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European Commission - Press release

State aid: Commission concludes that majority of derogations from British Aggregates Levy are free of aid

Brussels, 27 March 2015

The European Commission has concluded that all but one of the exemptions, exclusions and tax reliefs from the aggregates levy introduced in the United Kingdom in 2002 are free of state aid. The British aggregates levy is a tax on aggregates, a material often used in construction, which aims to encourage the use of recycled aggregates and reduce environmental damage. It is levied on rock, sand or gravel on their first extraction as well as on processed products. Derogations apply to certain extraction processes and to materials with certain geological features.

In March 2012, the EU General Court annulled the Commission's first decision on the British aggregates levy. The Commission had concluded that all the exemptions, exclusions and tax reliefs from the aggregates levy were free of state aid. After the annulment of its first decision, the Commission reassessed the case in light of this ruling and concluded in July 2013 that some of the exemptions and reliefs from the aggregates levy involved no state aid, as they were not selective. At the same time, the Commission opened an in-depth investigation into the remaining exemptions.

The Commission has now found that only the exemption for shale and spoil for shale extraction are not justified. This is because shale is the only exempted material that is deliberately extracted to produce aggregates. Exempting shale and spoil for shale extraction from the aggregates levy therefore would not contribute to the environmental objective of the tax. As a result, the beneficiaries of the exemption for shale and spoil for shale have received an undue advantage that they now have to pay back.    

Commissioner Margrethe Vestager, in charge of competition policy, said: “We have made sure that exemptions from the British aggregate levy will benefit only those materials and extraction processes that contribute to an environmental objective. We want to maximise consumers' welfare and this is only possible if competition and environmental policy stay together".


In 2001, the UK authorities notified their plans for an aggregates levy to the Commission for state aid scrutiny. The aim of the levy was to maximise the use of recycled aggregate and other alternatives to freshly extracted aggregate, as well as to promote the efficient extraction and use of aggregates, with a view to reducing environmental damage. However, certain materials and production processes were exempted from paying the levy because they produce aggregate as a by-product, or because their products are able to replace other freshly extracted aggregates. In April 2002, the Commission found that the planned exemptions from the levy involved no state aid within the meaning of EU rules because they were justified by the logic of the tax.

In March 2012, the EU General Court annulled this decision, following an action brought by the British Aggregates Association (case T-210/02 RENV). The Commission then reassessed the case in light of this ruling, leading it to conclude in July 2013 that some of the exemptions involved no state aid and also to open an in-depth investigation into the remaining exemptions.

Based on submissions from the UK authorities and interested parties, the Commission's investigation focussed on whether shale, slate and clay were deliberately extracted for use as aggregates and whether exemptions for by-products from the extraction of shale, slate, china clay, ball clay and from industrial combustion or from metal smelting (industrial slag) were justified.

On the basis of the information received, the Commission found that only shale was deliberately extracted in certain quarries for commercial use as aggregates. The Commission therefore concluded that in this case, an exemption from the aggregates levy was not justified because it does not contribute to the environmental goal pursued by the levy. This includes shale that is a by-product of the new quarrying of any material subject to the levy and aggregates made from the spoil of shale deliberately extracted for commercial use as aggregate. Companies that have been exempted from paying the levy on these products have not helped reducing the environmental burden caused by the extraction. The tax exemption procured them an undue advantage, which they now need to pay back.

On the contrary, the Commission has decided that shale should not be considered commercially exploited as aggregate and is therefore excluded from recovery if it: (i) is a by-product of coal extraction, (ii) is used in ceramic processes, (iii) replaces clay, slag or other materials as a source of aluminosilicate in the manufacture of cement or (iv) can be demonstrably used for purposes other than aggregate.

Moreover, tax exemptions that remain below the then applicable De minimis threshold of € 200 000 over three years are outside the scope of the state aid rules and do not need to be recovered either. Indeed, state funding below this threshold is deemed to have no appreciable effect on competition and trade.

 The non-confidential version of today's decision will be made available under case number SA.34775 in the State Aid Register on the competition website once any confidentiality issues have been resolved. The electronic newsletter State Aid Weekly e-News lists the most recent decisions on state aid published in the Official Journal and on the website.


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