# Official Journal L 332/2017

| | ISSN 1977-0677 |
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| Official Journal
  of the European Union | L 332 |
| | |
| English edition | Legislation | Volume 6014 December 2017 |

ISSN 1977-0677

Official Journal

of the European Union

L 332

English edition

Legislation

Volume 6014 December 2017

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| Contents | | II   Non-legislative acts | page |
| --- | --- | --- | --- |
| | | DECISIONS |
| | * | Commission Decision (EU) 2017/2115 of 27 July 2017 on aid scheme SA.38393 (2016/C, ex 2015/E) implemented by Belgium — Taxation of ports in Belgium
  (notified under document C(2017) 5174)

   (
  1
  ) | 1 |
| | * | Commission Decision (EU) 2017/2116 of 27 July 2017 on aid scheme SA.38398 (2016/C, ex 2015/E) implemented by France — Taxation of ports in France
  (notified under document C(2017) 5176)

   (
  1
  ) | 24 |

Contents

II   Non-legislative acts

page

DECISIONS

*

Commission Decision (EU) 2017/2115 of 27 July 2017 on aid scheme SA.38393 (2016/C, ex 2015/E) implemented by Belgium — Taxation of ports in Belgium
  (notified under document C(2017) 5174)

   (
  1
  )

(notified under document C(2017) 5174)

1

1

*

Commission Decision (EU) 2017/2116 of 27 July 2017 on aid scheme SA.38398 (2016/C, ex 2015/E) implemented by France — Taxation of ports in France
  (notified under document C(2017) 5176)

   (
  1
  )

(notified under document C(2017) 5176)

1

24

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| | (1)   Text with EEA relevance. |

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(1)   Text with EEA relevance.

1

| EN | Acts whose titles are printed in light type are those relating to day-to-day management of agricultural matters, and are generally valid for a limited period.
  The titles of all other Acts are printed in bold type and preceded by an asterisk. |
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EN

Acts whose titles are printed in light type are those relating to day-to-day management of agricultural matters, and are generally valid for a limited period.

The titles of all other Acts are printed in bold type and preceded by an asterisk.

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II Non-legislative acts

DECISIONS

| 14.12.2017 | EN | Official Journal of the European Union | L 332/1 |
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14.12.2017

EN

Official Journal of the European Union

L 332/1

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COMMISSION DECISION (EU) 2017/2115

of 27 July 2017

on aid scheme SA.38393 (2016/C, ex 2015/E) implemented by Belgium — Taxation of ports in Belgium

(notified under document C(2017) 5174)

(Only the French and Dutch texts are authentic)

(Text with EEA relevance)

THE EUROPEAN COMMISSION,

Having regard to the Treaty on the Functioning of the European Union, and in particular the first subparagraph of Article 108(2) thereof,

Having regard to the Agreement on the European Economic Area, and in particular Article 62(1)(a) thereof,

Having called on interested parties to submit their comments pursuant to those articles (1) and having regard to their comments,

Whereas:

1.   PROCEDURE

PROCEDURE

1.1.   QUESTIONNAIRE ON THE FUNCTIONING AND TAXATION OF PORTS AND COOPERATION PROCEDURE

QUESTIONNAIRE ON THE FUNCTIONING AND TAXATION OF PORTS AND COOPERATION PROCEDURE

| (1) | On 3 July 2013, the Commission sent a questionnaire on the functioning and taxation of ports to all Member States to gain an overview of the state of play and clarify the situation of ports in the light of European Union State aid rules pursuant to Article 107 of the Treaty on the Functioning of the European Union (‘TFEU’). The Belgian authorities responded by letters dated 30 September and 9 October 2013. By letter dated 20 January 2014, the Commission requested additional information on the taxation rules applicable to ports. The Belgian authorities responded by letter dated 13 March 2014 and the Port of Brussels sent its observations in a letter received on 18 March 2014. |
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(1)

On 3 July 2013, the Commission sent a questionnaire on the functioning and taxation of ports to all Member States to gain an overview of the state of play and clarify the situation of ports in the light of European Union State aid rules pursuant to Article 107 of the Treaty on the Functioning of the European Union (‘TFEU’). The Belgian authorities responded by letters dated 30 September and 9 October 2013. By letter dated 20 January 2014, the Commission requested additional information on the taxation rules applicable to ports. The Belgian authorities responded by letter dated 13 March 2014 and the Port of Brussels sent its observations in a letter received on 18 March 2014.

| (2) | By letter dated 9 July 2014, the Commission informed Belgium, in accordance with Article 21 of Council Regulation (EU) 2015/1589 (2) (‘the Procedural Regulation’), of its preliminary assessment, according to which the corporate tax exemption provided for certain Belgian ports (‘the Belgian ports’) constituted State aid incompatible with the internal market and this aid constituted existing aid within the meaning of Article 1(b) of the Regulation. A meeting took place with the Belgian authorities on 23 September 2014. The Walloon Region and the Port of Brussels each presented their observations by letters dated 30 September 2014, whereas the Flemish Region communicated its comments by letter of 1 October 2014. By letter dated 1 June 2015, the Commission informed Belgium that it had taken note of all the arguments put forward by the latter and that it still consideredthat the corporate tax exemption for a series of ports constituted aid incompatible with the internal market, if and to the extent that these ports engaged in economic activities. An appeal (3) was lodged against this letter on 3 August 2015, and rejected as inadmissible by order of the General Court of 9 March 2016 (4). |
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(2)

By letter dated 9 July 2014, the Commission informed Belgium, in accordance with Article 21 of Council Regulation (EU) 2015/1589 (2) (‘the Procedural Regulation’), of its preliminary assessment, according to which the corporate tax exemption provided for certain Belgian ports (‘the Belgian ports’) constituted State aid incompatible with the internal market and this aid constituted existing aid within the meaning of Article 1(b) of the Regulation. A meeting took place with the Belgian authorities on 23 September 2014. The Walloon Region and the Port of Brussels each presented their observations by letters dated 30 September 2014, whereas the Flemish Region communicated its comments by letter of 1 October 2014. By letter dated 1 June 2015, the Commission informed Belgium that it had taken note of all the arguments put forward by the latter and that it still consideredthat the corporate tax exemption for a series of ports constituted aid incompatible with the internal market, if and to the extent that these ports engaged in economic activities. An appeal (3) was lodged against this letter on 3 August 2015, and rejected as inadmissible by order of the General Court of 9 March 2016 (4).

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1.2.   PROPOSAL FOR APPROPRIATE MEASURES BY THE COMMISSION AND RESPONSE BY THE BELGIAN AUTHORITIES

PROPOSAL FOR APPROPRIATE MEASURES BY THE COMMISSION AND RESPONSE BY THE BELGIAN AUTHORITIES

| (3) | By letter dated 21 January 2016, the Commission reiterated its position that the corporate tax exemption granted to ports constituted a State aid scheme incompatible with the Treaty and proposed to the Belgian authorities, asappropriate measures, in accordance with Article 108(1) TFEU and Article 22 of the Procedural Regulation, the abolition of the corporate tax exemption laid down for the Belgian ports, in so far as they engaged in economic activities. The Belgian authorities were requested to adapt the legislation within a period of 10 months from the date of the decision, with the amendment applying no later than to the income generated by economic activities from the start of the 2017 tax year. The Belgian authorities were requested to inform the Commission in writing of Belgium's unconditional and unequivocal acceptance of these appropriate measures, in their entirety, within 2 months of the date of receipt of the decision, pursuant to Article 23(1) of the Procedural Regulation. An appeal (5) was lodged against this proposal for appropriate measures on 18 March 2016, and rejected as inadmissible by order of the General Court of 27 October 2016 (6). |
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(3)

By letter dated 21 January 2016, the Commission reiterated its position that the corporate tax exemption granted to ports constituted a State aid scheme incompatible with the Treaty and proposed to the Belgian authorities, asappropriate measures, in accordance with Article 108(1) TFEU and Article 22 of the Procedural Regulation, the abolition of the corporate tax exemption laid down for the Belgian ports, in so far as they engaged in economic activities. The Belgian authorities were requested to adapt the legislation within a period of 10 months from the date of the decision, with the amendment applying no later than to the income generated by economic activities from the start of the 2017 tax year. The Belgian authorities were requested to inform the Commission in writing of Belgium's unconditional and unequivocal acceptance of these appropriate measures, in their entirety, within 2 months of the date of receipt of the decision, pursuant to Article 23(1) of the Procedural Regulation. An appeal (5) was lodged against this proposal for appropriate measures on 18 March 2016, and rejected as inadmissible by order of the General Court of 27 October 2016 (6).

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| (4) | By letter of 21 March 2016, the Belgian authorities forwarded comments on the proposed appropriate measures to the Commission. |
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(4)

By letter of 21 March 2016, the Belgian authorities forwarded comments on the proposed appropriate measures to the Commission.

1.3.   OPENING OF THE FORMAL INVESTIGATION PROCEDURE

OPENING OF THE FORMAL INVESTIGATION PROCEDURE

| (5) | By letter dated 8 July 2016, the Commission decided to initiate the procedure provided for in Article 108(2) TFEU, pursuant to Article 23(2) of the Procedural Regulation. |
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(5)

By letter dated 8 July 2016, the Commission decided to initiate the procedure provided for in Article 108(2) TFEU, pursuant to Article 23(2) of the Procedural Regulation.

| (6) | The Commission decision to initiate the procedure was published in the Official Journal of the European Union (7). The Commission invited interested parties to submit their comments on the measure. A meeting was organised on 24 August 2016 with representatives of certain Belgian ports concerned by the measure. |
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(6)

The Commission decision to initiate the procedure was published in the Official Journal of the European Union (7). The Commission invited interested parties to submit their comments on the measure. A meeting was organised on 24 August 2016 with representatives of certain Belgian ports concerned by the measure.

Official Journal of the European Union

7

| (7) | Belgium presented its comments by letters dated 9 September 2016 (Federal Ministry of Finance) and 16 September 2016 (Walloon Region and Walloon ports). |
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(7)

Belgium presented its comments by letters dated 9 September 2016 (Federal Ministry of Finance) and 16 September 2016 (Walloon Region and Walloon ports).

| (8) | The Commission received comments from the following interested parties: Sea Invest, user of the ports of Antwerp, Ghent and Zeebrugge (14 September 2016), the Port of Rotterdam, acting on behalf of five Dutch publicly owned seaports (16 September 2016), the Port of Brussels (16 September 2016), the Flemish Port Commission (Vlaamse Havencommissie) (19 September 2016) and, after an extension of the deadline to present comments, the ports of Antwerp and Zeebrugge (4 October 2016). |
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(8)

The Commission received comments from the following interested parties: Sea Invest, user of the ports of Antwerp, Ghent and Zeebrugge (14 September 2016), the Port of Rotterdam, acting on behalf of five Dutch publicly owned seaports (16 September 2016), the Port of Brussels (16 September 2016), the Flemish Port Commission (Vlaamse Havencommissie) (19 September 2016) and, after an extension of the deadline to present comments, the ports of Antwerp and Zeebrugge (4 October 2016).

Vlaamse Havencommissie

| (9) | The European Commission forwarded those comments to Belgium, which was given the opportunity to respond. It received comments from Belgium by letter of 14 November 2016. A meeting was organised between the Belgian authorities and the Commission on 19 December 2016, during which additional comments were communicated to the Commission. A further meeting was organised between the Belgian federal and regional authorities, certain beneficiaries of the measure and the Commission on 10 January 2017. |
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(9)

The European Commission forwarded those comments to Belgium, which was given the opportunity to respond. It received comments from Belgium by letter of 14 November 2016. A meeting was organised between the Belgian authorities and the Commission on 19 December 2016, during which additional comments were communicated to the Commission. A further meeting was organised between the Belgian federal and regional authorities, certain beneficiaries of the measure and the Commission on 10 January 2017.

2.   DESCRIPTION OF THE MEASURE AND ITS CONTEXT

DESCRIPTION OF THE MEASURE AND ITS CONTEXT

2.1.   OWNERSHIP AND MANAGEMENT OF PORTS IN BELGIUM

OWNERSHIP AND MANAGEMENT OF PORTS IN BELGIUM

| (10) | In Belgium, the land occupied by ports is part of public property (domaine public/openbaar domein). In the 1990s, the operation of the main Belgian ports was transferred to decentralised bodies. Some ports are operated by autonomous municipal port authorities (such as the ports of Ghent, Ostend and Antwerp), while others are operated by legal persons under public law (such as the autonomous ports of the Centre and West, Liège, Charleroi and Namur) or by a limited liability company under public law for the port of Zeebrugge. |
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(10)

In Belgium, the land occupied by ports is part of public property (domaine public/openbaar domein). In the 1990s, the operation of the main Belgian ports was transferred to decentralised bodies. Some ports are operated by autonomous municipal port authorities (such as the ports of Ghent, Ostend and Antwerp), while others are operated by legal persons under public law (such as the autonomous ports of the Centre and West, Liège, Charleroi and Namur) or by a limited liability company under public law for the port of Zeebrugge.

domaine public/openbaar domein

| (11) | The ports are operated by port authorities, which are public entities. |
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(11)

The ports are operated by port authorities, which are public entities.

2.2.   INCOME TAX RULES APPLICABLE TO PORTS

INCOME TAX RULES APPLICABLE TO PORTS

| (12) | In accordance with Article 1 of the Income Tax Code (Code des Impôts sur les Revenus) of 1992 (8) (‘CIR’), resident ‘companies’ are subject to income tax in the form of corporate tax (9). On the other hand, resident legal persons other than ‘companies’ are subject to income tax in the form of a tax on legal persons (10). Article 2 of the CIR defines a ‘company’ as ‘any company, association, establishment or body of any kind, duly constituted, which has legal personality and engages in a business or transactions of a profit-making nature’. |
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(12)

In accordance with Article 1 of the Income Tax Code (Code des Impôts sur les Revenus) of 1992 (8) (‘CIR’), resident ‘companies’ are subject to income tax in the form of corporate tax (9). On the other hand, resident legal persons other than ‘companies’ are subject to income tax in the form of a tax on legal persons (10). Article 2 of the CIR defines a ‘company’ as ‘any company, association, establishment or body of any kind, duly constituted, which has legal personality and engages in a business or transactions of a profit-making nature’.

Code des Impôts sur les Revenus

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| (13) | Article 180(2) of the CIR provides that a certain number of Belgian ports are not subject to corporate tax (11). Article 220(2) of the CIR provides that legal persons who are not subject to corporate tax pursuant to Article 180 of the CIR are subject to the tax on legal persons (12). The tax on legal persons is not charged on the total amount of income or profits, but only certain types of income. Thus, in accordance with Article 221 of the CIR, for legal persons that are subject to this tax, tax is levied only on the cadastral income of property located in Belgium and the income and proceeds from investment capital and movable assets (13). In addition, the rates applicable to the various types of income subject to the tax on legal persons usually correspond to the rates of property tax or withholding tax (14) and are generally lower than the rates applicable for corporate tax (33,99 %). |
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(13)

Article 180(2) of the CIR provides that a certain number of Belgian ports are not subject to corporate tax (11). Article 220(2) of the CIR provides that legal persons who are not subject to corporate tax pursuant to Article 180 of the CIR are subject to the tax on legal persons (12). The tax on legal persons is not charged on the total amount of income or profits, but only certain types of income. Thus, in accordance with Article 221 of the CIR, for legal persons that are subject to this tax, tax is levied only on the cadastral income of property located in Belgium and the income and proceeds from investment capital and movable assets (13). In addition, the rates applicable to the various types of income subject to the tax on legal persons usually correspond to the rates of property tax or withholding tax (14) and are generally lower than the rates applicable for corporate tax (33,99 %).

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3.   GROUNDS FOR INITIATING THE FORMAL INVESTIGATION PROCEDURE

GROUNDS FOR INITIATING THE FORMAL INVESTIGATION PROCEDURE

| (14) | In its letter of 8 July 2016, the Commission considered that the Belgian authorities had not accepted the timetable for the implementation of the appropriate measures indicated by the Commission in its letter of 21 January 2016 and that the Belgian Government apparently did not clearly accept even the principle of subjecting the ports to corporate tax or undertaking to abolish the tax exemption in favour of the Belgian ports. The Commission concluded from this that the Belgian authorities had not accepted the appropriate measures proposed by the Commission on 21 January 2016 unconditionally, unequivocally and in full. |
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(14)

In its letter of 8 July 2016, the Commission considered that the Belgian authorities had not accepted the timetable for the implementation of the appropriate measures indicated by the Commission in its letter of 21 January 2016 and that the Belgian Government apparently did not clearly accept even the principle of subjecting the ports to corporate tax or undertaking to abolish the tax exemption in favour of the Belgian ports. The Commission concluded from this that the Belgian authorities had not accepted the appropriate measures proposed by the Commission on 21 January 2016 unconditionally, unequivocally and in full.

| (15) | Since the Commission still considered that the corporate tax exemption in favour of Belgian ports, where they engaged in economic activities, constituted an existing State aid scheme and since it had doubts about the compatibility of this aid scheme with the internal market, it decided to initiate the procedure provided for in Article 108(2) TFEU, pursuant to Article 23(2) of the Procedural Regulation. |
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(15)

Since the Commission still considered that the corporate tax exemption in favour of Belgian ports, where they engaged in economic activities, constituted an existing State aid scheme and since it had doubts about the compatibility of this aid scheme with the internal market, it decided to initiate the procedure provided for in Article 108(2) TFEU, pursuant to Article 23(2) of the Procedural Regulation.

