# CE2004084EN.01029401.xml

| 3.4.2004 | EN | Official Journal of the European Union | CE 84/294 |
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3.4.2004

EN

Official Journal of the European Union

CE 84/294

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(2004/C 84 E/0341)

WRITTEN QUESTION E-0006/04

by Sebastiano Musumeci (UEN) to the Commission

(16 January 2004)

Subject:   Granting of favourable tax status to Sicily

Subject:

One of the European Union's main objectives, written into Article 2 of the EU Treaty, is to promote a high level of employment.

Ireland and Wales have been granted favourable tax regimes.

As a result of these significant tax concessions, Ireland, and to a lesser extent Wales, have managed to raise per capita incomes significantly and bring the level of unemployment down substantially.

Sicily has similar characteristics to Ireland — the region is lagging behind its development and it is disadvantaged by virtue of being an island with a population of approximately five million.

Sicily has the potential for vast economic growth but this growth is being curbed partly by the legal and fiscal restrictions imposed by the Community.

Will the European Commission grant Sicily favourable tax status as this would:

| 1. | enable the island to attract more foreign investment, generating greater development potential and, with it, employment; |
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1.

enable the island to attract more foreign investment, generating greater development potential and, with it, employment;

| 2. | greatly benefit Sicilian firms without breaching Community competition rules; |
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2.

greatly benefit Sicilian firms without breaching Community competition rules;

| 3. | result in less revenue for Sicily's budget but not affect central government revenue, with the lower revenue in Sicily being offset by greater prosperity. |
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3.

result in less revenue for Sicily's budget but not affect central government revenue, with the lower revenue in Sicily being offset by greater prosperity.

Answer given by Mr Monti on behalf of the Commission

(9 March 2004)

(9 March 2004)

The Commission would recall to mind that the area of direct taxation falls within the competence of Member States provided that they respect the principles laid down in the EC Treaty, whilst the area of indirect taxes is harmonised at EU-level. However, should a tax measure confer a selective advantage to certain undertakings, sectors or regions, the EC Treaty rules on State aid may become applicable.

On the basis of the information provided, it is not clear to the Commission to which tax regimes the Honourable Member refers.

In general, the Commission is of the opinion that tax advantages limited to certain parts of a Member State territory constitute State aid. Such State aid can be approved under the conditions set out in the Commission guidelines on national regional aid (1). Aid that is not linked to investment, or the realisation of a specific project and which only foresees relieving undertakings from the costs they normally bear is, in principle, forbidden.

1

Member States have also made a commitment under the Code of Conduct for business taxation (2) not to introduce new harmful tax measures and therefore have an obligation to ensure that their tax measures are not contrary to this commitment.

2

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(1)  OJ C 74, 10.3.1998.

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(2)  Conclusions of the Ecofin Council meeting on 1 December 1997 concerning taxation policy.

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