# C_2006007EN.01000701.xml

| 12.1.2006 | EN | Official Journal of the European Union | C 7/7 |
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Authorisation of State aid pursuant to Article 61 of the EEA Agreement and Article 1(3) in Part I of Protocol 3 to the Surveillance and Court Agreement

EFTA Surveillance Authority decision to propose appropriate measures in relation to a scheme on tax and fee concessions in favour of Norðurál hf. The proposal has been accepted by Iceland.

(2006/C 7/07)

Date of adoption:

EFTA State: Iceland

Aid No: Case 55362

Title: Tax and fee concessions in favour of the aluminium smelter Norðurál hf. at Grundartangi, Iceland

Acceptance of the appropriate measures by the EFTA State: By letter dated 15 July 2005 the Icelandic authorities accepted the appropriate measures proposed by the Authority.

Objective: The objective of the aid granted by means of scheme on tax and fee concessions is to enhance the attractivenes of the Vesturland region for investment purposes.

Legal basis: The legal instruments of

Budget/Duration: EUR 88,3 million and 10,7 % aid intensity. The scheme has been permitted to be valid until 31 October 2018.

Form of the aid: Tax and fee concessions

Decision:

| 1. | The EFTA Surveillance Authority proposes to the Icelandic authorities the following appropriate measures:
(a)
The authorities shall take any legislative, administrative and other measures necessary to ensure that the following aid measures in the Grundartangi Decision, considered above to constitute an aid scheme, do not involve incompatible operating aid:
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The right to allocate amounts into a special account pursuant to Article 7.1 of the Investment Agreement and Article 6.1 of the Grundartangi Act; —
the exemption from net worth tax pursuant to Article 7.2 of the Investment Agreement and Article 6.2 of the Grundartangi Act; —
the exemption from Industrial charge and Market charge pursuant to Article 7.3 of the Investment Agreement and Article 6.3 of the Grundartangi Act; —
the reduction of stamp duties pursuant to Article 11 of the Investment Agreement and Article 6.7 of the Grundartangi Act; and —
the special calculation of municipal property tax pursuant to Article 8 of the Investment Agreement and Article 6.6 of the Grundartangi Act. Measures must be taken to ensure that aid granted on the basis of the abovementioned aid measures under the aid scheme does not exceed the ceiling of EUR 88,3 million in 2003 prices, representing the total amount of aid which may be granted to Norðurál hf. for all three investments, as well as that the aid intensity of 10,7 % — which forms an integral part of the absolute ceiling for the grant of State aid to Norðurál hf. — is not exceeded.
The Icelandic authorities must calculate the aid incurred each year on the basis of the discounted value applying the annual reference rates.
The aid scheme can in no circumstances be applied beyond the date of 31 October 2018 irrespectively of whether the total amount of aid under the above stated ceiling has been granted. Measures must therefore be taken in order to ensure that the aid scheme will expire on 31 October 2018. (b)
The authorities shall take any legislative, administrative and other measures necessary to abolish incompatible aid resulting from the exemption from dividends withholding tax provided for in Article 7.1 of the Investment Agreement and Article 6.1 of the Grundartangi Act and must therefore abolish this provision in its entirety. | (a) | The authorities shall take any legislative, administrative and other measures necessary to ensure that the following aid measures in the Grundartangi Decision, considered above to constitute an aid scheme, do not involve incompatible operating aid:
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The right to allocate amounts into a special account pursuant to Article 7.1 of the Investment Agreement and Article 6.1 of the Grundartangi Act; —
the exemption from net worth tax pursuant to Article 7.2 of the Investment Agreement and Article 6.2 of the Grundartangi Act; —
the exemption from Industrial charge and Market charge pursuant to Article 7.3 of the Investment Agreement and Article 6.3 of the Grundartangi Act; —
the reduction of stamp duties pursuant to Article 11 of the Investment Agreement and Article 6.7 of the Grundartangi Act; and —
the special calculation of municipal property tax pursuant to Article 8 of the Investment Agreement and Article 6.6 of the Grundartangi Act. Measures must be taken to ensure that aid granted on the basis of the abovementioned aid measures under the aid scheme does not exceed the ceiling of EUR 88,3 million in 2003 prices, representing the total amount of aid which may be granted to Norðurál hf. for all three investments, as well as that the aid intensity of 10,7 % — which forms an integral part of the absolute ceiling for the grant of State aid to Norðurál hf. — is not exceeded.
The Icelandic authorities must calculate the aid incurred each year on the basis of the discounted value applying the annual reference rates.
The aid scheme can in no circumstances be applied beyond the date of 31 October 2018 irrespectively of whether the total amount of aid under the above stated ceiling has been granted. Measures must therefore be taken in order to ensure that the aid scheme will expire on 31 October 2018. | — | The right to allocate amounts into a special account pursuant to Article 7.1 of the Investment Agreement and Article 6.1 of the Grundartangi Act; | — | the exemption from net worth tax pursuant to Article 7.2 of the Investment Agreement and Article 6.2 of the Grundartangi Act; | — | the exemption from Industrial charge and Market charge pursuant to Article 7.3 of the Investment Agreement and Article 6.3 of the Grundartangi Act; | — | the reduction of stamp duties pursuant to Article 11 of the Investment Agreement and Article 6.7 of the Grundartangi Act; and | — | the special calculation of municipal property tax pursuant to Article 8 of the Investment Agreement and Article 6.6 of the Grundartangi Act. | (b) | The authorities shall take any legislative, administrative and other measures necessary to abolish incompatible aid resulting from the exemption from dividends withholding tax provided for in Article 7.1 of the Investment Agreement and Article 6.1 of the Grundartangi Act and must therefore abolish this provision in its entirety. |