4.   COMMENTS RECEIVED AFTER THE INITIATION OF THE FORMAL INVESTIGATION PROCEDURE

COMMENTS RECEIVED AFTER THE INITIATION OF THE FORMAL INVESTIGATION PROCEDURE

4.1.   UNDERTAKINGS/ECONOMIC ACTIVITIES

UNDERTAKINGS/ECONOMIC ACTIVITIES

| (16) | The Belgian ports and Belgian authorities consider that ports are not ‘undertakings’ within the meaning of Article 107(1) TFEU, since their tasks, notably the administrative management of public and private property, are not of an economic nature. They stress that these tasks are of general interest and are imposed on or delegated to them by the public authorities, which are free to define the scope of non-economic services of general interest. They point out that the port authorities have special powers to carry out these tasks, are subject to the control of the authorities and do not have a profit-oriented objective, the surplus being reinvested in the port infrastructure and, in the case of some ports, paid to their shareholder municipality. |
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(16)

The Belgian ports and Belgian authorities consider that ports are not ‘undertakings’ within the meaning of Article 107(1) TFEU, since their tasks, notably the administrative management of public and private property, are not of an economic nature. They stress that these tasks are of general interest and are imposed on or delegated to them by the public authorities, which are free to define the scope of non-economic services of general interest. They point out that the port authorities have special powers to carry out these tasks, are subject to the control of the authorities and do not have a profit-oriented objective, the surplus being reinvested in the port infrastructure and, in the case of some ports, paid to their shareholder municipality.

| (17) | The ports of Antwerp and Zeebrugge and the Belgian authorities consider that the Court of Justice case-law on airports (case C-82/01 Aéroports de Paris (15)) is not applicable to ports, which are a different form of infrastructure. They point out in particular that the monopoly of the ports results from administrative decentralisation in favour of a public-law entity which is not profit-oriented, whereas the management of the airports is entrusted to private persons under the exclusive concession of an economic activity with transfer of the economic operational risk. They also consider that the legal dispute examined by the Court of Justice in the Aéroports de Paris case did not relate to the supply of ‘infrastructure services’, so the analogy with the provision of the port infrastructure by the Belgian authorities is inappropriate. |
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(17)

The ports of Antwerp and Zeebrugge and the Belgian authorities consider that the Court of Justice case-law on airports (case C-82/01 Aéroports de Paris (15)) is not applicable to ports, which are a different form of infrastructure. They point out in particular that the monopoly of the ports results from administrative decentralisation in favour of a public-law entity which is not profit-oriented, whereas the management of the airports is entrusted to private persons under the exclusive concession of an economic activity with transfer of the economic operational risk. They also consider that the legal dispute examined by the Court of Justice in the Aéroports de Paris case did not relate to the supply of ‘infrastructure services’, so the analogy with the provision of the port infrastructure by the Belgian authorities is inappropriate.

Aéroports de Paris

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Aéroports de Paris

| (18) | The majority of interested parties and the Belgian authorities dispute the economic nature of the activities mentioned by the Commission in the opening decision, in particular making the port infrastructure available to shipping and renting land and infrastructure to undertakings. They explain that the tariffs for land rental, infrastructure concessions and access to the port infrastructure (port charges) are public, non-discriminatory and fixed unilaterally in advance by the port authorities and are not determined by the interaction of supply and demand. They mention in particular a judgment by the Belgian Constitutional Court of 19 November 2015 (16) recognising that the port charges constitute ‘pure remuneration’, by third parties, for the intervention of the port authorities. They also refer to the Flemish Port Decree of 2 March 1999 on seaport policy and management (17) (‘Flemish Port Decree of 2 March 1999’), which provides that port charges must be set in ‘reasonable proportion’ to the value of the consideration received. Moreover, they point out that the concession fees are proportionally lower for the sites generating higher added value, are based on objective parameters (relating to the sites concerned) and reflect the intrinsic value generated by the service provided. Likewise, the Walloon Region and the Walloon ports consider that the payment of charges for the use of the infrastructure does not necessarily point to the economic nature of the port activities, since the fact that these charges do not cover the reconstitution of the capital invested indicates that the port activities are services of general interest. |
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(18)

The majority of interested parties and the Belgian authorities dispute the economic nature of the activities mentioned by the Commission in the opening decision, in particular making the port infrastructure available to shipping and renting land and infrastructure to undertakings. They explain that the tariffs for land rental, infrastructure concessions and access to the port infrastructure (port charges) are public, non-discriminatory and fixed unilaterally in advance by the port authorities and are not determined by the interaction of supply and demand. They mention in particular a judgment by the Belgian Constitutional Court of 19 November 2015 (16) recognising that the port charges constitute ‘pure remuneration’, by third parties, for the intervention of the port authorities. They also refer to the Flemish Port Decree of 2 March 1999 on seaport policy and management (17) (‘Flemish Port Decree of 2 March 1999’), which provides that port charges must be set in ‘reasonable proportion’ to the value of the consideration received. Moreover, they point out that the concession fees are proportionally lower for the sites generating higher added value, are based on objective parameters (relating to the sites concerned) and reflect the intrinsic value generated by the service provided. Likewise, the Walloon Region and the Walloon ports consider that the payment of charges for the use of the infrastructure does not necessarily point to the economic nature of the port activities, since the fact that these charges do not cover the reconstitution of the capital invested indicates that the port activities are services of general interest.

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| (19) | In their view, the principal economic activities which take place in the ports are carried out by concessionaires which take care of the handling (loading and unloading) of goods, while the port authorities have nothing at all to do with the commercial contracts concluded between concession-holding companies and shipowners. The ports are therefore not operated commercially by the port authorities but by the companies to which the infrastructure concession is granted and on which these companies must themselves construct the superstructures (cranes, warehouses) necessary for the handling services. |
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(19)

In their view, the principal economic activities which take place in the ports are carried out by concessionaires which take care of the handling (loading and unloading) of goods, while the port authorities have nothing at all to do with the commercial contracts concluded between concession-holding companies and shipowners. The ports are therefore not operated commercially by the port authorities but by the companies to which the infrastructure concession is granted and on which these companies must themselves construct the superstructures (cranes, warehouses) necessary for the handling services.

| (20) | They add that the port authorities must increasingly finance non-economic activities coming within the remit of the regions, and even activities unrelated to the operation of the port (18). They mention several Commission decisions and Court of Justice judgments which, in their view, establish that neither making available infrastructure open to all potential users on a fair and non-discriminatory basis, nor the management and operation of sites of a public authority with a view to the development of industrial and commercial activities for the private sector constitute economic activities. |
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(20)

They add that the port authorities must increasingly finance non-economic activities coming within the remit of the regions, and even activities unrelated to the operation of the port (18). They mention several Commission decisions and Court of Justice judgments which, in their view, establish that neither making available infrastructure open to all potential users on a fair and non-discriminatory basis, nor the management and operation of sites of a public authority with a view to the development of industrial and commercial activities for the private sector constitute economic activities.

18

| (21) | Finally, they consider that the economic activities of the ports, such as lifting (crane services) and towing, are entirely ancillary in nature. |
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(21)

Finally, they consider that the economic activities of the ports, such as lifting (crane services) and towing, are entirely ancillary in nature.

4.2.   ECONOMIC ADVANTAGE GRANTED THROUGH STATE RESOURCES

ECONOMIC ADVANTAGE GRANTED THROUGH STATE RESOURCES

| (22) | The Flemish Port Commission considers that, since the port authorities increasingly have to finance non-economic infrastructures coming within the remit of the regions, the corporate tax exemption does not constitute an advantage. |
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(22)

The Flemish Port Commission considers that, since the port authorities increasingly have to finance non-economic infrastructures coming within the remit of the regions, the corporate tax exemption does not constitute an advantage.

| (23) | The Port of Rotterdam points out that the ports of Antwerp, Zeebrugge and Ghent have a real tax rate below 1 % of accounting profit. |
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(23)

The Port of Rotterdam points out that the ports of Antwerp, Zeebrugge and Ghent have a real tax rate below 1 % of accounting profit.

| (24) | The Belgian authorities maintain that, since the ports pay the tax on legal persons, the condition that the advantage must be granted from State resources is not met. |
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(24)

The Belgian authorities maintain that, since the ports pay the tax on legal persons, the condition that the advantage must be granted from State resources is not met.

4.3.   SELECTIVITY

SELECTIVITY

| (25) | Most of the interested parties and the Belgian authorities consider that the reference system with regard to the taxation of legal persons is not corporate tax (as stated in the opening decision), but Article 1 of the CIR, which establishes two taxation systems in parallel for resident legal persons (corporate tax and tax on legal persons) according to the criteria defined in Article 2 of the CIR (activity of the legal person consisting, or not, in a ‘business’ or ‘operations of a profit-making nature’). They add that Article 180 of the CIR, which provides that the ports are not subject to corporate tax, merely clarifies and applies Article 1 of the CIR. Certain interested parties and the Belgian authorities also consider that the tax on legal persons is the reference system for the ports, which are not ‘companies’ within the meaning of Article 2 of the CIR, and that Article 180(2) of the CIR does not derogate from the general rules for the taxation of legal persons, but merely applies these general rules. They therefore maintain that, even if Article 180(2) were deleted, the ports would not necessarily be subject to corporate tax since the administration would have to examine their situation individually in the light of the general criteria of Articles 1 and 2 of the CIR and, since the ports are not ‘companies’ within the meaning of Article 2 of the CIR, they would not be subject to corporate tax. |
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(25)

Most of the interested parties and the Belgian authorities consider that the reference system with regard to the taxation of legal persons is not corporate tax (as stated in the opening decision), but Article 1 of the CIR, which establishes two taxation systems in parallel for resident legal persons (corporate tax and tax on legal persons) according to the criteria defined in Article 2 of the CIR (activity of the legal person consisting, or not, in a ‘business’ or ‘operations of a profit-making nature’). They add that Article 180 of the CIR, which provides that the ports are not subject to corporate tax, merely clarifies and applies Article 1 of the CIR. Certain interested parties and the Belgian authorities also consider that the tax on legal persons is the reference system for the ports, which are not ‘companies’ within the meaning of Article 2 of the CIR, and that Article 180(2) of the CIR does not derogate from the general rules for the taxation of legal persons, but merely applies these general rules. They therefore maintain that, even if Article 180(2) were deleted, the ports would not necessarily be subject to corporate tax since the administration would have to examine their situation individually in the light of the general criteria of Articles 1 and 2 of the CIR and, since the ports are not ‘companies’ within the meaning of Article 2 of the CIR, they would not be subject to corporate tax.

| (26) | The Walloon Region and the Walloon ports add that this duality (existence of two systems for the taxation of income: corporate tax and tax on legal persons) is essential and inherent in the income tax system and derives from the Belgian Constitution. Moreover, in their view, the Belgian Constitution does not require the legislator to subject certain activities to tax and, for the public administrations by definition (the State, communities, regions, provinces and municipalities), the public and private property assigned to a public service is exempt from taxation by virtue of a generally accepted principle of law. The Belgian authorities also point out that, according to the case-law of the national courts, public services, tasks and goods are not taxed unless expressly provided for by law. |
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(26)

The Walloon Region and the Walloon ports add that this duality (existence of two systems for the taxation of income: corporate tax and tax on legal persons) is essential and inherent in the income tax system and derives from the Belgian Constitution. Moreover, in their view, the Belgian Constitution does not require the legislator to subject certain activities to tax and, for the public administrations by definition (the State, communities, regions, provinces and municipalities), the public and private property assigned to a public service is exempt from taxation by virtue of a generally accepted principle of law. The Belgian authorities also point out that, according to the case-law of the national courts, public services, tasks and goods are not taxed unless expressly provided for by law.

| (27) | For the port authorities of Antwerp and Zeebrugge and the Belgian authorities, entities which, like the ports, do not distribute their profit but reinvest it or which pursue an objective beyond their own interests are subject to the tax on legal persons, which is in keeping with the logic of the system. |
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(27)

For the port authorities of Antwerp and Zeebrugge and the Belgian authorities, entities which, like the ports, do not distribute their profit but reinvest it or which pursue an objective beyond their own interests are subject to the tax on legal persons, which is in keeping with the logic of the system.

| (28) | They also maintain that they are in a different situation from that of other undertakings subject to corporate tax. Although enjoying a certain autonomy and notwithstanding the possible existence of economic activities, the port authorities are public authorities and carry out tasks of general interest, on a non-profit basis, in accordance with their statutes. They do not use industrial or commercial methods and their actions are not guided by short-term returns on investments. The concession fees and port charges do not always cover the costs they incur. They carry out public service tasks, the net cost of which would not be deductible from the corporate tax base pursuant to Article 49 of the CIR. If this net cost were subject to corporate tax, this would lead to discrimination in relation to other undertakings and to a reduction in the investment capacity of the ports. |
| --- | --- |

(28)

They also maintain that they are in a different situation from that of other undertakings subject to corporate tax. Although enjoying a certain autonomy and notwithstanding the possible existence of economic activities, the port authorities are public authorities and carry out tasks of general interest, on a non-profit basis, in accordance with their statutes. They do not use industrial or commercial methods and their actions are not guided by short-term returns on investments. The concession fees and port charges do not always cover the costs they incur. They carry out public service tasks, the net cost of which would not be deductible from the corporate tax base pursuant to Article 49 of the CIR. If this net cost were subject to corporate tax, this would lead to discrimination in relation to other undertakings and to a reduction in the investment capacity of the ports.

| (29) | The Belgian authorities point out that, in a judgment of 1 December 2016 (19), the Belgian Constitutional Court confirmed the choice of the legislator to exempt the ports from corporate tax. |
| --- | --- |

(29)

The Belgian authorities point out that, in a judgment of 1 December 2016 (19), the Belgian Constitutional Court confirmed the choice of the legislator to exempt the ports from corporate tax.

19

4.4.   DISTORTION OF COMPETITION AND EFFECT ON TRADE

DISTORTION OF COMPETITION AND EFFECT ON TRADE

| (30) | The Flemish Port Commission maintains that, in other Member States, and in particular the Netherlands, the same port activities are financed by the public authorities, so the conditions of competition are not distorted. |
| --- | --- |

(30)

The Flemish Port Commission maintains that, in other Member States, and in particular the Netherlands, the same port activities are financed by the public authorities, so the conditions of competition are not distorted.

| (31) | The port authorities of Antwerp and Zeebrugge, referring to paragraph 188 of the Commission Notice on the notion of State aid (20) (‘the Notice of 19 July 2016’), explain that each port has a legal monopoly over its port area, with this monopoly excluding not only ‘competition on the market, but also for the market’. They conclude from this that the measure does not introduce any distortion of competition. They also mention an opinion by the Dutch competition authority (21), according to which the Port of Rotterdam is not in competition with the operators of other ports since the port charges represent only a limited fraction of the transport costs of the shipowners, so that increasing or decreasing these tariffs would have no impact on port traffic. |
| --- | --- |

(31)

The port authorities of Antwerp and Zeebrugge, referring to paragraph 188 of the Commission Notice on the notion of State aid (20) (‘the Notice of 19 July 2016’), explain that each port has a legal monopoly over its port area, with this monopoly excluding not only ‘competition on the market, but also for the market’. They conclude from this that the measure does not introduce any distortion of competition. They also mention an opinion by the Dutch competition authority (21), according to which the Port of Rotterdam is not in competition with the operators of other ports since the port charges represent only a limited fraction of the transport costs of the shipowners, so that increasing or decreasing these tariffs would have no impact on port traffic.

20

21

| (32) | They indicate that, according to the Notice of 19 July 2016, in a network infrastructure different elements of the network complement each other, instead of competing with one another (paragraph 211 and footnote 311), which rules out a distortion of competition. They point out that, in this Notice, the Commission applies this principle to the construction of railway infrastructure (paragraph 219) and the construction of road infrastructure, including toll-roads (paragraph 220), but they consider that it also applies to ports. |
| --- | --- |

(32)

They indicate that, according to the Notice of 19 July 2016, in a network infrastructure different elements of the network complement each other, instead of competing with one another (paragraph 211 and footnote 311), which rules out a distortion of competition. They point out that, in this Notice, the Commission applies this principle to the construction of railway infrastructure (paragraph 219) and the construction of road infrastructure, including toll-roads (paragraph 220), but they consider that it also applies to ports.

| (33) | The Walloon Region and the Walloon ports note in particular that the inland ports exempt from corporate tax are not in competition with other private inland ports making the same infrastructure accessible to the public. The Federal authorities add that the inland ports, which are small, are complementary to the other ports and are in competition only with road transport. |
| --- | --- |

(33)

The Walloon Region and the Walloon ports note in particular that the inland ports exempt from corporate tax are not in competition with other private inland ports making the same infrastructure accessible to the public. The Federal authorities add that the inland ports, which are small, are complementary to the other ports and are in competition only with road transport.

| (34) | The Port of Rotterdam points out that the Dutch public ports are in competition in particular with the ports of Antwerp, Zeebrugge and Ghent. |
| --- | --- |

(34)

The Port of Rotterdam points out that the Dutch public ports are in competition in particular with the ports of Antwerp, Zeebrugge and Ghent.

4.5.   COMPATIBILITY

COMPATIBILITY

| (35) | The Walloon Region and the Walloon ports consider that Article 106(2) TFEU constitutes an appropriate basis for the compatibility of the measure: the ports have a clear legal mandate and the ports undeniably meet all the conditions laid down by that Article. They stress that compatibility in terms of Article 93 TFEU, which does not make the absence of an effect on trade a condition of its application, must be evaluated extensively. |
| --- | --- |

(35)

The Walloon Region and the Walloon ports consider that Article 106(2) TFEU constitutes an appropriate basis for the compatibility of the measure: the ports have a clear legal mandate and the ports undeniably meet all the conditions laid down by that Article. They stress that compatibility in terms of Article 93 TFEU, which does not make the absence of an effect on trade a condition of its application, must be evaluated extensively.

| (36) | The port authorities of Antwerp and Zeebrugge consider that the Commission's response to the arguments presented concerning the compatibility of the measure is insufficiently reasoned. They add that Article 93 TFEU could be used as a basis for the compatibility of the measure, since the ports have to finance infrastructure contributing to the trans-European transport networks. |
| --- | --- |

(36)

The port authorities of Antwerp and Zeebrugge consider that the Commission's response to the arguments presented concerning the compatibility of the measure is insufficiently reasoned. They add that Article 93 TFEU could be used as a basis for the compatibility of the measure, since the ports have to finance infrastructure contributing to the trans-European transport networks.

