According to a press release of 8 January 2019, the European Commission has requested Spain and Italy to ensure that their taxation of harbours comply with the state aid rules. Consequently, harbours in Spain and Italy must pay corporate tax on the same terms as other businesses.

Harbours in Spain and Italy are subject to substantial tax exemptions according to national legislation. In April 2018, the European Commission informed the two countries that it was concerned about the countries’ taxation of harbours. It is the European Commission's preliminary assessment that the tax exemptions provide selective advantages to the harbours which may be contrary to the EU rules on state aid. Consequently, the European Commission is now requesting Spain and Italy to bring the taxation of harbours in accordance with the state aid rules.

State aid and tax exceptions

Tax exemptions for harbours in Spain and Italy existed prior to their adoption of the EU Treaty and are therefore considered so-called existing aid. This means that any aid granted cannot be claimed repaid even if it is contrary to the EU state aid rules. Instead, the European Commission may propose how to bring the taxation of harbours in accordance with the state aid rules. This is what the European Commission has now done with two decisions which request the two countries to change their harbour taxation rules. If Spain and Italy do not comply with these decisions, the European Commission may start a formal investigation. If the European Commission concludes that the tax exemptions constitute state aid, the matter may result in a demand to end the tax exemption.

Many cases on state aid and harbour taxation

This case is one of many cases on state aid to harbours in Member States. In January 2016, the European Commission demanded that the Netherlands abolished the tax exemption for six publicly owned harbours. In July 2017, the European Commission demanded that Belgium and France adapted their legislation to ensure that all harbours were covered by the same corporate tax rules as other businesses. The tax exemption was considered state aid.

State aid and harbours

The rules on state aid apply only if the recipient is engaged in economic activities. Most industrial harbours engage in economic and non-economic activities. The commercial operation of harbour infrastructure, terminals and clean-up of channels are examples of economic activities. Whereas for instance maritime control and safety are typically considered non-financial activities.

State aid to economic activities or state aid which is not ear-marked for non-economic activities may be covered by the EU state aid rules. If this is the case, the aid must be granted in accordance with the state aid rules. There are good possibilities for exempting state aid to harbours by complying with the procedure of the General Block Exemption Regulation or by granting the aid as de minimis aid.

Contacts

Andreas Christensen

Partner (H)

Rikke Søgaard Berth

Partner

Marie Løvbjerg

Director, Attorney