the maritime transport companies contributed to an extent to achieving the objectives of common interest set out in the Guidelines on state aid for shipping. To that extent alone, the aid is compatible with the single market. The Spanish authorities must now determine, in accordance with the Commission decision, the amounts of incompatible aid to be recovered from the economic interest groupings and their investors. The Commission decision does not allow the beneficiaries to pass on the repayment obligations to third parties (such as shipyards), even under existing contracts.
The Commission also takes the view that its 2001 Brittany Ferries decision (case N618/1998, and in particular recital 193) may have created legal uncertainty as to whether the Spanish scheme for leasing and financing through tax relief constituted aid. This uncertainty was cleared up with the publication, in April 2007, of the final decision in the investigation into the French scheme for fiscal economic interest groupings (case SA.16608) referred to in the 2001 decision. The Commission found that that scheme was incompatible with the single market (see IP/06/1852). As regards the Spanish scheme, the Commission therefore found that the incompatible aid awarded before April 2007 did not have to be recovered.
Article 108(3) of the Treaty on the Functioning of the European Union (TFEU) states that the Commission must be notified of state aid with a view to prior authorisation. If a Member State grants state aid in violation of this rule ('unlawful aid'), complaints may be lodged with the Commission or it may decide to investigate with a view to determining whether this aid is compatible with the state aid rules. If the Commission finds that the aid was paid in violation of these rules and distorted competition in the single market ('incompatible aid'), the Member State must recover it from the beneficiaries.
Member States can help maritime transport companies to remain competitive at international level, in line with the Guidelines on state aid for shipping, for instance by applying taxes to them based on fleet tonnage. To date, the Commission has authorised the tonnage tax arrangements of 16 Member States - for example, in 2002 it authorised the Spanish scheme following notification by the Spanish Government. As in other Member States, the Spanish tonnage tax scheme is optional and replaces the normal rules for calculating corporation tax for the companies and activities which are eligible.
In the context of the Spanish scheme for leasing and financing through tax relief, the Commission disputes the application to economic interest groupings of tonnage tax, which should apply only to eligible maritime transport companies within the meaning of the Guidelines on state aid for shipping and not to investment vehicles or ship lessors. In short, the economic interest groupings and their investors did benefit from incompatible aid which distorted competition on the EU single market.
The decision adopted today does not call into question the Spanish tonnage tax scheme for maritime companies as approved by the Commission in 2002. Spanish shipyards will continue to benefit from aid granted under schemes approved by the Commission, such as aid for innovation, regional shipbuilding aid and export credits.
On 20 November 2012, the Commission approved a new Spanish scheme for the early depreciation of assets acquired via finance leases (see IP/12/1241).
The non-confidential version of today's decision will be made available under case number SA.21233 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.