4.6.   NEED FOR A TRANSITIONAL PERIOD

NEED FOR A TRANSITIONAL PERIOD

| (37) | The Belgian authorities ask the Commission for a transitional period with respect to subjecting the ports to corporate tax. They stress that the time limit provided for in the opening decision of 8 July 2016 (subjecting the ports to corporate tax from 1 January 2017) is too short, especially in relation to the time limit allowed the Netherlands in the context of case SA.25338. They emphasise that the deletion of Article 180(2) CIR would involve a legislative procedure lasting ‘generally speaking, at least three to six months’. In their view, legislative amendments which are far more complex than merely deleting Article 180(2) are required, since (i) this deletion would not necessarily result in the ports being made subject to corporate tax, (ii) the preparation of a new tax regime for the ports must take account of the constitutional principle of equality and (iii) the transition by a legal person from the tax on legal persons to corporate tax is not explicitly regulated in Belgian tax law. They add that the Commission, in the case of expiry of an aid scheme presumed to be existing, must respect a Member State's legitimate interests in ensuring legal certainty for beneficiaries. |
| --- | --- |

(37)

The Belgian authorities ask the Commission for a transitional period with respect to subjecting the ports to corporate tax. They stress that the time limit provided for in the opening decision of 8 July 2016 (subjecting the ports to corporate tax from 1 January 2017) is too short, especially in relation to the time limit allowed the Netherlands in the context of case SA.25338. They emphasise that the deletion of Article 180(2) CIR would involve a legislative procedure lasting ‘generally speaking, at least three to six months’. In their view, legislative amendments which are far more complex than merely deleting Article 180(2) are required, since (i) this deletion would not necessarily result in the ports being made subject to corporate tax, (ii) the preparation of a new tax regime for the ports must take account of the constitutional principle of equality and (iii) the transition by a legal person from the tax on legal persons to corporate tax is not explicitly regulated in Belgian tax law. They add that the Commission, in the case of expiry of an aid scheme presumed to be existing, must respect a Member State's legitimate interests in ensuring legal certainty for beneficiaries.

| (38) | The Port of Rotterdam asks the Commission to postpone subjecting the Dutch ports to corporate tax until a sector inquiry has been carried out and all the seaports in the North Range become subject simultaneously to the tax or, at the very least, to subject the Belgian and French ports to corporate tax rapidly and simultaneously. |
| --- | --- |

(38)

The Port of Rotterdam asks the Commission to postpone subjecting the Dutch ports to corporate tax until a sector inquiry has been carried out and all the seaports in the North Range become subject simultaneously to the tax or, at the very least, to subject the Belgian and French ports to corporate tax rapidly and simultaneously.

5.   ASSESSMENT OF THE MEASURES

ASSESSMENT OF THE MEASURES

5.1.   PRESENCE OF STATE AID WITHIN THE MEANING OF ARTICLE 107(1) TFEU

PRESENCE OF STATE AID WITHIN THE MEANING OF ARTICLE 107(1) TFEU

| (39) | According to Article 107(1) TFEU, any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the internal market. |
| --- | --- |

(39)

According to Article 107(1) TFEU, any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the internal market.

5.1.1.   UNDERTAKINGS/ECONOMIC ACTIVITIES

5.1.1.1.   
  General remarks

General remarks

| (40) | According to the Court of Justice, an economic activity is ‘any activity consisting in offering goods and services on a given market’ (22). Likewise, ‘The concept of an undertaking covers any entity engaged in an economic activity, regardless of its legal status and the way in which it is financed.’ (23) |
| --- | --- |

(40)

According to the Court of Justice, an economic activity is ‘any activity consisting in offering goods and services on a given market’ (22). Likewise, ‘The concept of an undertaking covers any entity engaged in an economic activity, regardless of its legal status and the way in which it is financed.’ (23)

22

23

| (41) | In addition, in accordance with the case-law on the economic nature of the operation of infrastructures (24), the Commission has established, in a series of decisions, that the commercial operation and construction of port infrastructure constitute economic activities (25). For example, the commercial operation of a port terminal by making it available to users against the payment of a fee constitutes an economic activity (26). Likewise, the Court of Justice has already implicitly, but definitely, recognised the economic nature of certain port operations, in particular the ‘loading, unloading, transhipment, storage and general movement of goods or material of any kind within the port’ (27). The Commission applies these rules not only to seaports, but also to inland ports (28). |
| --- | --- |

(41)

In addition, in accordance with the case-law on the economic nature of the operation of infrastructures (24), the Commission has established, in a series of decisions, that the commercial operation and construction of port infrastructure constitute economic activities (25). For example, the commercial operation of a port terminal by making it available to users against the payment of a fee constitutes an economic activity (26). Likewise, the Court of Justice has already implicitly, but definitely, recognised the economic nature of certain port operations, in particular the ‘loading, unloading, transhipment, storage and general movement of goods or material of any kind within the port’ (27). The Commission applies these rules not only to seaports, but also to inland ports (28).

24

25

26

loading, unloading, transhipment, storage and general movement of goods or material of any kind within the port

27

28

| (42) | In this respect, and unlike the Belgian authorities and certain interested parties, the Commission considers that the case-law of the Court concerning airports must be applied to ports, which are simply another type of infrastructure. The differences identified by certain interested parties between ports and airports – and especially the differences in legal structure or the fact that the ports are public-law entities which are not profit-oriented – are not relevant in terms of the general criterion relating to the supply of goods or services on a market, which forms the basis for the Court case-law. Likewise, the Commission notes that the Court, in paragraph 90 of the Aéroports de Paris judgment, recalls that ‘the Court of First Instance properly found that the commercial fees in issue constituted consideration for [...] services as manager of the airport facilities’; it is therefore incorrect to assert that this case did not relate to the supply of infrastructure services, as the Belgian authorities and certain interested parties maintain. |
| --- | --- |

(42)

In this respect, and unlike the Belgian authorities and certain interested parties, the Commission considers that the case-law of the Court concerning airports must be applied to ports, which are simply another type of infrastructure. The differences identified by certain interested parties between ports and airports – and especially the differences in legal structure or the fact that the ports are public-law entities which are not profit-oriented – are not relevant in terms of the general criterion relating to the supply of goods or services on a market, which forms the basis for the Court case-law. Likewise, the Commission notes that the Court, in paragraph 90 of the Aéroports de Paris judgment, recalls that ‘the Court of First Instance properly found that the commercial fees in issue constituted consideration for [...] services as manager of the airport facilities’; it is therefore incorrect to assert that this case did not relate to the supply of infrastructure services, as the Belgian authorities and certain interested parties maintain.

Aéroports de Paris

| (43) | In order to determine whether the Belgian ports are undertakings, there is no need to evaluate the economic or non-economic nature of each of their activities. It is sufficient to establish that the entities referred to by the measure at issue in fact engage in one or more economic activities, for which they will be regarded as an ‘undertaking’. In this respect, the fact that an entity engages in one or more sovereign or non-economic activities does not disqualify it altogether from being designated an ‘undertaking’. |
| --- | --- |

(43)

In order to determine whether the Belgian ports are undertakings, there is no need to evaluate the economic or non-economic nature of each of their activities. It is sufficient to establish that the entities referred to by the measure at issue in fact engage in one or more economic activities, for which they will be regarded as an ‘undertaking’. In this respect, the fact that an entity engages in one or more sovereign or non-economic activities does not disqualify it altogether from being designated an ‘undertaking’.

| (44) | The Belgian ports may engage in several types of economic activity corresponding to the supply of various services on different markets. First, the ports provide a general service to their users (mainly shipowners, more generally any operator of a vessel) by providing ships with access to the port infrastructure in exchange for a remuneration generally known as ‘port charges’ (29). Second, certain ports provide particular services to ships, such as piloting, lifting, handling, mooring, also in exchange for remuneration (30). Third, the ports, for remuneration, make certain infrastructure or certain land available to undertakings, which use these areas for their own needs or to supply some of the aforementioned particular services to ships. |
| --- | --- |

(44)

The Belgian ports may engage in several types of economic activity corresponding to the supply of various services on different markets. First, the ports provide a general service to their users (mainly shipowners, more generally any operator of a vessel) by providing ships with access to the port infrastructure in exchange for a remuneration generally known as ‘port charges’ (29). Second, certain ports provide particular services to ships, such as piloting, lifting, handling, mooring, also in exchange for remuneration (30). Third, the ports, for remuneration, make certain infrastructure or certain land available to undertakings, which use these areas for their own needs or to supply some of the aforementioned particular services to ships.

general

29

particular

30

particular

| (45) | The fact that third-party undertakings use certain port land and infrastructure to provide services to shipowners or ships does not prevent the management activities carried out by the port authorities, consisting in particular in renting the land and infrastructure to these third-party undertakings, also being of an economic nature. |
| --- | --- |

(45)

The fact that third-party undertakings use certain port land and infrastructure to provide services to shipowners or ships does not prevent the management activities carried out by the port authorities, consisting in particular in renting the land and infrastructure to these third-party undertakings, also being of an economic nature.

| (46) | The Commission also points out that Belgian domestic law itself contains indications concerning the industrial and/or commercial nature of the port activities (31), In particular, the official administrative comments on the CIR necessarily imply that the ports operate ‘an industrial, commercial or agricultural undertaking of some kind’ (32) or that, even on a non-profit-making basis, they engage in ‘a permanent professional activity consisting of [...] the repetition, which is sufficiently frequent to constitute an ‘occupation’, of operations of an industrial, commercial or agricultural nature [and] the use of industrial or commercial methods’ (33) (34). |
| --- | --- |

(46)

The Commission also points out that Belgian domestic law itself contains indications concerning the industrial and/or commercial nature of the port activities (31), In particular, the official administrative comments on the CIR necessarily imply that the ports operate ‘an industrial, commercial or agricultural undertaking of some kind’ (32) or that, even on a non-profit-making basis, they engage in ‘a permanent professional activity consisting of [...] the repetition, which is sufficiently frequent to constitute an ‘occupation’, of operations of an industrial, commercial or agricultural nature [and] the use of industrial or commercial methods’ (33) (34).

31

32

33

34

| (47) | Moreover, the Commission does not dispute the fact that certain activities of the ports may be of a non-economic nature, especially some of the services supplied by the harbourmasters, such as maritime traffic control and safety (35) or anti-pollution surveillance (36). In the present case, the activities considered by the Commission to be economic are nevertheless separate from these (other) activities mentioned in the previous sentence. |
| --- | --- |

(47)

Moreover, the Commission does not dispute the fact that certain activities of the ports may be of a non-economic nature, especially some of the services supplied by the harbourmasters, such as maritime traffic control and safety (35) or anti-pollution surveillance (36). In the present case, the activities considered by the Commission to be economic are nevertheless separate from these (other) activities mentioned in the previous sentence.

35

36

| (48) | The Commission also notes that, although the national authorities have ‘wide discretion [...] in providing, commissioning and organising services of general economic interest as closely as possible to the needs of the users’ (37), this does not preclude these activities being of an economic nature. It is settled case-law that the concept of ‘economic activity’ itself derives from matters of fact, in particular the existence of a market for the services concerned (38), and does not depend on national choices or assessments. The Commission is therefore justified in classing certain port activities as economic, even though the national authorities consider these activities to constitute non-economic services of general interest. |
| --- | --- |

(48)

The Commission also notes that, although the national authorities have ‘wide discretion [...] in providing, commissioning and organising services of general economic interest as closely as possible to the needs of the users’ (37), this does not preclude these activities being of an economic nature. It is settled case-law that the concept of ‘economic activity’ itself derives from matters of fact, in particular the existence of a market for the services concerned (38), and does not depend on national choices or assessments. The Commission is therefore justified in classing certain port activities as economic, even though the national authorities consider these activities to constitute non-economic services of general interest.

37

38

| (49) | Finally, the following considerations do not per se call into question the economic or non-economic nature of the activities carried out:






  — | The fact that the tasks of ports are of general interest and imposed on or delegated to them by the public authorities: this is the case for all services of general economic interest (‘SGEIs’), which are nevertheless economic activities. More generally, ‘the fact that a particular service is provided in-house has no relevance for the economic nature of the activity’
   (39). On the other hand, the general interest may be taken into consideration to assess, where appropriate, compatibility of aid granted by a State to an undertaking to support its economic activity. |
| --- | --- | --- |

(49)

Finally, the following considerations do not per se call into question the economic or non-economic nature of the activities carried out:

—

The fact that the tasks of ports are of general interest and imposed on or delegated to them by the public authorities: this is the case for all services of general economic interest (‘SGEIs’), which are nevertheless economic activities. More generally, ‘the fact that a particular service is provided in-house has no relevance for the economic nature of the activity’
   (39). On the other hand, the general interest may be taken into consideration to assess, where appropriate, compatibility of aid granted by a State to an undertaking to support its economic activity.

39

| — | The fact that the port authorities are vested with special powers to perform these tasks (40): such special powers do not prevent the port authorities from being able to engage in an economic activity by offering goods or services on a market. Where appropriate, these powers may constitute an instrument for intervening on this market. |
| --- | --- |

—

The fact that the port authorities are vested with special powers to perform these tasks (40): such special powers do not prevent the port authorities from being able to engage in an economic activity by offering goods or services on a market. Where appropriate, these powers may constitute an instrument for intervening on this market.

40

| — | The fact that the port authorities increasingly themselves have to finance non-economic activities coming within the responsibilities of the regions, and even activities unrelated to port operation: such a characteristic in no way alters the economic nature of the port activities consisting of supplying goods or services on a market. Absent or imperfect compensation by the State for the costs associated with non-economic activities that it imposes on the ports confirms, rather than refutes, the fact that ports engage in economic activities alongside certain non-economic activities. The tax benefit derived by a port from the scheme at issue is proportional to the profits made by that port and is in no way linked to the (uncompensated) cost of the non-economic activities imposed on it by the State. The Commission cannot therefore take account of this in its assessment of the scheme. |
| --- | --- |

—

The fact that the port authorities increasingly themselves have to finance non-economic activities coming within the responsibilities of the regions, and even activities unrelated to port operation: such a characteristic in no way alters the economic nature of the port activities consisting of supplying goods or services on a market. Absent or imperfect compensation by the State for the costs associated with non-economic activities that it imposes on the ports confirms, rather than refutes, the fact that ports engage in economic activities alongside certain non-economic activities. The tax benefit derived by a port from the scheme at issue is proportional to the profits made by that port and is in no way linked to the (uncompensated) cost of the non-economic activities imposed on it by the State. The Commission cannot therefore take account of this in its assessment of the scheme.

| — | The fact, assuming it to have been established (41), that the ports do not have a profit motive and systematically reinvest their profits: it is settled case-law that the absence of profit motive on the part of the person providing a service does not imply that this service is of a non-economic nature (42). Likewise, the systematic reinvestment of the profits in the activity is not decisive in differentiating an economic activity from a non-economic activity. Any undertaking for that matter has the choice between distribution and reinvestment of all or part of the profits it has made. |
| --- | --- |

—

The fact, assuming it to have been established (41), that the ports do not have a profit motive and systematically reinvest their profits: it is settled case-law that the absence of profit motive on the part of the person providing a service does not imply that this service is of a non-economic nature (42). Likewise, the systematic reinvestment of the profits in the activity is not decisive in differentiating an economic activity from a non-economic activity. Any undertaking for that matter has the choice between distribution and reinvestment of all or part of the profits it has made.

41

42

5.1.1.2.   
  Concerning the tariffs applied

Concerning the tariffs applied

| (50) | Also irrelevant with regard to the classification of ports as ‘undertakings’ is the argument put forward by the Belgian authorities and certain interested parties that the tariffs of the services provided by the port authorities are public, non-discriminatory and fixed in advance unilaterally by the port authorities and are not determined directly by the interaction of supply and demand (43). |
| --- | --- |

(50)

Also irrelevant with regard to the classification of ports as ‘undertakings’ is the argument put forward by the Belgian authorities and certain interested parties that the tariffs of the services provided by the port authorities are public, non-discriminatory and fixed in advance unilaterally by the port authorities and are not determined directly by the interaction of supply and demand (43).

43

| (51) | The Commission notes first that the characteristics of the tariffs applied by the ports (publicity, non-discrimination, etc.) are similar to those of tariffs applied in the context of SGEIs (44), which are economic activities and are subject to the law on State aid. Likewise, prices are also public, non-discriminatory and set unilaterally in advance by the provider for the vast majority of economic activities. |
| --- | --- |

(51)

The Commission notes first that the characteristics of the tariffs applied by the ports (publicity, non-discrimination, etc.) are similar to those of tariffs applied in the context of SGEIs (44), which are economic activities and are subject to the law on State aid. Likewise, prices are also public, non-discriminatory and set unilaterally in advance by the provider for the vast majority of economic activities.

44

| (52) | Although the proportion of expenditure associated with a given activity that is covered by revenue collected from users and, conversely, the proportion that is covered by tax (the taxpayer) may sometimes point to the existence of a market and an economic activity, the way in which the prices are set is not as such decisive from this point of view. |
| --- | --- |

(52)

Although the proportion of expenditure associated with a given activity that is covered by revenue collected from users and, conversely, the proportion that is covered by tax (the taxpayer) may sometimes point to the existence of a market and an economic activity, the way in which the prices are set is not as such decisive from this point of view.

| (53) | Incidentally, it is not contested that the prices paid by users and customers of the ports (general and particular port charges, concession fees) cover at least the bulk of the costs incurred by the port authorities when they offer their services on the market (45). |
| --- | --- |

(53)

Incidentally, it is not contested that the prices paid by users and customers of the ports (general and particular port charges, concession fees) cover at least the bulk of the costs incurred by the port authorities when they offer their services on the market (45).

45

| (54) | Furthermore, although the Walloon Region and the Walloon ports point out that the fees for the use of the infrastructure do not cover the reconstitution of the capital invested, they do not provide any factual evidence in support of their argument. |
| --- | --- |

(54)

Furthermore, although the Walloon Region and the Walloon ports point out that the fees for the use of the infrastructure do not cover the reconstitution of the capital invested, they do not provide any factual evidence in support of their argument.

| (55) | Incidentally, this argument is presented as the demonstration of the general interest nature of the port activity, which, as such, is not relevant to determine the economic or non-economic nature of the port activities. The Commission also notes that, by definition, the costs of SGEIs (which are economic activities) are not in general covered in full by the revenue collected from users, so the existence of a funding shortfall does not necessarily preclude the existence of an economic activity within the meaning of Article 107 TFEU. |
| --- | --- |

(55)

Incidentally, this argument is presented as the demonstration of the general interest nature of the port activity, which, as such, is not relevant to determine the economic or non-economic nature of the port activities. The Commission also notes that, by definition, the costs of SGEIs (which are economic activities) are not in general covered in full by the revenue collected from users, so the existence of a funding shortfall does not necessarily preclude the existence of an economic activity within the meaning of Article 107 TFEU.

| (56) | Moreover, the mere fact that prices are set by the port authorities does not mean that demand is not taken into account. On the contrary, the port authorities do take the market conditions into consideration (supply and demand, especially the prices charged by competitors and the demand behaviour of users and customers) when they determine their tariffs and especially the port charges (46). As regards the concession fees, the ports of Antwerp and Zeebrugge point out that the tariffs are set according to objective parameters relating to the nature of the land or the activity concerned and reflect the ‘intrinsic value’ and the ‘added value’ generated. Consequently, the tariffs are linked to the characteristics of the service provided by the ports and to the characteristics of the undertakings or activities that the port is seeking to attract. On this basis, the tariffs obviously constitute an important instrument of the commercial policy implemented by the port to encourage shipowners and shippers to use the port infrastructure and undertakings to establish themselves there to develop their production or service activities. |
| --- | --- |

(56)

Moreover, the mere fact that prices are set by the port authorities does not mean that demand is not taken into account. On the contrary, the port authorities do take the market conditions into consideration (supply and demand, especially the prices charged by competitors and the demand behaviour of users and customers) when they determine their tariffs and especially the port charges (46). As regards the concession fees, the ports of Antwerp and Zeebrugge point out that the tariffs are set according to objective parameters relating to the nature of the land or the activity concerned and reflect the ‘intrinsic value’ and the ‘added value’ generated. Consequently, the tariffs are linked to the characteristics of the service provided by the ports and to the characteristics of the undertakings or activities that the port is seeking to attract. On this basis, the tariffs obviously constitute an important instrument of the commercial policy implemented by the port to encourage shipowners and shippers to use the port infrastructure and undertakings to establish themselves there to develop their production or service activities.