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| (a) | The authorities shall take any legislative, administrative and other measures necessary to ensure that the following aid measures in the Grundartangi Decision, considered above to constitute an aid scheme, do not involve incompatible operating aid:
—
The right to allocate amounts into a special account pursuant to Article 7.1 of the Investment Agreement and Article 6.1 of the Grundartangi Act; —
the exemption from net worth tax pursuant to Article 7.2 of the Investment Agreement and Article 6.2 of the Grundartangi Act; —
the exemption from Industrial charge and Market charge pursuant to Article 7.3 of the Investment Agreement and Article 6.3 of the Grundartangi Act; —
the reduction of stamp duties pursuant to Article 11 of the Investment Agreement and Article 6.7 of the Grundartangi Act; and —
the special calculation of municipal property tax pursuant to Article 8 of the Investment Agreement and Article 6.6 of the Grundartangi Act. Measures must be taken to ensure that aid granted on the basis of the abovementioned aid measures under the aid scheme does not exceed the ceiling of EUR 88,3 million in 2003 prices, representing the total amount of aid which may be granted to Norðurál hf. for all three investments, as well as that the aid intensity of 10,7 % — which forms an integral part of the absolute ceiling for the grant of State aid to Norðurál hf. — is not exceeded.
The Icelandic authorities must calculate the aid incurred each year on the basis of the discounted value applying the annual reference rates.
The aid scheme can in no circumstances be applied beyond the date of 31 October 2018 irrespectively of whether the total amount of aid under the above stated ceiling has been granted. Measures must therefore be taken in order to ensure that the aid scheme will expire on 31 October 2018. | — | The right to allocate amounts into a special account pursuant to Article 7.1 of the Investment Agreement and Article 6.1 of the Grundartangi Act; | — | the exemption from net worth tax pursuant to Article 7.2 of the Investment Agreement and Article 6.2 of the Grundartangi Act; | — | the exemption from Industrial charge and Market charge pursuant to Article 7.3 of the Investment Agreement and Article 6.3 of the Grundartangi Act; | — | the reduction of stamp duties pursuant to Article 11 of the Investment Agreement and Article 6.7 of the Grundartangi Act; and | — | the special calculation of municipal property tax pursuant to Article 8 of the Investment Agreement and Article 6.6 of the Grundartangi Act. | | | | |
| — | The right to allocate amounts into a special account pursuant to Article 7.1 of the Investment Agreement and Article 6.1 of the Grundartangi Act; | | | | | | | | | | | | | | |
| — | the exemption from net worth tax pursuant to Article 7.2 of the Investment Agreement and Article 6.2 of the Grundartangi Act; | | | | | | | | | | | | | | |
| — | the exemption from Industrial charge and Market charge pursuant to Article 7.3 of the Investment Agreement and Article 6.3 of the Grundartangi Act; | | | | | | | | | | | | | | |
| — | the reduction of stamp duties pursuant to Article 11 of the Investment Agreement and Article 6.7 of the Grundartangi Act; and | | | | | | | | | | | | | | |
| — | the special calculation of municipal property tax pursuant to Article 8 of the Investment Agreement and Article 6.6 of the Grundartangi Act. | | | | | | | | | | | | | | |
| (b) | The authorities shall take any legislative, administrative and other measures necessary to abolish incompatible aid resulting from the exemption from dividends withholding tax provided for in Article 7.1 of the Investment Agreement and Article 6.1 of the Grundartangi Act and must therefore abolish this provision in its entirety. | | | | | | | | | | | | | | |

| 2. | The relevant measures to comply with the appropriate measures must be effective within three months of the date of the adoption of the present decision, unless the Authority agrees to a later date should that be considered objectively necessary and justified by the Authority.
The Icelandic authorities shall communicate to the Authority the relevant measures it will take to comply with the appropriate measures as soon as possible and in any event not later than six weeks from receipt of this proposal |
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| 3. | Iceland is requested to submit simplified annual reports regarding the implementation of the aid in accordance with Article 21 in Part II of Protocol 3 to the Surveillance and Court Agreement in conjunction with Articles 5 and 6 of the Authority's decision 195/04/COL. |
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| 4. | The Authority asks the Icelandic authorities to agree to this proposal for appropriate measures, pursuant to Article 19(1) in Part II of Protocol 3 to the Surveillance and Court Agreement, and to provide the answer within six weeks from receipt of this proposal. |
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The authentic text of the decision, from which all confidential information has been removed, can be found at:

http://www.eftasurv.int/fieldsofwork/fieldstateaid/stateaidregistry

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