State aid: Commission questions tax exemptions for Dutch public companies and takes steps to ensure fair competition between EU ports
Direct from the European Commission.
The European Commission has opened an in-depth investigation to verify whether exemptions from corporate tax granted under Dutch law to public companies, including port operators, are in line with EU state aid rules. The Commission has concerns that exempting certain companies merely because they are publicly owned may give them an advantage over their competitors. The opening of an in-depth investigation gives interested parties an opportunity to submit comments on the measures under assessment; it does not prejudge the outcome. Separately, the Commission is also gathering information on taxation of ports in other Member States. The Commission has informed France and Belgium of its concerns regarding the taxation of ports in these countries and has asked Germany to provide further information to ensure that there are no undue competitive advantages being granted to ports.
Commission Vice President in charge of competition policy Joaquín Almunia said: “Fair competition is crucial for all market players. The Commission therefore needs to verify that public companies, including port operators, in the Netherlands are not given more favourable tax treatment than their private competitors. Furthermore, there should be a level-playing field between ports in the EU, so it is important to make sure that state aid rules are being complied with in all Member States.”
In May 2013, following complaints, the Commission asked The Netherlands to abolish tax provisions exempting certain public companies from the obligation to pay corporate tax (see IP/13/395). The Commission has concerns that these provisions selectively favour public companies over their private competitors, in breach of EU state aid rules. Since then, the Dutch authorities have expressed their intention to subject public companies to corporate tax, but under their plans a number of exceptions would remain, notably for five Dutch seaports: Rotterdam, Amsterdam, Zeeland, Groningen and Moerdijk. Given that the Dutch authorities have not fully accepted the measures proposed by the Commission to ensure compliance with the state aid rules, the Commission has now opened an in-depth investigation.
Cross-border competition plays an important role in the ports sector and the Commission is committed to ensuring a level playing field in this important economic sector. In 2013, the Commission therefore has, on its own initiative, sent a questionnaire to all Member States to obtain a better overview of the corporate tax systems applicable to ports.
In its investigation, the Commission has become aware of possible corporate tax advantages for publicly and privately owned ports in several Member States. The Commission has found indications of sectorial tax exemptions for ports or of other sectorial advantages such as reduced tax rates. In certain Member States, ports are not subject to corporate tax but to an alternative tax regime that might be more favourable. In other Member States, ports do not actually pay any corporate taxes because they are loss-making. This raises questions about whether the public financing of those ports, for example the recurrent compensation of their losses, respects EU state aid rules.
Today, the Commission has sent letters to Belgium and France as first steps to ensure that ports in these countries do not benefit from unjustified corporate tax advantages. The letters, sent as part of the cooperation procedure applicable to existing aid, outline the Commission’s concerns and give Belgium and France an opportunity to respond. In Germany, ports appear to be subject to corporate tax but the Commission has asked for further information regarding certain ports to ensure they do not receive undue competitive advantages. The Commission is also continuing its investigation into the functioning and taxation of ports in other Member States and will take the necessary steps to ensure fair competition between all ports in the EU.
Under the Dutch Corporate Tax Law, revenues stemming from economic activities carried out by public bodies – either as part of the public administration or in the form of publicly owned companies – are, in principle, exempted from corporate tax. There are a number of exceptions from this exemption: certain economic activities (like farming or mining) and certain publicly owned companies (like Schiphol airport in Amsterdam or the National Lottery) are subject to corporate tax. Nevertheless, there are still economic activities carried out by public bodies and many publicly owned companies that remain exempted. These companies compete directly with private players in The Netherlands and in the EU who do not benefit from the same advantage.
The exemption from corporate tax for Dutch public companies dates back to 1956, before The Netherlands’ accession to the EU. The measure therefore constitutes existing aid and its assessment is subject to a specific cooperation procedure between The Netherlands and the Commission. When existing aid seems to be in breach of EU state aid rules, the Commission proposes measures to the Member State. If the Member State does not accept the proposal, the Commission may open an in-depth investigation to verify the compatibility of the existing aid and, if it is not compatible with EU state aid rules, may require the Member State to put an end to existing aid that distorts competition in the Single Market.
The non-confidential version of the decision will be made available under the case number SA.25338 in theState Aid Register on the 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.