46

| (57) | Consequently, making available both port infrastructure and land against payment of remuneration in fact constitute services offered on a market and therefore economic activities. |
| --- | --- |

(57)

Consequently, making available both port infrastructure and land against payment of remuneration in fact constitute services offered on a market and therefore economic activities.

5.1.1.3.   
  Concerning the making available of the port infrastructure to shipowners against remuneration and the supply of specific services by the port authorities to shipowners against remuneration

Concerning the making available of the port infrastructure to shipowners against remuneration and the supply of specific services by the port authorities to shipowners against remuneration

| (58) | As regards the services offered by the ports in exchange for the payment of port charges (access to the port infrastructure in general and any specific services), the Commission points out that the judgment of the Belgian Constitutional Court of 19 November 2015 (No 162/2015) recognising that the port charges constitute ‘pure remuneration’, by third parties, for the intervention of the port authorities, as well as the references made in the Flemish Port Decree of 2 March 1999 establishing that the port charges must be set in ‘reasonable proportion’ to the value of the consideration received, confirm that the ports offer services on a market against remuneration. The fact that this remuneration is supposed to reasonably cover the value of the consideration means that it can be ruled out a priori that the services provided to users of the ports are financed essentially by taxation rather than by real remuneration for the service obtained by these users, which again confirms the economic approach adopted by Belgium in the relationship between the ports and their users and the economic nature of the activities at issue. |
| --- | --- |

(58)

As regards the services offered by the ports in exchange for the payment of port charges (access to the port infrastructure in general and any specific services), the Commission points out that the judgment of the Belgian Constitutional Court of 19 November 2015 (No 162/2015) recognising that the port charges constitute ‘pure remuneration’, by third parties, for the intervention of the port authorities, as well as the references made in the Flemish Port Decree of 2 March 1999 establishing that the port charges must be set in ‘reasonable proportion’ to the value of the consideration received, confirm that the ports offer services on a market against remuneration. The fact that this remuneration is supposed to reasonably cover the value of the consideration means that it can be ruled out a priori that the services provided to users of the ports are financed essentially by taxation rather than by real remuneration for the service obtained by these users, which again confirms the economic approach adopted by Belgium in the relationship between the ports and their users and the economic nature of the activities at issue.

a priori

| (59) | The Commission points out, moreover, that the Flemish Government argued before the Belgian Constitutional Court that the general port charges (consideration for access to the general port infrastructure) were comparable ‘to the toll payable for use of a toll-road or tunnel’ (47). However, it is clear from the Commission's decision-making practice that the use of a toll-road or toll tunnel is an economic activity (48). Finally, the Commission notes that the port charges are in principle subject to VAT in Belgium, just like other supplies of services (49). |
| --- | --- |

(59)

The Commission points out, moreover, that the Flemish Government argued before the Belgian Constitutional Court that the general port charges (consideration for access to the general port infrastructure) were comparable ‘to the toll payable for use of a toll-road or tunnel’ (47). However, it is clear from the Commission's decision-making practice that the use of a toll-road or toll tunnel is an economic activity (48). Finally, the Commission notes that the port charges are in principle subject to VAT in Belgium, just like other supplies of services (49).

47

48

49

| (60) | The decisions of the Commission or the Court of Justice mentioned by the interested parties and the Belgian authorities do not undermine this conclusion. In case N110/2008 JadeWeserPort (50), the question of the economic or non-economic nature of the activities at issue was not decided by the Commission; the recitals cited by the interested parties and the Belgian authorities in support of their reasoning (recitals 52 to 63 of the Decision) are followed by recitals indicating that the activity could be regarded as economic (recitals 64 to 66 of the Decision). As far as cases N390/2005 Construction of transhipment facilities on the railway line Lanaken – Maastricht (51) and N478/2004 Coras Iompair Eireann (52) are concerned, the Commission points out that they relate to the financing of the construction of railway infrastructure and not to making available port infrastructures against remuneration, and that in any case, the position taken by the Commission in those cases no longer corresponds to the Court of Justice case-law (53) or even to the Commission's current decision-making practice, according to which the construction of infrastructure to be exploited economically constitutes an economic activity. Finally, the judgment of the Court of Justice in case C-18/01 Korhonen (54) does not concern State aid law but Council Directive 92/50/EEC (55). |
| --- | --- |

(60)

The decisions of the Commission or the Court of Justice mentioned by the interested parties and the Belgian authorities do not undermine this conclusion. In case N110/2008 JadeWeserPort (50), the question of the economic or non-economic nature of the activities at issue was not decided by the Commission; the recitals cited by the interested parties and the Belgian authorities in support of their reasoning (recitals 52 to 63 of the Decision) are followed by recitals indicating that the activity could be regarded as economic (recitals 64 to 66 of the Decision). As far as cases N390/2005 Construction of transhipment facilities on the railway line Lanaken – Maastricht (51) and N478/2004 Coras Iompair Eireann (52) are concerned, the Commission points out that they relate to the financing of the construction of railway infrastructure and not to making available port infrastructures against remuneration, and that in any case, the position taken by the Commission in those cases no longer corresponds to the Court of Justice case-law (53) or even to the Commission's current decision-making practice, according to which the construction of infrastructure to be exploited economically constitutes an economic activity. Finally, the judgment of the Court of Justice in case C-18/01 Korhonen (54) does not concern State aid law but Council Directive 92/50/EEC (55).

50

51

52

53

Korhonen

54

55

5.1.1.4.   
  Concerning making available land and infrastructure to undertakings against remuneration

Concerning making available land and infrastructure to undertakings against remuneration

| (61) | The Commission Decision in case SA.36346 (56), referred to in paragraph 17(f) of the Notice of 19 July 2016 and cited by the interested parties and the Belgian authorities, does not imply that the management or development of the port area and, in particular, the renting or making available of specific land and infrastructure against remuneration, is a non-economic activity. Case SA.36346 in fact concerned support for the revitalisation of public land and not the renting of land or infrastructure against remuneration. |
| --- | --- |

(61)

The Commission Decision in case SA.36346 (56), referred to in paragraph 17(f) of the Notice of 19 July 2016 and cited by the interested parties and the Belgian authorities, does not imply that the management or development of the port area and, in particular, the renting or making available of specific land and infrastructure against remuneration, is a non-economic activity. Case SA.36346 in fact concerned support for the revitalisation of public land and not the renting of land or infrastructure against remuneration.

56

| (62) | The Commission practice has already been to consider that renting public property against remuneration constitutes an economic activity, especially where the port's co-contractor provides port services to its customers (57). It can also be inferred from the tariff conditions published by the port authorities (58) that the concession fees are subject to VAT, which is evidence of their economic nature. Similarly, the renting of land by the ports constitutes an economic activity subject to VAT (59). |
| --- | --- |

(62)

The Commission practice has already been to consider that renting public property against remuneration constitutes an economic activity, especially where the port's co-contractor provides port services to its customers (57). It can also be inferred from the tariff conditions published by the port authorities (58) that the concession fees are subject to VAT, which is evidence of their economic nature. Similarly, the renting of land by the ports constitutes an economic activity subject to VAT (59).

57

58

59

| (63) | The Commission also notes that, in their comments, the ports of Antwerp and Zeebrugge emphasise that the choice of concessionaire is made after an ‘invitation to tender’, which confirms that these ports, where they give access to the port infrastructure, offer goods or services on a market. |
| --- | --- |

(63)

The Commission also notes that, in their comments, the ports of Antwerp and Zeebrugge emphasise that the choice of concessionaire is made after an ‘invitation to tender’, which confirms that these ports, where they give access to the port infrastructure, offer goods or services on a market.

5.1.1.5.   
  Concerning the ancillary or principal nature of the economic activities

Concerning the ancillary or principal nature of the economic activities

| (64) | The fact that the economic activities of an entity are minor or marginal in relation to its non-economic activities does not in principle allow these economic activities to be regarded as exempt from the State aid rules. |
| --- | --- |

(64)

The fact that the economic activities of an entity are minor or marginal in relation to its non-economic activities does not in principle allow these economic activities to be regarded as exempt from the State aid rules.

| (65) | In addition, and without it being necessary to undertake a port-by-port evaluation of the proportion of the different economic activities, it can be inferred from the preceding arguments that a very large part of the activities considered to be non-economic by the interested parties and the Belgian authorities (renting of land, access to infrastructure against remuneration) are, in reality, economic. As indicated above, it is not contested that the port charges and concession fees account for the vast majority of the turnover of the Belgian ports and this revenue even exceeds total current expenditure in the case of the port of Antwerp. |
| --- | --- |

(65)

In addition, and without it being necessary to undertake a port-by-port evaluation of the proportion of the different economic activities, it can be inferred from the preceding arguments that a very large part of the activities considered to be non-economic by the interested parties and the Belgian authorities (renting of land, access to infrastructure against remuneration) are, in reality, economic. As indicated above, it is not contested that the port charges and concession fees account for the vast majority of the turnover of the Belgian ports and this revenue even exceeds total current expenditure in the case of the port of Antwerp.

| (66) | Finally, although the Commission accepts that, if the infrastructure is used almost exclusively for a non-economic activity, its funding may fall outside the State aid rules in its entirety, provided the economic use remains purely ancillary (60), the fact that the ports engage in non-economic activities does not mean that the port infrastructure itself is used almost exclusively for a non-economic activity. |
| --- | --- |

(66)

Finally, although the Commission accepts that, if the infrastructure is used almost exclusively for a non-economic activity, its funding may fall outside the State aid rules in its entirety, provided the economic use remains purely ancillary (60), the fact that the ports engage in non-economic activities does not mean that the port infrastructure itself is used almost exclusively for a non-economic activity.

60

Conclusion

Conclusion

| (67) | The Commission therefore considers that the activities carried out by the Belgian ports covered by the measure are – at least in part – economic activities. |
| --- | --- |

(67)

The Commission therefore considers that the activities carried out by the Belgian ports covered by the measure are – at least in part – economic activities.

5.1.2.   ECONOMIC ADVANTAGE

| (68) | According to the Court of Justice, an advantage comprises not only a positive benefit, but also all the measures which in various forms mitigate the charges which are normally included in the budget of an undertaking (61). |
| --- | --- |

(68)

According to the Court of Justice, an advantage comprises not only a positive benefit, but also all the measures which in various forms mitigate the charges which are normally included in the budget of an undertaking (61).

61

| (69) | The Commission points out that, under Belgian tax law, the profit generated by economic activities carried out by the Belgian ports referred to in Article 180(2) of the CIR are not subject to corporate tax. Therefore, the ports are not required to bear the costs normally borne by entities subject to corporate tax. |
| --- | --- |

(69)

The Commission points out that, under Belgian tax law, the profit generated by economic activities carried out by the Belgian ports referred to in Article 180(2) of the CIR are not subject to corporate tax. Therefore, the ports are not required to bear the costs normally borne by entities subject to corporate tax.

| (70) | The tax on legal persons is not levied on total profits. For entities subject to the tax on legal persons, tax is levied only on part of the revenue generated by the port activities, namely on the cadastral income of property located in Belgium and on the income and proceeds from investment capital and movable assets (62). Consequently, the taxable amount for the tax on legal persons does not include the total profits made by the ports, for example, the port charges and fees paid by customers in consideration for services offered by the ports or the fees and rentspaid for the use of port infrastructure. Moreover, for the part of this revenue which is subject to the tax on legal persons, the rates are generally lower (63) than the applicable corporate tax rate (33,99 %). The amount of tax paid for the economic activities is therefore lower than the amount resulting from the application of the corporate tax rules. |
| --- | --- |

(70)

The tax on legal persons is not levied on total profits. For entities subject to the tax on legal persons, tax is levied only on part of the revenue generated by the port activities, namely on the cadastral income of property located in Belgium and on the income and proceeds from investment capital and movable assets (62). Consequently, the taxable amount for the tax on legal persons does not include the total profits made by the ports, for example, the port charges and fees paid by customers in consideration for services offered by the ports or the fees and rentspaid for the use of port infrastructure. Moreover, for the part of this revenue which is subject to the tax on legal persons, the rates are generally lower (63) than the applicable corporate tax rate (33,99 %). The amount of tax paid for the economic activities is therefore lower than the amount resulting from the application of the corporate tax rules.

62

63

| (71) | In addition, Belgium did not submit any evidence of a nature to alter this conclusion by the Commission during the cooperation procedure launched on 9 July 2014 or in its comments after the opening of the formal investigation procedure on 8 July 2016. It did not challenge the comments presented by the Dutch ports either, according to which the ports of Antwerp, Zeebrugge and Ghent have a real tax rate well below the corporate tax rate in Belgium (33,99 %). |
| --- | --- |

(71)

In addition, Belgium did not submit any evidence of a nature to alter this conclusion by the Commission during the cooperation procedure launched on 9 July 2014 or in its comments after the opening of the formal investigation procedure on 8 July 2016. It did not challenge the comments presented by the Dutch ports either, according to which the ports of Antwerp, Zeebrugge and Ghent have a real tax rate well below the corporate tax rate in Belgium (33,99 %).

| (72) | It is not possible either to subscribe to the arguments of the Flemish Port Commission, according to which, essentially, the advantage resulting from the corporate tax exemption is designed only to compensate for the increasing financing, by the port authorities, of non-economic infrastructure outside their remit. This is because there is no provision of national law guaranteeing that the amount of the advantage is limited to the net cost of such non-economic infrastructures (64). The exemption from corporate tax, the amount of which is proportional to the profit made, therefore leads to an advantage disproportionate to any cost of financing non-economic infrastructures. |
| --- | --- |

(72)

It is not possible either to subscribe to the arguments of the Flemish Port Commission, according to which, essentially, the advantage resulting from the corporate tax exemption is designed only to compensate for the increasing financing, by the port authorities, of non-economic infrastructure outside their remit. This is because there is no provision of national law guaranteeing that the amount of the advantage is limited to the net cost of such non-economic infrastructures (64). The exemption from corporate tax, the amount of which is proportional to the profit made, therefore leads to an advantage disproportionate to any cost of financing non-economic infrastructures.

64

| (73) | Consequently, the Commission considers that the ports at issue benefit from an advantage within the meaning of Article 107(1) TFEU which corresponds to the difference between the corporate tax that the ports should have paid for their economic activities and the proportion of the tax on legal persons which can be attributed to these economic activities. |
| --- | --- |

(73)

Consequently, the Commission considers that the ports at issue benefit from an advantage within the meaning of Article 107(1) TFEU which corresponds to the difference between the corporate tax that the ports should have paid for their economic activities and the proportion of the tax on legal persons which can be attributed to these economic activities.

5.1.3.   STATE RESOURCES AND IMPUTABILITY TO THE STATE

| (74) | Pursuant to Article 107(1) TFEU, only measures granted by Member States or through State resources are considered as State aid. It is settled case-law that waiving revenues that would – in principle – otherwise have been paid to the State constitutes a transfer of State resources (65). |
| --- | --- |

(74)

Pursuant to Article 107(1) TFEU, only measures granted by Member States or through State resources are considered as State aid. It is settled case-law that waiving revenues that would – in principle – otherwise have been paid to the State constitutes a transfer of State resources (65).

65

| (75) | Contrary to the arguments put forward by the Belgian authorities, since the taxation of the economic activities of the ports in the form of the tax on legal persons leads to taxation which is more favourable to the taxpayer than taxation in the form of corporate tax would have been (see section 5.1.2 above concerning the existence of an economic advantage), it gives rise to a shortfall in tax revenue for the State. |
| --- | --- |

(75)

Contrary to the arguments put forward by the Belgian authorities, since the taxation of the economic activities of the ports in the form of the tax on legal persons leads to taxation which is more favourable to the taxpayer than taxation in the form of corporate tax would have been (see section 5.1.2 above concerning the existence of an economic advantage), it gives rise to a shortfall in tax revenue for the State.

| (76) | Consequently, the Commission considers that this measure constitutes a transfer of State resources within the meaning of Article 107(1) TFEU. |
| --- | --- |

(76)

Consequently, the Commission considers that this measure constitutes a transfer of State resources within the meaning of Article 107(1) TFEU.

| (77) | In addition, since the tax system at issue comes under Belgian law and is not imposed on Belgium by Union legislation, it is imputable to the State (66). |
| --- | --- |

(77)

In addition, since the tax system at issue comes under Belgian law and is not imposed on Belgium by Union legislation, it is imputable to the State (66).

66

5.1.4.   SELECTIVITY

| (78) | To be considered State aid, a measure must be selective, in the sense that it favours certain undertakings or the production of certain goods within the meaning of Article 107(1) TFEU (67). |
| --- | --- |

(78)

To be considered State aid, a measure must be selective, in the sense that it favours certain undertakings or the production of certain goods within the meaning of Article 107(1) TFEU (67).

