EC argues that exemption for Belgian and French ports constitutes state aid | Deloitte

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EC argues that exemption for Belgian and French ports constitutes state aid

The European Commission argues that Belgium and France should cancel the subjective corporate tax exemption for sea and inland waterway ports before the end of this year.

22 August 2017

Tax exemption for sea and inland waterway ports

Belgium and France apply a subjective corporate tax exemption for domestic seas and inland waterway ports, permitting port operators to refrain from paying tax on the profits they realise. This deviates from the regular corporate tax regime that subjects profits realized by economic activities to corporate tax. The European Commission qualifies this benefit for Belgian and French port companies as unlawful state aid.


State aid

Since the Belgian and French ports are exempt from corporate tax they are favoured vis-à-vis other companies. This constitutes a selective benefit for port companies, which is prohibited by European state aid rules. Since there is no justification for this differentiated - beneficial - tax treatment, e.g., a clear general purpose objective such as promoting mobility or multimodal transport, the European Commission argues that the exemption cannot be maintained in both countries. Hence, Belgium and France should amend their tax laws before 31 December 2017, to subject inland waterway ports to the regular corporate tax regime as of 2018. Given that the Belgian and French exemption already existed before establishment of the EU, prior year benefits do not have to be reclaimed.


Dutch ports

In January 2016, the European Commission already ruled that the Dutch corporate tax exemption for Dutch port companies also constitutes state aid. The Netherlands thus abolished this exemption for financial years starting on or after 1 January 2017. During that debate, the Netherlands indicated that failure to take a similar decision in respect of the Belgian and French exemptions would distort competition within the internal market. The European Commission decision discussed here solves this issue.


Support for port companies

Though the subjective exemptions for port companies have been qualified as state aid within the EU, the European Commission has eased other rules to promote the realisation of objectives in the transport sector and encourage investments in infrastructure. For instance, the rules for government investments in ports have been simplified, enabling Member States to invest up to EUR 150 million in sea ports and up to EUR 50 million in inland waterway ports - in principle without a prior audit by the European Commission. The same easing applies to investments in regional airports that handle up to 3 million passengers annually.


Source: Press release of the European Commission of 27 July 2017 (IP/17/2181), press release of the European Commission of 17 May 2017 (IP/17/1341), and MEMO/17/1342

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