----

STATE AID — ITALY

Aid C 12/04 (ex NN 165/03) — Fiscal incentives in favour of companies taking part in trade fairs abroad

Invitation to submit comments pursuant to Article 88(2) of the EC Treaty

(2004/C 221/02)

(Text with EEA relevance)

By means of the letter dated 16 March 2004, reproduced in the authentic language on the pages following this summary, the Commission notified Italy of its decision to initiate the procedure laid down in Article 88(2) of the EC Treaty in respect of the above measures.

Interested parties may submit their comments on the measures in respect of which the Commission is initiating the procedure within one month of the date of publication of this summary and the following letter, to:

These comments will be communicated to Italy. Confidential treatment of the identity of the interested party submitting the comments may be requested in writing, stating the reasons for the request.

SUMMARY

Description of the measure

On 2 October 2003, Italy enacted the Law Decree of 30 September 2003, No 269 (DL 269/2003), which entered into force on its publication in the Official Journal of the Italian Republic No 230 of 2 October 2003.

Article 1(1)(b) of DL 269/2003 provides that any undertakings subject to corporate tax in Italy may exclude from their taxable income the expenses directly incurred with respect to their participation in trade fairs abroad. The provision applies to the exclusive purpose of determining the taxable income in the first fiscal year following the one upon which DL 269/2003 entered into force (2 October 2003). The exclusion is provided in addition to the ordinary tax deduction for these costs imputed in the income statement of the beneficiary as provided by Article 108(2) of the Italian Income Tax Code (TUIR) with respect to advertising and promotion, exposition, and agency costs.

Assessment of the measure

According to the Commission, the above advantage seems to fulfil all the relevant conditions of Article 87(1) of the EC Treaty.

The Commission considers that the measure seems to afford to the beneficiaries an economic advantage, consisting in the reduction of the taxable income of the company taking part in trade fairs abroad, for an amount corresponding to the costs incurred with respect to the participation in these fairs. A company incurring such costs reports in its accounts a corresponding negative adjustment, having the effect of a lower effective corporate tax burden being applied in 2004.

The advantage seems selective because it is restricted to companies carrying on certain investments which are exclusively concerned with the participation in trade fairs abroad, and excludes other competitors not participating in these fairs (e.g. companies participating in local fairs). The Commission also notes that the advantage seems to be attributable to the State as it consists in the foregoing of tax revenues by the Italian Treasury.

Finally, the Commission considers that the measure seems to distort competition and trade between Member States, as both the objective of the scheme and its effects are aimed at improving the trading conditions of the beneficiaries in exporting their goods to foreign markets.

The Commission has doubts as to whether the aid granted in favour of undertakings taking part in trade fairs abroad is compatible with the single market. The Italian authorities have not presented any arguments to indicate that any of the exceptions provided for in Article 87(2) and (3) of the EC Treaty, under which State aid may be considered compatible with the common market, apply in the present case.

The tax advantages granted by the regime do not seem to be related to specific investments, including job creation, eligible to receive aid under the existing block exemption regulations framework, nor under other Community guidelines, but seem to simply constitute a reduction of charges that should normally be borne by the beneficiaries in the course of their business and must therefore be considered as operating aid, which can only be considered compatible with the single market if they facilitate the development of certain activities or of certain economic areas and are limited in time, digressive and proportionate to what is necessary to remedy to specific economic handicaps. The above requirements do not appear to be fulfilled in this case.

Furthermore, the scheme seems to be specifically aimed at improving the trading conditions of its beneficiaries against foreign competitors, including those established in other Member States. Thus, the measure could conflict with single market principles as it cannot be excluded that it results in a remission of internal taxes in respect of exports to other Member States contrary to Article 92 of the Treaty, and for this reason it cannot be considered to be compatible with the single market.

Considering its doubts on the compatibility of the aid, the Commission proposes to initiate the formal investigation procedure laid down in Article 88(2) of the EC Treaty.

In accordance with Article 14 of Council Regulation (EC) No 659/1999, all unlawful aid can be subject to recovery from the recipient.

TEXT OF LETTER

‘La Commissione desidera informare l'Italia che, dopo aver esaminato le informazioni fornite dalle Vostre autorità sulle misure succitate, ha deciso di avviare il procedimento di cui all'articolo 88, paragrafo 2 del trattato CE.

PROCEDIMENTO

DESCRIZIONE DETTAGLIATA DELLA MISURA

VALUTAZIONE DELLA MISURA

Aiuti di Stato ai sensi dell'articolo 87, paragrafo 1 del trattato CE

Vantaggio economico

Favorire talune imprese o attività economiche

Presenza di risorse statali

Distorsione della concorrenza ed incidenza sugli scambi tra gli Stati membri

Compatibilità

CONCLUSIONE

----

(1)  Regolamento (CE) n. 659/1999 del Consiglio del 22 marzo 1999 recante modalità di applicazione dell'articolo 93 del trattato CE, GU L83 del 27.3.1999, pag. 1.

(2)  Cause riunite T-92/00 e T-103/00, Território Histórico de Álava - Diputación Foral de Alava e a. / Commissione, Racc. 2002, pag. II-1385.

(3)  Causa T-214/95 Het Vlaamse Gewest / Commissione, Racc. 1998, pag. II-717.

(4)  Regolamento (CE) n. 69/2001 della Commissione, del 12 gennaio 2001, relativo all'applicazione degli articoli 87 e 88 del trattato CE agli aiuti d'importanza minore (‘de minimis’), GU L 10 del 13.1.2001, pag. 1.

(5)  Cfr. sezione 1 della comunicazione della Commissione agli Stati membri, a norma dell'articolo 93, paragrafo 1 del trattato CE, sull'applicazione degli articoli 92 e 93 del trattato all'assicurazione del credito all'esportazione a breve termine, GU C 281 del 17.9.1997, pag. 4.

(6)  Causa C-156/98, Germania / Commissione, Racc. 2000, pag. I-6857.

----