67

| (79) | According to settled case-law (68), the assessment of the material selectivity of a measure mitigating the charges which are normally included in the budget of an undertaking, such as a tax exemption, consists of three steps. First, it is necessary to identify the common or ‘normal’ tax regime (the ‘reference system’) applicable in the Member State concerned. Second, it is necessary to determine whether the measure in question derogates from the reference system by differentiating between economic operators which, in the light of the objective pursued by the reference tax regime, are in a comparable factual and legal situation. If this is the case, the measure would be deemed prima facie selective. As a third step, it is necessary to establish whether the derogating measure is justified by the nature or general scheme – in other words, the intrinsic logic – of the reference tax system (69). As regards this third step, the Member State must demonstrate that the differential tax treatment results directly from the basic or guiding principles of its tax system (70). |
| --- | --- |

(79)

According to settled case-law (68), the assessment of the material selectivity of a measure mitigating the charges which are normally included in the budget of an undertaking, such as a tax exemption, consists of three steps. First, it is necessary to identify the common or ‘normal’ tax regime (the ‘reference system’) applicable in the Member State concerned. Second, it is necessary to determine whether the measure in question derogates from the reference system by differentiating between economic operators which, in the light of the objective pursued by the reference tax regime, are in a comparable factual and legal situation. If this is the case, the measure would be deemed prima facie selective. As a third step, it is necessary to establish whether the derogating measure is justified by the nature or general scheme – in other words, the intrinsic logic – of the reference tax system (69). As regards this third step, the Member State must demonstrate that the differential tax treatment results directly from the basic or guiding principles of its tax system (70).

68

prima facie

69

70

| (80) | In the course of the procedure, the Belgian authorities have defended two lines of argument in turn. In their replies to the questionnaire sent on 3 July 2013 by the Commission, the Belgian authorities first pointed out that Article 180(2) of the CIR was the legal basis for the exemption from corporate tax in favour of the ports. However, they then argued, in their comments dated 19 December 2016, that it was not merely as a result of applying the general rules of the CIR provided for in Articles 1 and 2 of the CIR that the ports were not subject to corporate tax, since ports were not ‘companies’ within the meaning of Article 2 of the CIR. |
| --- | --- |

(80)

In the course of the procedure, the Belgian authorities have defended two lines of argument in turn. In their replies to the questionnaire sent on 3 July 2013 by the Commission, the Belgian authorities first pointed out that Article 180(2) of the CIR was the legal basis for the exemption from corporate tax in favour of the ports. However, they then argued, in their comments dated 19 December 2016, that it was not merely as a result of applying the general rules of the CIR provided for in Articles 1 and 2 of the CIR that the ports were not subject to corporate tax, since ports were not ‘companies’ within the meaning of Article 2 of the CIR.

| (81) | State aid is an objective concept and only the effects of the measure must be taken into account. The fact that the Belgian ports do not pay corporate tax is not contested, but the basis for this absence of payment of corporate tax, according to the Belgian authorities, can be either Article 180(2) of the CIR or Articles 1 and 2 of the CIR. |
| --- | --- |

(81)

State aid is an objective concept and only the effects of the measure must be taken into account. The fact that the Belgian ports do not pay corporate tax is not contested, but the basis for this absence of payment of corporate tax, according to the Belgian authorities, can be either Article 180(2) of the CIR or Articles 1 and 2 of the CIR.

5.1.4.1.   
  Assessment of selectivity if Articles 1 and 2 of the CIR constitute the legal basis for the non-payment of corporate tax by the Belgian ports

Assessment of selectivity if Articles 1 and 2 of the CIR constitute the legal basis for the non-payment of corporate tax by the Belgian ports

| (82) | In their comments dated 19 December 2016, the Belgian authorities maintain that Article 180(2) of the CIR has no legal implications and is purely declarative. Deleting it would not in any way alter the situation of the ports in relation to corporate tax. According to the Belgian authorities, the ports are exempt from corporate tax pursuant to Articles 1 and 2 of the CIR and the general criteria of the Belgian tax system. The Belgian authorities maintain that the ports are not ‘companies’ within the meaning of Articles 1 and 2 of the CIR. |
| --- | --- |

(82)

In their comments dated 19 December 2016, the Belgian authorities maintain that Article 180(2) of the CIR has no legal implications and is purely declarative. Deleting it would not in any way alter the situation of the ports in relation to corporate tax. According to the Belgian authorities, the ports are exempt from corporate tax pursuant to Articles 1 and 2 of the CIR and the general criteria of the Belgian tax system. The Belgian authorities maintain that the ports are not ‘companies’ within the meaning of Articles 1 and 2 of the CIR.

| (83) | In this scenario, the reference system would be constituted by Articles 1 and 2 of the CIR, which provide that ‘companies’ are subject to corporate tax, whereas resident legal persons other than companies are subject to the tax on legal persons. According to the Belgian authorities, since ports are not ‘companies’, they would necessarily be subject to the tax on legal persons. Article 180(2) of the CIR, which, according to the Belgian authorities, merely draws the consequences from the general rules set out in Articles 1 and 2, would therefore not constitute a derogation to the reference system and would even form an integral part of it. In so far as ports are not ‘companies’, the rules relating to the tax on legal persons could also be considered to be a narrower reference system. |
| --- | --- |

(83)

In this scenario, the reference system would be constituted by Articles 1 and 2 of the CIR, which provide that ‘companies’ are subject to corporate tax, whereas resident legal persons other than companies are subject to the tax on legal persons. According to the Belgian authorities, since ports are not ‘companies’, they would necessarily be subject to the tax on legal persons. Article 180(2) of the CIR, which, according to the Belgian authorities, merely draws the consequences from the general rules set out in Articles 1 and 2, would therefore not constitute a derogation to the reference system and would even form an integral part of it. In so far as ports are not ‘companies’, the rules relating to the tax on legal persons could also be considered to be a narrower reference system.

| (84) | This interpretation is therefore based essentially on the assumption that the nature of the activities carried out by the ports would necessarily preclude the possibility of their classification as ‘companies’ for the purposes of the taxation of income (of resident legal persons), whereas they constitute ‘undertakings’ within the meaning of Article 107 TFEU, as established above. Neither the observations made by Belgium, nor those of the third parties, provide any convincing evidence to validate this assumption. |
| --- | --- |

(84)

This interpretation is therefore based essentially on the assumption that the nature of the activities carried out by the ports would necessarily preclude the possibility of their classification as ‘companies’ for the purposes of the taxation of income (of resident legal persons), whereas they constitute ‘undertakings’ within the meaning of Article 107 TFEU, as established above. Neither the observations made by Belgium, nor those of the third parties, provide any convincing evidence to validate this assumption.

| (85) | The Commission considers, on the contrary, that the ports are in principle ‘companies’ for the purposes of taxation of income as regards the bulk of their activities and that they carry out economic activities of a nature to classify them as ‘undertakings’ within the meaning of Article 107 TFEU. Nor is this classification as companies called into question by any provision of national law. |
| --- | --- |

(85)

The Commission considers, on the contrary, that the ports are in principle ‘companies’ for the purposes of taxation of income as regards the bulk of their activities and that they carry out economic activities of a nature to classify them as ‘undertakings’ within the meaning of Article 107 TFEU. Nor is this classification as companies called into question by any provision of national law.

| (86) | The Commission notes that the assumption on which the Belgian authorities base their reasoning is in contradiction with the official comments on the CIR, with other domestic texts and with official positions adopted by the Belgian Government. The official comments on the CIR state that legal persons who are ‘unconditionally’ excluded from corporate tax (notably the ports pursuant to Article 180(2) of the CIR) should ‘in principle be regarded as taxpayers subject to corporate tax’ (71). Also in view of their legal form (and the characteristics generally associated with this legal form), the majority of the ports listed in Article 180(2) of the CIR – which are public limited companies (SA), private limited companies (SPRL) or autonomous municipal authorities – should also be subject in principle to corporate tax (72). Second, the Flemish Port Decree of 2 March 1999 itself contains indications concerning the industrial (73) and/or commercial nature (74) of the port activities and therefore their classification as ‘company’ within the meaning of Article 2 of the CIR, the consequence of which should be that they are subject to corporate tax. Likewise, the Belgian Government itself argued, before the Belgian Constitutional Court, that the ports, among other companies and legal persons referred to in Articles 180 and 220(2) of the CIR, are ‘in fact legal persons who engage in a business or transactions of a profit-making nature within the meaning of Article 2 of the CIR’ (75). Before the Lower House of the Belgian Parliament, the Deputy Prime Minister and Minister for Finance and Foreign Trade also stated that the Belgian ports were public undertakings which, in the absence of the unconditional exemption provided for in Article 180 of the CIR, would be subject to corporate tax pursuant to Articles 1, 2 and 179 of the CIR (76). Finally, the ports are not subject to the tax on legal persons naturally and directly, but only because they are specifically exempted from corporate tax by Article 180(2) of the CIR, according to the actual wording of Article 220(2) of the CIR, which contradicts the Belgian authorities' interpretation that the ports do not pay corporate tax because they are naturally subject to the tax on legal persons, as resident legal persons other than ‘companies’. |
| --- | --- |

(86)

The Commission notes that the assumption on which the Belgian authorities base their reasoning is in contradiction with the official comments on the CIR, with other domestic texts and with official positions adopted by the Belgian Government. The official comments on the CIR state that legal persons who are ‘unconditionally’ excluded from corporate tax (notably the ports pursuant to Article 180(2) of the CIR) should ‘in principle be regarded as taxpayers subject to corporate tax’ (71). Also in view of their legal form (and the characteristics generally associated with this legal form), the majority of the ports listed in Article 180(2) of the CIR – which are public limited companies (SA), private limited companies (SPRL) or autonomous municipal authorities – should also be subject in principle to corporate tax (72). Second, the Flemish Port Decree of 2 March 1999 itself contains indications concerning the industrial (73) and/or commercial nature (74) of the port activities and therefore their classification as ‘company’ within the meaning of Article 2 of the CIR, the consequence of which should be that they are subject to corporate tax. Likewise, the Belgian Government itself argued, before the Belgian Constitutional Court, that the ports, among other companies and legal persons referred to in Articles 180 and 220(2) of the CIR, are ‘in fact legal persons who engage in a business or transactions of a profit-making nature within the meaning of Article 2 of the CIR’ (75). Before the Lower House of the Belgian Parliament, the Deputy Prime Minister and Minister for Finance and Foreign Trade also stated that the Belgian ports were public undertakings which, in the absence of the unconditional exemption provided for in Article 180 of the CIR, would be subject to corporate tax pursuant to Articles 1, 2 and 179 of the CIR (76). Finally, the ports are not subject to the tax on legal persons naturally and directly, but only because they are specifically exempted from corporate tax by Article 180(2) of the CIR, according to the actual wording of Article 220(2) of the CIR, which contradicts the Belgian authorities' interpretation that the ports do not pay corporate tax because they are naturally subject to the tax on legal persons, as resident legal persons other than ‘companies’.

71

72

73

74

75

76

| (87) | Therefore, the Commission does not concur with the position that, even if Article 180(2) were deleted, the ports would not be subject to corporate tax under the general criteria provided for in Articles 1 and 2 of the CIR. In the light of the references cited in the previous recital, the Commission considers, on the contrary, that, pursuant to the general rules of Belgian national law, the ports, which are ‘companies’ within the meaning of Article 2 of the CIR, should be subject to corporate tax, in the absence of formal and unconditional exemption from this tax under Article 180(2) of the CIR. For the same reasons, the Commission disputes that the rules relating to the tax on legal persons constitute the reference system for the taxation of the ports. |
| --- | --- |

(87)

Therefore, the Commission does not concur with the position that, even if Article 180(2) were deleted, the ports would not be subject to corporate tax under the general criteria provided for in Articles 1 and 2 of the CIR. In the light of the references cited in the previous recital, the Commission considers, on the contrary, that, pursuant to the general rules of Belgian national law, the ports, which are ‘companies’ within the meaning of Article 2 of the CIR, should be subject to corporate tax, in the absence of formal and unconditional exemption from this tax under Article 180(2) of the CIR. For the same reasons, the Commission disputes that the rules relating to the tax on legal persons constitute the reference system for the taxation of the ports.

| (88) | In their comments, the Belgian authorities and certain interested parties maintain that the exemption from corporate tax for the ports is inferred, quite apart from the general rules of the CIR (Articles 1 and 2), from other general rules of national law (a general principle of law, a rule derived from case-law according to which public services, tasks and goods are not taxed unless explicitly provided for by law, or even by the Belgian Constitution itself). |
| --- | --- |

(88)

In their comments, the Belgian authorities and certain interested parties maintain that the exemption from corporate tax for the ports is inferred, quite apart from the general rules of the CIR (Articles 1 and 2), from other general rules of national law (a general principle of law, a rule derived from case-law according to which public services, tasks and goods are not taxed unless explicitly provided for by law, or even by the Belgian Constitution itself).

| (89) | In the light of the references cited above, the Commission considers that the normal application of the general rules of Belgian law would result in the ports being subject to corporate tax with respect to the income from their economic activities. |
| --- | --- |

(89)

In the light of the references cited above, the Commission considers that the normal application of the general rules of Belgian law would result in the ports being subject to corporate tax with respect to the income from their economic activities.

| (90) | Incidentally, even if, contrary to what the Commission has just shown, the national rules in question – or their interpretation by the administration – were such as to result in the non-payment of corporate tax by Belgian ports, these rules would introduce discrimination between ‘undertakings’ engaging in economic activities within the meaning of Article 107 TFEU (see section 5.1.1. above). Just as in the case of Article 180(2), in the analysis set out below by the Commission, these rules, or the Belgian income tax regime as a whole, would therefore be the source of advantages granted to certain ‘undertakings’, namely the ports, despite the fact that these undertakings, with regard to the profits generated from ‘economic activities’, are in a comparable situation to other undertakings subject to corporate tax (resident legal persons) from the point of view of the objective of taxation of the income of resident legal persons – which is to tax profits. The Commission considers that the ports do not conform to ‘particular operating principles which clearly distinguish them from other economic operators’ subject to corporate tax (77). In particular, the fact that the ports do not seek a profit (78) is not sufficient to consider that they are in a different situation from that of other operators subject to corporate tax. In this scenario, the Belgian system would itself be selective (79). |
| --- | --- |

(90)

Incidentally, even if, contrary to what the Commission has just shown, the national rules in question – or their interpretation by the administration – were such as to result in the non-payment of corporate tax by Belgian ports, these rules would introduce discrimination between ‘undertakings’ engaging in economic activities within the meaning of Article 107 TFEU (see section 5.1.1. above). Just as in the case of Article 180(2), in the analysis set out below by the Commission, these rules, or the Belgian income tax regime as a whole, would therefore be the source of advantages granted to certain ‘undertakings’, namely the ports, despite the fact that these undertakings, with regard to the profits generated from ‘economic activities’, are in a comparable situation to other undertakings subject to corporate tax (resident legal persons) from the point of view of the objective of taxation of the income of resident legal persons – which is to tax profits. The Commission considers that the ports do not conform to ‘particular operating principles which clearly distinguish them from other economic operators’ subject to corporate tax (77). In particular, the fact that the ports do not seek a profit (78) is not sufficient to consider that they are in a different situation from that of other operators subject to corporate tax. In this scenario, the Belgian system would itself be selective (79).

77

78

79

| (91) | Therefore, even if Articles 1 and 2 of the CIR constituted the legal basis for non-payment of corporate tax by the Belgian ports, this non-payment would be a measure which is prima facie selective with respect to the economic activities of the ports. |
| --- | --- |

(91)

Therefore, even if Articles 1 and 2 of the CIR constituted the legal basis for non-payment of corporate tax by the Belgian ports, this non-payment would be a measure which is prima facie selective with respect to the economic activities of the ports.

prima facie

5.1.4.2.   
  Assessment of selectivity if Article 180(2) of the CIR constitutes the legal basis for non-payment of corporate tax by the Belgian ports

Assessment of selectivity if Article 180(2) of the CIR constitutes the legal basis for non-payment of corporate tax by the Belgian ports

| (92) | As results from the arguments developed above, the Commission considers that Article 180(2) of the CIR is the only legal basis for non-payment of corporate tax by the Belgian ports and that, in the absence of this provision, the ports would pay corporate tax like any other company or undertaking deriving taxable income from an economic activity. |
| --- | --- |

(92)

As results from the arguments developed above, the Commission considers that Article 180(2) of the CIR is the only legal basis for non-payment of corporate tax by the Belgian ports and that, in the absence of this provision, the ports would pay corporate tax like any other company or undertaking deriving taxable income from an economic activity.

5.1.4.2.1.   Reference system and derogation from the reference system

Reference system and derogation from the reference system

| (93) | The Commission considers that the reference system in the case at issue is constituted by the general tax rules arising from Articles 1 and 2 of the CIR. Article 1 of the CIR establishes a dual system for the taxation of income for legal persons resident in Belgium: it subjects ‘companies’ to corporate tax and ‘legal persons other than companies’ to the tax on legal persons. Article 2 of the CIR comprises the criteria for the definition of ‘companies’ and therefore the determination of the legal persons to be subject to corporate tax and by elimination those whose income will be subject to the tax on legal persons. Article 179 confirms that taxpayers subject to corporate tax are resident companies. |
| --- | --- |

(93)

The Commission considers that the reference system in the case at issue is constituted by the general tax rules arising from Articles 1 and 2 of the CIR. Article 1 of the CIR establishes a dual system for the taxation of income for legal persons resident in Belgium: it subjects ‘companies’ to corporate tax and ‘legal persons other than companies’ to the tax on legal persons. Article 2 of the CIR comprises the criteria for the definition of ‘companies’ and therefore the determination of the legal persons to be subject to corporate tax and by elimination those whose income will be subject to the tax on legal persons. Article 179 confirms that taxpayers subject to corporate tax are resident companies.

reference system

| (94) | Article 180(2) of the CIR constitutes a derogation from these general tax rules in so far as it exempts the ports from corporate tax unconditionally, without applying the general criteria for allocation between corporate tax and tax on legal persons defined in Articles 1 and 2, in other words without taking into account the status of ‘companies’ (or otherwise) of these ports (80). |
| --- | --- |

(94)

Article 180(2) of the CIR constitutes a derogation from these general tax rules in so far as it exempts the ports from corporate tax unconditionally, without applying the general criteria for allocation between corporate tax and tax on legal persons defined in Articles 1 and 2, in other words without taking into account the status of ‘companies’ (or otherwise) of these ports (80).

derogation

80

| (95) | In so far as, for the reasons set out in recital (86), the ports are ‘companies’ within the meaning of Article 1 of the CIR, the reference system for the taxation of the income of the ports can also be defined more narrowly as all the rules relating to corporate tax, namely Articles 1 and 179 of the CIR, which provide that resident ‘companies’ are subject to corporate tax which is defined as a ‘tax on the total income’. |
| --- | --- |

(95)

In so far as, for the reasons set out in recital (86), the ports are ‘companies’ within the meaning of Article 1 of the CIR, the reference system for the taxation of the income of the ports can also be defined more narrowly as all the rules relating to corporate tax, namely Articles 1 and 179 of the CIR, which provide that resident ‘companies’ are subject to corporate tax which is defined as a ‘tax on the total income’.

| (96) | In terms of this reference system, Article 180(2) of the CIR explicitly constitutes a derogation (it is its raison d'être), since it removes the ports from the scope of Article 179 and corporate tax, even though the ports are then subject to the tax on legal persons by virtue of Article 220(2) of the CIR. In the absence of the explicit, specific exemption provided for in Article 180(2) of the CIR, Belgian ports – like other resident companies – would in fact be automatically subject to corporate tax. |
| --- | --- |

(96)

In terms of this reference system, Article 180(2) of the CIR explicitly constitutes a derogation (it is its raison d'être), since it removes the ports from the scope of Article 179 and corporate tax, even though the ports are then subject to the tax on legal persons by virtue of Article 220(2) of the CIR. In the absence of the explicit, specific exemption provided for in Article 180(2) of the CIR, Belgian ports – like other resident companies – would in fact be automatically subject to corporate tax.

5.1.4.2.2.   Derogation from the reference system introducing differentiation between economic operators in a comparable legal or factual situation in terms of the objective pursued by the reference tax system

Derogation from the reference system introducing differentiation between economic operators in a comparable legal or factual situation in terms of the objective pursued by the reference tax system

| (97) | It results from the above that Article 180(2) of the CIR derogates from the general rules of the taxation of income of ‘companies’ (both by reference to the general rules under Articles 1 and 2 of the CIR and by reference to the less general rules under Article 179 of the CIR) and introduces differentiations between economic operators in a comparable legal or factual situation in terms of the objective pursued by the reference tax system. In fact, whichever reference system is adopted (corporate tax or taxation of the income of resident legal persons in general), the objective of income tax is to tax income, an objective in relation to which all undertakings are in the same factual and legal situation as regards the profits from their economic activities. |
| --- | --- |

(97)

It results from the above that Article 180(2) of the CIR derogates from the general rules of the taxation of income of ‘companies’ (both by reference to the general rules under Articles 1 and 2 of the CIR and by reference to the less general rules under Article 179 of the CIR) and introduces differentiations between economic operators in a comparable legal or factual situation in terms of the objective pursued by the reference tax system. In fact, whichever reference system is adopted (corporate tax or taxation of the income of resident legal persons in general), the objective of income tax is to tax income, an objective in relation to which all undertakings are in the same factual and legal situation as regards the profits from their economic activities.

| (98) | The fact that the ports do not pursue a profit motive or that they concentrate less on a short-term return on investment does not in any way alter this assessment. It has been established that a tax exemption in favour of non-profit undertakings which engage in economic activities is in general regarded as selective, even if it is granted in the light of the national legislator's objective of favouring entities regarded as socially deserving (81). The fact that the Belgian ports are owned and controlled by public authorities or – aside from economic activities – that they engage in non-economic activities, such as public authority tasks, does not imply that they are in a different legal and factual situation with respect to the application of corporate tax to the revenue generated by their economic activities. |
| --- | --- |

(98)

The fact that the ports do not pursue a profit motive or that they concentrate less on a short-term return on investment does not in any way alter this assessment. It has been established that a tax exemption in favour of non-profit undertakings which engage in economic activities is in general regarded as selective, even if it is granted in the light of the national legislator's objective of favouring entities regarded as socially deserving (81). The fact that the Belgian ports are owned and controlled by public authorities or – aside from economic activities – that they engage in non-economic activities, such as public authority tasks, does not imply that they are in a different legal and factual situation with respect to the application of corporate tax to the revenue generated by their economic activities.

81

| (99) | The measure at issue is therefore prima facie selective regarding the economic activities of the ports. |
| --- | --- |

(99)

The measure at issue is therefore prima facie selective regarding the economic activities of the ports.

prima facie

5.1.4.3.   
  Justification by the nature or general scheme of the system

Justification by the nature or general scheme of the system

| (100) | As indicated above, it is for the Member State to demonstrate that the derogation is justified by the nature or general scheme of the reference tax system. In the final step of the three-step analysis, only the characteristics inherent in the reference tax system can justify differentiated treatment. |
| --- | --- |

(100)

As indicated above, it is for the Member State to demonstrate that the derogation is justified by the nature or general scheme of the reference tax system. In the final step of the three-step analysis, only the characteristics inherent in the reference tax system can justify differentiated treatment.

| (101) | Conformity of a measure with national law cannot, as such, constitute justification by the scheme of the system unless it is shown that this justification results from characteristics inherent in the reference tax system (82). |
| --- | --- |

(101)

Conformity of a measure with national law cannot, as such, constitute justification by the scheme of the system unless it is shown that this justification results from characteristics inherent in the reference tax system (82).

82

| (102) | In this respect, Decision No 151/2016 of the Belgian Constitutional Court of 1 December 2016 in any case does not have the scope which the Belgian authorities try to assign to it. In fact, this decision does not concern the exemption from corporate tax in favour of the ports in relation to State aid, but the liability to corporate tax of intermunicipal associations, cooperation structures and project associations, in relation to the principles of equality and non-discrimination, which means that the absence of discrimination in national law does not prejudge the absence of selectivity within the meaning of Article 107(1) TFEU. |
| --- | --- |

(102)

In this respect, Decision No 151/2016 of the Belgian Constitutional Court of 1 December 2016 in any case does not have the scope which the Belgian authorities try to assign to it. In fact, this decision does not concern the exemption from corporate tax in favour of the ports in relation to State aid, but the liability to corporate tax of intermunicipal associations, cooperation structures and project associations, in relation to the principles of equality and non-discrimination, which means that the absence of discrimination in national law does not prejudge the absence of selectivity within the meaning of Article 107(1) TFEU.

| (103) | Likewise, since the decisive criterion for liability to corporate tax or to the tax on legal persons is the pursuit of a ‘business’ or ‘transactions of a profit-making nature’ by the entity concerned (Article 2 of the CIR), the arguments to the effect that the ports are exempt from corporate tax because they do not distribute their profit but reinvest it, that they pursue an objective beyond their individual interest, that they do not have the statutory objective of the pursuit of profit, that they are public authorities and that they carry out tasks in the general interest are not sufficient to justify more favourable tax treatment than that of other resident companies in relation to the guiding principles of the tax system. Other undertakings also reinvest their profit, pursueobjectives or generate effects on the economy beyond their individual interest (83) without being exempted from corporate tax on those accounts. Likewise, entities which are not public authorities (such as not-for-profit associations) may be subject to the tax on legal persons provided that they respect the general criterion laid down in Article 2 of the CIR, which means that the fact of belonging to the public sphere is not relevant either in relation to the national rules. Hence, these associations, in spite of their non-profit-oriented statutory objective, may be subject to corporate tax pursuant to the general criteria provided for in Articles 1 and 2 of the CIR if they engage in a ‘business’ or carry out ‘transactions of a profit-making nature’. |
| --- | --- |

(103)

Likewise, since the decisive criterion for liability to corporate tax or to the tax on legal persons is the pursuit of a ‘business’ or ‘transactions of a profit-making nature’ by the entity concerned (Article 2 of the CIR), the arguments to the effect that the ports are exempt from corporate tax because they do not distribute their profit but reinvest it, that they pursue an objective beyond their individual interest, that they do not have the statutory objective of the pursuit of profit, that they are public authorities and that they carry out tasks in the general interest are not sufficient to justify more favourable tax treatment than that of other resident companies in relation to the guiding principles of the tax system. Other undertakings also reinvest their profit, pursueobjectives or generate effects on the economy beyond their individual interest (83) without being exempted from corporate tax on those accounts. Likewise, entities which are not public authorities (such as not-for-profit associations) may be subject to the tax on legal persons provided that they respect the general criterion laid down in Article 2 of the CIR, which means that the fact of belonging to the public sphere is not relevant either in relation to the national rules. Hence, these associations, in spite of their non-profit-oriented statutory objective, may be subject to corporate tax pursuant to the general criteria provided for in Articles 1 and 2 of the CIR if they engage in a ‘business’ or carry out ‘transactions of a profit-making nature’.

83

| (104) | The alleged fact that the resources of the ports do not always cover their costs cannot constitute a justification for exemption from corporate tax since, in this situation of absence of profit, no tax is due under the normal system for the taxation of income, and since a loss can be carried forward and charged against any future profits generated by economic activities, exemption is superfluous and has a consequence only where the ports make a taxable profit. The Commission notes that, over the period 2004-2014 (eleven financial years), the results of the ports of Antwerp, Ghent, Zeebrugge and Ostend have been almost consistently positive (one negative result for Antwerp in 2011 and one negative result for Ostend in 2013), so the justification invoked is theoretical and even contradicted by the facts. Moreover, no provision for exemption from corporate tax similar to that benefiting the ports is made for other ‘companies’ in the event of their resources not covering their costs. |
| --- | --- |

(104)

The alleged fact that the resources of the ports do not always cover their costs cannot constitute a justification for exemption from corporate tax since, in this situation of absence of profit, no tax is due under the normal system for the taxation of income, and since a loss can be carried forward and charged against any future profits generated by economic activities, exemption is superfluous and has a consequence only where the ports make a taxable profit. The Commission notes that, over the period 2004-2014 (eleven financial years), the results of the ports of Antwerp, Ghent, Zeebrugge and Ostend have been almost consistently positive (one negative result for Antwerp in 2011 and one negative result for Ostend in 2013), so the justification invoked is theoretical and even contradicted by the facts. Moreover, no provision for exemption from corporate tax similar to that benefiting the ports is made for other ‘companies’ in the event of their resources not covering their costs.

| (105) | Similarly, the fact that certain costs not inherent in the object of an undertaking would not be deductible from corporate tax, pursuant to Article 49 of the CIR, does not provide any justification either for exempting the ports from corporate tax. Article 49 of the CIR provides that ‘the expenses incurred or borne by the taxpayer during the taxable period with a view to acquiring or retaining the taxable income shall be deductible’. First, the exemption from corporate tax in favour of the ports is unrelated to the fact that the ports would be financially disadvantaged by Article 49 of the CIR: the exemption from corporate tax concerns all the profits made and is not limited to the profits resulting from the possible absence of deductibility of certain expenses pursuant to Article 49 of the CIR. The exemption of ports from corporate tax is therefore not justified by a guiding principle of the Belgian tax system, even assuming that Article 49 of the CIR constitutes such a guiding principle. Furthermore, neither the Belgian authorities nor the interested parties have shown, in the light of the objective of the measure (84) and its drafting, how this kind of provision would in fact be of a nature to impede the deductibility of the costs of the non-economic activities of general interests of the ports. The ports of Antwerp and Zeebrugge for that matter only present this problem as a simple risk and not as an established fact. |
| --- | --- |

(105)

Similarly, the fact that certain costs not inherent in the object of an undertaking would not be deductible from corporate tax, pursuant to Article 49 of the CIR, does not provide any justification either for exempting the ports from corporate tax. Article 49 of the CIR provides that ‘the expenses incurred or borne by the taxpayer during the taxable period with a view to acquiring or retaining the taxable income shall be deductible’. First, the exemption from corporate tax in favour of the ports is unrelated to the fact that the ports would be financially disadvantaged by Article 49 of the CIR: the exemption from corporate tax concerns all the profits made and is not limited to the profits resulting from the possible absence of deductibility of certain expenses pursuant to Article 49 of the CIR. The exemption of ports from corporate tax is therefore not justified by a guiding principle of the Belgian tax system, even assuming that Article 49 of the CIR constitutes such a guiding principle. Furthermore, neither the Belgian authorities nor the interested parties have shown, in the light of the objective of the measure (84) and its drafting, how this kind of provision would in fact be of a nature to impede the deductibility of the costs of the non-economic activities of general interests of the ports. The ports of Antwerp and Zeebrugge for that matter only present this problem as a simple risk and not as an established fact.

84

| (106) | Again, the fact that the exemption of the ports from corporate tax, like the exemption from tax of the public or private property of certain public entities assigned to a public service, results from a general principle of law, or even from the Belgian Constitution itself, assuming this fact to have been established (85), is not as such necessarily of a nature to justify this exemption through the nature or general scheme of the system, in so far as any considerations taken into account by the authors of the Constitution or the national courts may be external to the smooth operation of the tax system or its guiding principles. |
| --- | --- |

(106)

Again, the fact that the exemption of the ports from corporate tax, like the exemption from tax of the public or private property of certain public entities assigned to a public service, results from a general principle of law, or even from the Belgian Constitution itself, assuming this fact to have been established (85), is not as such necessarily of a nature to justify this exemption through the nature or general scheme of the system, in so far as any considerations taken into account by the authors of the Constitution or the national courts may be external to the smooth operation of the tax system or its guiding principles.

85

| (107) | Finally, the arguments of the Belgian authorities and interested parties relating to the criteria developed by national case-law to assess whether a legal person is a ‘company’ within the meaning of Articles 1 and 2 of the CIR (in particular absence of industrial and commercial methods) are ineffective to demonstrate the justification for the measure by the logic inherent in the tax system, in so far as they aim in reality to prove that the ports are not ‘companies’, in which case the absence of liability to corporate tax would be selective due to the very choice of the criteria used to determine the limits of the reference system (see above) and not due to a derogation from this reference system which could possibly be justified. |
| --- | --- |

(107)

Finally, the arguments of the Belgian authorities and interested parties relating to the criteria developed by national case-law to assess whether a legal person is a ‘company’ within the meaning of Articles 1 and 2 of the CIR (in particular absence of industrial and commercial methods) are ineffective to demonstrate the justification for the measure by the logic inherent in the tax system, in so far as they aim in reality to prove that the ports are not ‘companies’, in which case the absence of liability to corporate tax would be selective due to the very choice of the criteria used to determine the limits of the reference system (see above) and not due to a derogation from this reference system which could possibly be justified.

5.1.5.   DISTORTION OF COMPETITION AND EFFECT ON TRADE

| (108) | In order to be classified as State aid, the measure must affect intra-EU trade and distort, or threaten to distort, competition. Both criteria are closely linked. |
| --- | --- |

(108)

In order to be classified as State aid, the measure must affect intra-EU trade and distort, or threaten to distort, competition. Both criteria are closely linked.

| (109) | According to case-law, a distortion of competition is generally established as soon as a State grants a financial advantage to an undertaking in a liberalised sector where there is, or could be, competition (86). It is indisputable that there is competition in the port sector and that it is exacerbated by the nature and characteristics specific to transport, and especially maritime and inland waterway transport. The transport services offered by the ports are, at least to some extent, in competition with those offered by or in other ports and by other providers of transport services in Belgium and in other Member States. |
| --- | --- |

(109)

According to case-law, a distortion of competition is generally established as soon as a State grants a financial advantage to an undertaking in a liberalised sector where there is, or could be, competition (86). It is indisputable that there is competition in the port sector and that it is exacerbated by the nature and characteristics specific to transport, and especially maritime and inland waterway transport. The transport services offered by the ports are, at least to some extent, in competition with those offered by or in other ports and by other providers of transport services in Belgium and in other Member States.

86

| (110) | Thus, in the context of the public consultation of the interested parties on a draft Regulation in the ports sector, ‘All stakeholders stressed the need for a stable and fair level playing field [...] for inter-port (competition between ports) [...] competition in the EU.’ (87) Likewise, the ports, and especially the inland ports and more generally inland waterway transport of which they form a constituent part, are in competition with other forms of transport. Moreover, competition is particularly exacerbated between the Belgian and Dutch coastal ports (mention is often made in this context of the Amsterdam — Rotterdam — Antwerp area). |
| --- | --- |

(110)

Thus, in the context of the public consultation of the interested parties on a draft Regulation in the ports sector, ‘All stakeholders stressed the need for a stable and fair level playing field [...] for inter-port (competition between ports) [...] competition in the EU.’ (87) Likewise, the ports, and especially the inland ports and more generally inland waterway transport of which they form a constituent part, are in competition with other forms of transport. Moreover, competition is particularly exacerbated between the Belgian and Dutch coastal ports (mention is often made in this context of the Amsterdam — Rotterdam — Antwerp area).

87

| (111) | By strengthening the position of beneficiaries in international trade, the measure is therefore likely to affect intra-EU trade and distort competition. |
| --- | --- |

(111)

By strengthening the position of beneficiaries in international trade, the measure is therefore likely to affect intra-EU trade and distort competition.

| (112) | Moreover, the alleged fact that similar State aid measures exist in other Member States and the behaviour of the Commission concerning these possible measures have no bearing on the classification of the measure concerned as State aid, since the measure in favour of the Belgian ports referred to in Article 180(2) of the CIR has the consequence of improving their competitive situation in relation to a reference situation in which they would be taxed under the normal conditions of the corporate tax system (88). |
| --- | --- |

(112)

Moreover, the alleged fact that similar State aid measures exist in other Member States and the behaviour of the Commission concerning these possible measures have no bearing on the classification of the measure concerned as State aid, since the measure in favour of the Belgian ports referred to in Article 180(2) of the CIR has the consequence of improving their competitive situation in relation to a reference situation in which they would be taxed under the normal conditions of the corporate tax system (88).

88

| (113) | In addition, even though it can be considered that the ports benefit from a legal monopoly to offer their services within the port they operate, the transport services they offer are, at least to a certain extent, in competition with those offered by other providers of transport services, notably the ports of other Member States. |
| --- | --- |

(113)

In addition, even though it can be considered that the ports benefit from a legal monopoly to offer their services within the port they operate, the transport services they offer are, at least to a certain extent, in competition with those offered by other providers of transport services, notably the ports of other Member States.

| (114) | The opinion of the Dutch competition authority cited by the interested parties is not relevant in the context of the current State aid procedure as it does not concern the assessment of a scheme in relation to Article 107 TFEU, which requires a specific examination of the competition criterion. Moreover, Article 25 of the Flemish Port Decree of 2 March 1999 implies that the tariffs used by the ports have a bearing on their competitive position (89). The existence of competition between European ports is moreover also confirmed by the comments of the Dutch public ports. |
| --- | --- |

(114)

The opinion of the Dutch competition authority cited by the interested parties is not relevant in the context of the current State aid procedure as it does not concern the assessment of a scheme in relation to Article 107 TFEU, which requires a specific examination of the competition criterion. Moreover, Article 25 of the Flemish Port Decree of 2 March 1999 implies that the tariffs used by the ports have a bearing on their competitive position (89). The existence of competition between European ports is moreover also confirmed by the comments of the Dutch public ports.

89

| (115) | Furthermore, the references to paragraphs 211, 219 and 220 of the Notice of 19 July 2016 are not relevant in the present case as they do not concern the port infrastructure mentioned in paragraph 215. The latter indicates that ‘public funding of port infrastructure favours an economic activity and is hence in principle subject to State aid rules’ and that ‘ports may compete with one another and the financing of port infrastructure is therefore also likely to affect trade between Member States’. Moreover, paragraphs 219 and 220 of the Notice indicate that aidfor the construction of the infrastructure concerned may not affect intra-Community trade or competition, whereas the measure at issue in the present procedure does not constitute aid for construction of infrastructure but operating aid linked to the profit made in the context of its operation. |
| --- | --- |

(115)

Furthermore, the references to paragraphs 211, 219 and 220 of the Notice of 19 July 2016 are not relevant in the present case as they do not concern the port infrastructure mentioned in paragraph 215. The latter indicates that ‘public funding of port infrastructure favours an economic activity and is hence in principle subject to State aid rules’ and that ‘ports may compete with one another and the financing of port infrastructure is therefore also likely to affect trade between Member States’. Moreover, paragraphs 219 and 220 of the Notice indicate that aidfor the construction of the infrastructure concerned may not affect intra-Community trade or competition, whereas the measure at issue in the present procedure does not constitute aid for construction of infrastructure but operating aid linked to the profit made in the context of its operation.

5.1.6.   CONCLUSION

| (116) | In the light of the arguments set out above, the tax exemption for the Belgian ports provided for in Article 180(2) of the CIR constitutes State aid within the meaning of Article 107(1) TFEU, in so far as the exempted revenue is generated by economic activities carried out by the ports. |
| --- | --- |

(116)

In the light of the arguments set out above, the tax exemption for the Belgian ports provided for in Article 180(2) of the CIR constitutes State aid within the meaning of Article 107(1) TFEU, in so far as the exempted revenue is generated by economic activities carried out by the ports.

5.2.   COMPATIBILITY OF THE MEASURE WITH THE INTERNAL MARKET

COMPATIBILITY OF THE MEASURE WITH THE INTERNAL MARKET

| (117) | It is for the Member State concerned to demonstrate that the State aid measures can be regarded as compatible with the internal market. In their various contributions, responses and comments, the Belgian authorities have not put forward any arguments concerning the compatibility of the measure. The Walloon Region and the Walloon ports consider that Article 93 and 106(2) TFEU could constitute appropriate bases for compatibility. The port authorities of Antwerp and Zeebrugge do likewise regarding Article 93 TFEU. |
| --- | --- |

(117)

It is for the Member State concerned to demonstrate that the State aid measures can be regarded as compatible with the internal market. In their various contributions, responses and comments, the Belgian authorities have not put forward any arguments concerning the compatibility of the measure. The Walloon Region and the Walloon ports consider that Article 93 and 106(2) TFEU could constitute appropriate bases for compatibility. The port authorities of Antwerp and Zeebrugge do likewise regarding Article 93 TFEU.

| (118) | First, Article 106(2) TFEU provides that compensation for carrying out public service tasks can be declared compatible with the internal market if it meets certain conditions (90). However, the Commission points out that the measure at issue, which links the amount of aid to the profits made, is not linked or limited to the net costs of the public service tasks (91), whereas this is a precondition for the aid to be recognised as compatible on the basis of Article 106(2) TFEU. Consequently, the measure cannot be regarded as public service compensation compatible with the internal market and is not compatible on the basis of Article 106(2) TFEU. |
| --- | --- |

(118)

First, Article 106(2) TFEU provides that compensation for carrying out public service tasks can be declared compatible with the internal market if it meets certain conditions (90). However, the Commission points out that the measure at issue, which links the amount of aid to the profits made, is not linked or limited to the net costs of the public service tasks (91), whereas this is a precondition for the aid to be recognised as compatible on the basis of Article 106(2) TFEU. Consequently, the measure cannot be regarded as public service compensation compatible with the internal market and is not compatible on the basis of Article 106(2) TFEU.

90

91

| (119) | Second, Article 93 TFEU stipulates that aids which meet the needs of coordination of transport or represent reimbursement for the discharge of certain obligations inherent in the concept of a public service can also be declared compatible with the internal market. Although the ports play a major role in the development of multimodal transport, not all the investments made by the ports are covered by Article 93 TFEU, which is limited to aids which meet the needs of coordination of transport. Moreover, the corporate tax exemption does not constitute investment aid but operating aid which is not targeted at specific investments The measure favours undertakings making the most profit or therefore having greater internal capacity prima facie to finance investments. It is not targeted either at compensation for the cost of certain obligations inherent in the concept of a public service, as pointed out above. In addition, the measure, a tax exemption, results in an unlimited advantage in relation to costs of any kind. It is therefore not limited to the amount needed for coordination of transport or for reimbursement for the discharge of certain obligations inherent in the concept of a public service and therefore does not guarantee compliance with the principle of proportionality. It has no identified incentive effect either. Therefore Article 93 TFEU is not applicable. |
| --- | --- |

(119)

Second, Article 93 TFEU stipulates that aids which meet the needs of coordination of transport or represent reimbursement for the discharge of certain obligations inherent in the concept of a public service can also be declared compatible with the internal market. Although the ports play a major role in the development of multimodal transport, not all the investments made by the ports are covered by Article 93 TFEU, which is limited to aids which meet the needs of coordination of transport. Moreover, the corporate tax exemption does not constitute investment aid but operating aid which is not targeted at specific investments The measure favours undertakings making the most profit or therefore having greater internal capacity prima facie to finance investments. It is not targeted either at compensation for the cost of certain obligations inherent in the concept of a public service, as pointed out above. In addition, the measure, a tax exemption, results in an unlimited advantage in relation to costs of any kind. It is therefore not limited to the amount needed for coordination of transport or for reimbursement for the discharge of certain obligations inherent in the concept of a public service and therefore does not guarantee compliance with the principle of proportionality. It has no identified incentive effect either. Therefore Article 93 TFEU is not applicable.

prima facie

| (120) | Third, and although Article 107(3)(c) was not invoked either by Belgium or by the interested parties, the Commission has examined whether the measure at issue is of a nature to ‘facilitate the development of certain economic activities or of certain economic areas’ without adversely affecting trading conditions to an extent contrary to the common interest. For the reasons already set out above (absence of proportionality, absence of incentive effect and absence of link with an identified public interest objective), the Commission considers however that Article 107(3)(c) TFEU is not applicable. |
| --- | --- |

(120)

Third, and although Article 107(3)(c) was not invoked either by Belgium or by the interested parties, the Commission has examined whether the measure at issue is of a nature to ‘facilitate the development of certain economic activities or of certain economic areas’ without adversely affecting trading conditions to an extent contrary to the common interest. For the reasons already set out above (absence of proportionality, absence of incentive effect and absence of link with an identified public interest objective), the Commission considers however that Article 107(3)(c) TFEU is not applicable.

5.3.   EXISTING AID OR NEW AID

EXISTING AID OR NEW AID

| (121) | The Belgian authorities explained that the ports have been subject to the tax on legal persons since the 1960s and that prior to this they were subject to schedular tax (impôt cédulaire/cedulaire belastingen), which is similar to the tax on legal persons. The tax treatment accorded to the ports was also linked to their legal status, which has changed over time. According to the Belgian authorities, the ports were already subject to the tax on legal persons prior to the entry into force of the Treaty of Rome in 1958. On the basis of the information received, it would appear that the ports have always been exempt from corporate tax. |
| --- | --- |

(121)

The Belgian authorities explained that the ports have been subject to the tax on legal persons since the 1960s and that prior to this they were subject to schedular tax (impôt cédulaire/cedulaire belastingen), which is similar to the tax on legal persons. The tax treatment accorded to the ports was also linked to their legal status, which has changed over time. According to the Belgian authorities, the ports were already subject to the tax on legal persons prior to the entry into force of the Treaty of Rome in 1958. On the basis of the information received, it would appear that the ports have always been exempt from corporate tax.

impôt cédulaire/cedulaire belastingen

| (122) | In accordance with Article 1(b)(i) of the Procedural Regulation, aid schemes that were put into effect prior to the entry into force of the Treaty are existing aid schemes. |
| --- | --- |

(122)

In accordance with Article 1(b)(i) of the Procedural Regulation, aid schemes that were put into effect prior to the entry into force of the Treaty are existing aid schemes.

| (123) | On the basis of the information available, the exemption from corporate tax for the ports was applicable before 1958 and has not undergone any substantial changes since then. Consequently, the measure is deemed to be an existing aid scheme. |
| --- | --- |

(123)

On the basis of the information available, the exemption from corporate tax for the ports was applicable before 1958 and has not undergone any substantial changes since then. Consequently, the measure is deemed to be an existing aid scheme.

6.   CONCERNING THE REQUEST OF THE BELGIAN AUTHORITIES TO GRANT A TRANSITIONAL PERIOD FOR THE BELGIAN PORTS

CONCERNING THE REQUEST OF THE BELGIAN AUTHORITIES TO GRANT A TRANSITIONAL PERIOD FOR THE BELGIAN PORTS

| (124) | As regards the request for a transitional period made by the Belgian authorities, the Commission recalls that, at this stage of the procedure concerning existing aid, a transitional period cannot in principle be granted, unless there are exceptional circumstances. In the final decision, the Commission can grant the Member State concerned only a reasonable period for implementation in the light of the modifications required. |
| --- | --- |

(124)

As regards the request for a transitional period made by the Belgian authorities, the Commission recalls that, at this stage of the procedure concerning existing aid, a transitional period cannot in principle be granted, unless there are exceptional circumstances. In the final decision, the Commission can grant the Member State concerned only a reasonable period for implementation in the light of the modifications required.

| (125) | The Commission also notes that, since the start of the cooperation procedure launched on 9 July 2014, the Belgian authorities have already had a certain amount of time in which to start considering possible legislative amendments. It also points out that there is no question, as the Belgian authorities feared, of the ports being made subject to corporate tax from 1 January 2017. |
| --- | --- |

(125)

The Commission also notes that, since the start of the cooperation procedure launched on 9 July 2014, the Belgian authorities have already had a certain amount of time in which to start considering possible legislative amendments. It also points out that there is no question, as the Belgian authorities feared, of the ports being made subject to corporate tax from 1 January 2017.

| (126) | In accordance with the mandatory role allotted to it by Articles 107 and 108 TFEU, the Commission must end State aid deemed incompatible with the internal market and re-establish the conditions for a level playing field as quickly as possible. If, at this stage in the procedure, the Commission considers that incompatible aid has been granted to certain undertakings, it cannot in principle suspend the State aid procedure in question or grant a transitional period, since that would amount to authorising the payment of aid incompatible with the internal market for a longer period, which would also be unfair in relation to competitors not receiving aid or even a lower amount of aid. The Commission notes in this respect that the Dutch ports, which have been subject to corporate tax since 1 January 2017, have asked it to take rapid action to ensure that the Belgian ports are subject to corporate tax. |
| --- | --- |

(126)

In accordance with the mandatory role allotted to it by Articles 107 and 108 TFEU, the Commission must end State aid deemed incompatible with the internal market and re-establish the conditions for a level playing field as quickly as possible. If, at this stage in the procedure, the Commission considers that incompatible aid has been granted to certain undertakings, it cannot in principle suspend the State aid procedure in question or grant a transitional period, since that would amount to authorising the payment of aid incompatible with the internal market for a longer period, which would also be unfair in relation to competitors not receiving aid or even a lower amount of aid. The Commission notes in this respect that the Dutch ports, which have been subject to corporate tax since 1 January 2017, have asked it to take rapid action to ensure that the Belgian ports are subject to corporate tax.

| (127) | As pointed out above, the possible existence of other State aid to other ports in other Member States does not justify suspension of the procedure or a delay in the entry into force of the national measures implementing the Commission decision. Such a delay would have the effect of prolonging the current distortions between Northern European ports, and more precisely between the Belgian ports, the Dutch ports already mentioned, and the French ports, since the latter are the subject of a similar parallel decision abolishing the tax exemptions from which they currently benefit. |
| --- | --- |

(127)

As pointed out above, the possible existence of other State aid to other ports in other Member States does not justify suspension of the procedure or a delay in the entry into force of the national measures implementing the Commission decision. Such a delay would have the effect of prolonging the current distortions between Northern European ports, and more precisely between the Belgian ports, the Dutch ports already mentioned, and the French ports, since the latter are the subject of a similar parallel decision abolishing the tax exemptions from which they currently benefit.

| (128) | Also the fact that the Commission allegedly allowed the Netherlands a longer implementation period in case SA.25338 (92) is not relevant in support of a request for a transitional period in the present case. The Commission treats all Member States equally and each case in the light of its specific characteristics and the Dutch case cannot be compared to the Belgian case. Incidentally, in its final decision, the Commission explicitly refused to allow the Netherlands a transitional period in spite of the existence of similar measures still in force in other Member States. It should also be noted that the Netherlands had to end the tax advantages at issue before Belgium, so its ports have not received favourable treatment. |
| --- | --- |

(128)

Also the fact that the Commission allegedly allowed the Netherlands a longer implementation period in case SA.25338 (92) is not relevant in support of a request for a transitional period in the present case. The Commission treats all Member States equally and each case in the light of its specific characteristics and the Dutch case cannot be compared to the Belgian case. Incidentally, in its final decision, the Commission explicitly refused to allow the Netherlands a transitional period in spite of the existence of similar measures still in force in other Member States. It should also be noted that the Netherlands had to end the tax advantages at issue before Belgium, so its ports have not received favourable treatment.

92

| (129) | In addition, in the present case, the arguments put forward by the Belgian authorities concerning compliance difficulties under domestic law do not constitute exceptional circumstances of a nature to justify a transitional period. In particular, as the Commission has pointed out above, the repeal of Article 180(2) of the CIR should suffice in principle for the ports to be made liable to corporate tax. Similarly, the fact that the transfer of a legal person from the tax on legal persons to corporate tax is not explicitly governed by Belgian tax law is nota sufficient argument; the Belgian tax authority has the possibility (and uses it) to reclassify the activity of an entity subject to the tax on legal persons in order for it to be subject to corporate tax, in the absence of any legislative measure organising this transfer. Finally, the Belgian authorities do not explain how the abolition of an unconditional exemption from corporate tax for the ports would be contrary to the principle of equal treatment, even supposing that this circumstance, derived from national law, is relevant for the allowance of a transitional period. On the contrary, the recent reform to make Belgian intermunicipal associations liable to corporate tax, when they were previously exempted from this tax and subject to the tax on legal persons (which is also the case for the ports), was presented by the Belgian Government as designed to promote equal treatment (93). |
| --- | --- |

(129)

In addition, in the present case, the arguments put forward by the Belgian authorities concerning compliance difficulties under domestic law do not constitute exceptional circumstances of a nature to justify a transitional period. In particular, as the Commission has pointed out above, the repeal of Article 180(2) of the CIR should suffice in principle for the ports to be made liable to corporate tax. Similarly, the fact that the transfer of a legal person from the tax on legal persons to corporate tax is not explicitly governed by Belgian tax law is nota sufficient argument; the Belgian tax authority has the possibility (and uses it) to reclassify the activity of an entity subject to the tax on legal persons in order for it to be subject to corporate tax, in the absence of any legislative measure organising this transfer. Finally, the Belgian authorities do not explain how the abolition of an unconditional exemption from corporate tax for the ports would be contrary to the principle of equal treatment, even supposing that this circumstance, derived from national law, is relevant for the allowance of a transitional period. On the contrary, the recent reform to make Belgian intermunicipal associations liable to corporate tax, when they were previously exempted from this tax and subject to the tax on legal persons (which is also the case for the ports), was presented by the Belgian Government as designed to promote equal treatment (93).

93

| (130) | Moreover, the Commission has never approved the measure at issue which has never been notified by the Belgian authorities. The principles of legal certainty and legitimate expectations are therefore not applicable in the present case, especially as, since the measure is existing aid, the Commission cannot order the recovery of the aid granted in the past. |
| --- | --- |

(130)

Moreover, the Commission has never approved the measure at issue which has never been notified by the Belgian authorities. The principles of legal certainty and legitimate expectations are therefore not applicable in the present case, especially as, since the measure is existing aid, the Commission cannot order the recovery of the aid granted in the past.

7.   CONCERNING THE REQUESTS OF THE DUTCH PORTS

CONCERNING THE REQUESTS OF THE DUTCH PORTS

| (131) | As regards the request by the Dutch ports to defer their liability to corporate tax, the Commission recalls that the present procedure does not concern Dutch ports, but Belgian ports. In its final decision in case SA.25338 concerning the Dutch ports (94),the Commission refused to delay the liability of Dutch ports to corporate tax for the same reasons of principle as those set out in the present decision. The liability of the Dutch ports to corporate tax derives after all from Dutch national law and the Commission, in any case under Article 107 TFEU, is unable to require a Member State to change its legislation to grant State aid to certain economic operators. |
| --- | --- |

(131)

As regards the request by the Dutch ports to defer their liability to corporate tax, the Commission recalls that the present procedure does not concern Dutch ports, but Belgian ports. In its final decision in case SA.25338 concerning the Dutch ports (94),the Commission refused to delay the liability of Dutch ports to corporate tax for the same reasons of principle as those set out in the present decision. The liability of the Dutch ports to corporate tax derives after all from Dutch national law and the Commission, in any case under Article 107 TFEU, is unable to require a Member State to change its legislation to grant State aid to certain economic operators.

94

8.   CONCLUSION

CONCLUSION

| (132) | The corporate tax exemption for the Belgian ports mentioned in Article 180(2) of the CIR constitutes an existing State aid scheme which is incompatible with the internal market. |
| --- | --- |

(132)

The corporate tax exemption for the Belgian ports mentioned in Article 180(2) of the CIR constitutes an existing State aid scheme which is incompatible with the internal market.

| (133) | It is therefore appropriate for the Belgian authorities to abolish the exemption from corporate tax at issue and to subject the entities in question to corporate tax. This measure should be adopted before the end of the calendar year in progress on the date of this decision and apply at the latest to the income generated by the economic activities from the start of the tax year following its adoption, |
| --- | --- |

(133)

It is therefore appropriate for the Belgian authorities to abolish the exemption from corporate tax at issue and to subject the entities in question to corporate tax. This measure should be adopted before the end of the calendar year in progress on the date of this decision and apply at the latest to the income generated by the economic activities from the start of the tax year following its adoption,

HAS ADOPTED THIS DECISION:

Article 1

The corporate tax exemption for the Belgian ports listed in Article 180(2) of the CIR constitutes an existing State aid scheme which is incompatible with the internal market.

Article 2

1.   Belgium shall remove the corporate tax exemption referred to in Article 1 and subject the entities for which this exemption applies to corporate tax.

2.   The measure by which Belgium executes its obligations under paragraph 1 shall be adopted before the end of the calendar year in progress on the date of notification of this decision. This measure shall apply at the latest to the income from economic activities generated from the start of the tax year following its adoption.

Article 3

Belgium shall inform the Commission within two months of the date of notification of this decision of the measures taken to comply with it.

Article 4

This Decision is addressed to the Kingdom of Belgium.

Done at Brussels, 27 July 2017

For the Commission

Margrethe VESTAGER

Member of the Commission

---

(1)  
  OJ C 302, 19.8.2016, p. 5.

1

(2)  Council Regulation (EU) 2015/1589 of 13 July 2015 laying down detailed rules for the application of Article 108 of the Treaty on the Functioning of the European Union (OJ L 248, 24.9.2015, p. 9).

2

(3)  
  OJ C 156, 2.5.2016, pp. 46-47.

3

(4)  Order of 9 March 2016, Port Autonome du Centre et de l'Ouest SCRL and others v Commission, T-438/15, EU:T:2016:142.

4

Port Autonome du Centre et de l'Ouest SCRL and others

Commission

(5)  
  OJ C 175, 17.5.2016, pp. 23-24.

5

(6)  Order of 27 October 2016, Port Autonome du Centre et de l'Ouest SCRL and others v Commission, T-116/16, ECLI:EU:T:2016:656.

6

Port Autonome du Centre et de l'Ouest SCRL and others

Commission

(7)  
  OJ C 302, 19.8.2016, p. 5.

7

(8)  Article 1(1) of the CIR: ‘The following shall be established as income tax:

8

| 1. | a tax on the total income of the inhabitants of the Kingdom, in the form of a tax on natural persons; |
| --- | --- |

1.

a tax on the total income of the inhabitants of the Kingdom, in the form of a tax on natural persons;

| 2. | a tax on the total income of resident companies, in the form of corporate tax; |
| --- | --- |

2.

a tax on the total income of resident companies, in the form of corporate tax;

| 3. | a tax on the income of Belgian legal persons, other than companies, in the form of a tax on legal persons; |
| --- | --- |

3.

a tax on the income of Belgian legal persons, other than companies, in the form of a tax on legal persons;

| 4. | a tax on the income of non-residents, in the form of a tax on non-residents.’ |
| --- | --- |

4.

a tax on the income of non-residents, in the form of a tax on non-residents.’

(9)  Article 179 of the CIR repeats this rule set out in Article 1. The corporate tax rules are provided for in Title III, Articles 179 to 219bis of the CIR.

9

bis

(10)  The rules in respect of the tax on legal persons are provided for in Title IV, Articles 220 to 226 of the CIR.

10

(11)  Article 180(2) of the CIR refers to the following entities: SCRL Port autonome du Centre et de l'Ouest (a limited liability cooperative company), Compagnie des installations maritimes de Bruges, the Port of Brussels, the autonomous municipal port authorities of Antwerp, Ostend and Ghent, the autonomous ports of Liège, Charleroi and Namur, the public limited companies Waterwegen en Zeekanaal and De Scheepvaart. Article 110 of the Law of 18 December 2016 organising the recognition and management of crowdfunding and laying down miscellaneous financial provisions (Loi du 18 décembre 2016 organisant la reconnaissance et l'encadrement du crowdfunding et portant des dispositions diverses en matière de finances) (Moniteur belge of 20 December 2016; Numac: 2016003460) provides on the subject of Article 180(2) of the CIR that: ‘(...) the words ‘the autonomous municipal port authorities of Antwerp and Ostend, the public limited company Havenbedrijf Gent’ shall be replaced by the words ‘the autonomous municipal port authority of Ostend, the public limited companies Havenbedrijf Antwerpen and Havenbedrijf Gent’
  ’.

11

Loi du 18 décembre 2016 organisant la reconnaissance et l'encadrement du crowdfunding et portant des dispositions diverses en matière de finances

Moniteur belge

(12)  Article 220 of the CIR: ‘The following shall be subject to the tax on legal persons: (...) 2. legal persons who, by virtue of Article 180, are not subject to the corporate tax; (...)’.

12

(13)  Article 221 of the CIR: ‘The legal persons subject to the tax on legal persons shall be taxable only with regard to:

13

| 1. | the cadastral income from their immovable property located in Belgium, (...); |
| --- | --- |

1.

the cadastral income from their immovable property located in Belgium, (...);

| 2. | the income and proceeds from investment capital and movable assets, including the first tranches of income referred to in Article 21(5), (6) and (10), and the interest referred to in Article 21(13), as well as the sundry income referred to in Article 90(5) to (7) and (11).’ |
| --- | --- |

2.

the income and proceeds from investment capital and movable assets, including the first tranches of income referred to in Article 21(5), (6) and (10), and the interest referred to in Article 21(13), as well as the sundry income referred to in Article 90(5) to (7) and (11).’

(14)  Article 225 of the CIR: ‘The tax relating to the income referred to in Article 221 shall be equal to the property tax and withholding tax. (...)’.

14

(15)  Judgment of the Court of Justice of 24 October 2002, Aéroports de Paris v Commission, C-82/01, EU:C:2002:617.

15

Aéroports de Paris

Commission

(16)  C.C., 19 November 2015, No 162/2015; Moniteur belge of 5 February 2016; Numac: 2015205632.

16

Moniteur belge

(17)  
  Moniteur belge of 8 April 1999; Numac: 1999035415. See Article 13(3): ‘Port charges shall be set autonomously by the port authorities, in reasonable proportion to the value of the consideration received (...)’.

17

Moniteur belge

(18)  This point is also mentioned by the Flemish Port Commission. It specifies that government funding for maritime access infrastructure (in particular the functioning of the locks and dredging of shipping channels crossing certain ports), the basic port infrastructure and the harbourmaster's services has been reduced in recent years.

18

(19)  C.C., 1 December 2016, No 151/2016; Moniteur belge of 12 January 2017; Numac: 2016206080.

19

Moniteur belge

(20)  
  OJ C 262, 19.7.2016, p. 1.

20

(21)  Report by the Dutch competition authority on the port authority of Rotterdam, 2005, P_600019/255.R261, p. 2.

21

(22)  Judgment of the Court of Justice of 16 June 1987, Commission v Italy, 118/85, EU:C:1987:283, paragraph 7; Judgment of the Court of Justice of 18 June 1998, Commission v Italy, C-35/96, EU:C:1998:303, paragraph 36.

22

Commission

Italy

Commission

Italy

(23)  Judgment of the Court of Justice of 12 September 2000, Pavlov and others, Joined Cases C-180/98 to C-184/98, EU:C:2000:428, paragraph 74.

23

Pavlov and others

(24)  Judgment of the General Court of 24 March 2011, Freistaat Sachsen and Land Sachsen-Anhalt and others v Commission, Joined Cases T-443/08 and T-455/08, EU:T:2011:117, in particular paragraphs 93 and 94, upheld on appeal in Judgment of the Court of Justice of 19 December 2012, Mitteldeutsche Flughafen and Flughafen Leipzig-Halle v Commission, C-288/11 P, EU:C:2012:821, in particular paragraphs 40-43, 47. Judgment of the General Court of 12 December 2000, Aéroports de Paris v Commission, T-128/98, EU:T:2000:290, paragraph 125, confirmed on appeal in Judgment of the Court of Justice of 24 October 2002, Aéroports de Paris v Commission, C-82/01 P, EU:C:2002:617.

24

Freistaat Sachsen and Land Sachsen-Anhalt and others

Commission

Mitteldeutsche Flughafen and Flughafen Leipzig-Halle

Commission

Aéroports de Paris

Commission

Aéroports de Paris

Commission

(25)  See, for example, Commission Decision of 15 December 2009 in State aid case N 385/2009 – Public financing of port infrastructure in Ventspils Port (OJ C 62, 13.3.2010, p. 7); Commission Decision of 15 June 2011 in State aid case 44/2010 – Latvia – Public financing of port infrastructure in Krievu salā (OJ C 215, 21.7.2011, p. 21); Commission Decision of 22 February 2012 in State aid case SA.30742 (N/2010) – Lithuania – Construction of infrastructure for the ferry terminal in Klaipėda (OJ C 121, 26.4.2012, p. 1); Commission Decision of 2 July 2013 in State aid case SA.35418 (2012/N) – Greece – Extension of Piraeus port (OJ C 256, 5.9.2013, p. 2); Commission Decision of 18 September 2013 in State aid case SA.36953 (2013/N) – Spain – Port Authority of Bahía de Cádiz (OJ C 335, 16.11.2013, p. 1).

25

(26)  See, for example, Commission Decision of 18 September 2013 in State aid case SA.36953 (2013/N) – Spain – Port Authority of Bahía de Cádiz (OJ C 335, 16.11.2013, p. 1).

26

(27)  Judgment of the Court of Justice of 10 December 1991, Merci Convenzionali Porto di Genova, C-179/90, EU:C:1991:464, paragraphs 3 and 27; Judgment of the Court of Justice of 17 July 1997 in case C-242/95 GT-Link A/S v de Danske Statsbaner, EU:C:1997:376, paragraph 52: ‘It does not follow, however, that the operation of any commercial port constitutes the operation of a service of general economic interest or, in particular, that all the services provided in such a port amount to such a task.’

27

Merci Convenzionali Porto di Genova

GT-Link A/S

de Danske Statsbane

(28)  See, for example, Commission Decision of 18 December 2013 in State aid case SA.37402 – Freeport of Budapest (OJ C 141, 9.5.2014, p. 1); Commission Decision of 17 October 2012 in State aid case SA.34501 – Inland port Königs Wusterhausen/Wildau (OJ C 176, 21.6.2013, p. 1); Commission Decision of 1 October 2014 in State aid case SA.38478 – Györ-Gönyü Public Port (OJ C 418, 21.11.2014, p. 1).

28

(29)  See Article 15(1) (concerning the ‘general port charges’) of the Flemish Port Decree of 2 March 1999.

29

(30)  See Article 15(2) (concerning the ‘particular port charges’) of the Flemish Port Decree of 2 March 1999.

30

(31)  See Articles 25(2) (‘The Flemish Government shall be authorised to set up a joint concertation commission. A five-year promotion plan, based on an industrial economy model, shall be drawn up’) and 26(1) (‘Disputes between port authorities in operation matters, especially with regard to the commercial activities of the port authorities [...] shall be regulated by the port disputes commission [...]’) of the Flemish Port Decree of 2 March 1999. See too Article 3 of the Decree of 1 April 1999 on the creation of the autonomous Port of the Centre and West (Décret du 1er avril 1999 relatif à la création du Port autonome du Centre et de l'Ouest) (‘Port activities shall mean the activities associated with the function of the Company, i.e. loading, unloading, storage and transport of goods, as well as industrial, commercial and service activities.’)

31

Décret du 1er

(32)  See comment No 179/10 on the CIR below.

32

(33)  See comment No 179/11 on the CIR below.

33

(34)  See comments Nos 2/4, 179/10 and 179/11 on the CIR.

34

| — | Number 2/4: ‘
  “Company” means any company, association, establishment or body of any kind which:






  (a) | is duly constituted; |
| --- | --- | --- |

—

Number 2/4: ‘
  “Company” means any company, association, establishment or body of any kind which:

(a)

is duly constituted;

| (b) | has legal personality; |
| --- | --- |

(b)

has legal personality;

| (c) | engages in a business or transactions of a profit-making nature (Article 2, § 2(1), first line, CIR 92). |
| --- | --- |

(c)

engages in a business or transactions of a profit-making nature (Article 2, § 2(1), first line, CIR 92).

For fuller explanations on the subject of the concepts referred to under points a, b and c, reference is made to 179/6 to 20.’

| — | Number 179/10: ‘The expression “engages in a business” means “operating an industrial, commercial or agricultural undertaking of some kind”, the profits from which would constitute professional income subject in this capacity to personal income tax, if this operation were carried out by a natural person or a company, etc., which does not have legal personality (Articles 23, § 1(1) and 24, CIR 92).’ |
| --- | --- |

—

Number 179/10: ‘The expression “engages in a business” means “operating an industrial, commercial or agricultural undertaking of some kind”, the profits from which would constitute professional income subject in this capacity to personal income tax, if this operation were carried out by a natural person or a company, etc., which does not have legal personality (Articles 23, § 1(1) and 24, CIR 92).’

| — | Number 179/11: ‘The expression “engages in transactions of a profit-making nature” covers both:






  1. | “profit-making occupations” (Articles 23, § 1(2) and 27, CIR 92), this expression being interpreted by case-law to mean “occupation with a profit motive”; |
| --- | --- | --- |

—

Number 179/11: ‘The expression “engages in transactions of a profit-making nature” covers both:

1.

“profit-making occupations” (Articles 23, § 1(2) and 27, CIR 92), this expression being interpreted by case-law to mean “occupation with a profit motive”;

| 2. | “occupations of a profit-making nature, but not for profit”, which are characterised by a permanent professional activity consisting of:






  (a) | the repetition, which is sufficiently frequent to constitute an “occupation”, of operations of an industrial, commercial or agricultural nature; |
| --- | --- | --- |

2.

“occupations of a profit-making nature, but not for profit”, which are characterised by a permanent professional activity consisting of:

(a)

the repetition, which is sufficiently frequent to constitute an “occupation”, of operations of an industrial, commercial or agricultural nature;

| (b) | the use of industrial or commercial methods. |
| --- | --- |

(b)

the use of industrial or commercial methods.

It is therefore a matter under point 2 of occupations which, essentially, normally generate profits even if the legal person engaging in them does not, according to its statutes or in fact, have a profit motive.’

(35)  Commission Decision of 16 October 2002 in State aid case N 438/02 – Belgium – Subsidies to port authorities for carrying out public authority tasks, OJ C 284, 21.11.2002, p. 2.

35

(36)  Judgment of the Court of Justice of 18 March 1997, Calì & Figli, C-343/95, EU:C:1997:160, paragraph 22.

36

Calì & Figli,

(37)  Protocol (No 26) on services of general interest (annexed to the TFEU).

37

(38)  Judgment of the Court of Justice of 16 November 1995, FFSA and others, C-244/94, EU:C:1995:392, paragraph 21; Judgment of the Court of Justice of 1 July 2008, MOTOE, C-49/07, EU:C:2008:376, paragraphs 27 and 28.

38

FFSA and others

MOTOE

(39)  See paragraph 14 of the Notice of 19 July 2016.

39

(40)  Judgment of the Court of Justice of 1 July 2008, MOTOE, C-49/07, EU:C:2008:376, paragraph 25; Judgment of the Court of Justice of 24 October 2002, Aéroports de Paris, C-82/01 P, paragraphs 74 and 77.

40

MOTOE

Aéroports de Paris

(41)  The Commission points out in particular that, according to the Belgian authorities, some Belgian ports transfer part of their profits to their shareholder.

41

(42)  Judgment of the Court of Justice of 29 October 1980, Van Landewyck, Joined Cases 209/78 to 215/78 and 218/78, EU:C:1980:248, paragraph 88; Judgment of the Court of Justice of 16 November 1995, FFSA and others, C-244/94, EU:C:1995:392, paragraph 21; Judgment of the Court of Justice of 1 July 2008, MOTOE, C-49/07, EU:C:2008:376, paragraphs 27 and 28; Judgment of the Court of Justice of 10 January 2006, Cassa di Risparmio di Firenze and others, C-222/04, EU:C:2006:8, paragraphs 122 and 123.

42

Van Landewyck

FFSA and others

MOTOE

Cassa di Risparmio di Firenze and others

(43)  Judgment of the Court of Justice of 24 October 2002, Aéroports de Paris v Commission, C-82/01 P, EU:C:2002:617, paragraph 78.

43

Aéroports de Paris

Commission

(44)  An SGEI is the ‘supply of services which, if it were considering its own commercial interest, an undertaking would not assume or would not assume to the same extent or under the same conditions’, notably regarding price and quality (see points 47 and 48 of the Communication from the Commission on the application of the European Union State aid rules to compensation granted for the provision of services of general economic interest, OJ C 8, 11.1.2012, pp. 4-14).

44

(45)  For the port of Antwerp in 2015, the various port charges and fees accounted for EUR 290.3 million or approximately 84 % of current revenue (which also includes operating subsidies paid by the Flemish Government) and 113 % of current expenditure (cf. Annual Report 2015, pp. 61-62).

45

(46)  Article 25(3) of the Flemish Port Decree of 2 March 1999 provides that ‘The Flemish Government and the port authorities shall develop initiatives with a view to achieving [...] harmonious tariff structures in the Flemish seaports so as to guarantee the Flemish seaports a level playing field’ . The documents annexed to the comments forwarded by the Port of Brussels (p. 102) also show that prices (and discounts) are considered as a means to influence demand-side behaviour: ‘The Port actively seeks to develop waterway transport and to strengthen modal transfer to waterways by means of the following measures: The Port pursues its tariff incentive policy, i.e. navigation rights of EUR 0,00025 tonne/km and an exemption from docking charges for maritime traffic, new forms of traffic and forms of traffic on the increase. The Region will compensate the Port for the loss of revenue associated with this measure. [...] In this context, the Port provides rebates on the concession fees for its land to undertakings which are the heaviest users of the waterways. [...].’

46

(47)  Judgment No 162/2015 of 19 November 2015 of the Constitutional Court, point A.2.2.

47

(48)  See paragraph 220 of the Notice of 19 July 2016.

48

(49)  The port charges relating to inland shipping are subject to VAT. See Article 5 of the tariffs of the port of Antwerp for inland shipping (Tariff regulations for inland shipping, p. 11). On the other hand, due to a specific exemption provided for in Article 139 of the VAT Directive (Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, OJ L 347, 11.12.2006, p. 1), reproduced in Article 42(1)(5) of the Belgian VAT Code, the port charges relating to international shipping are specially exempted from VAT (no reference to VAT in the Port of Antwerp Tariff Regulations for Sea-going Vessels). The need for a specific exemption shows that the supplies of services at issue would normally be included in the scope of VAT as supplies of services within the meaning of Article 2(1)(c) of the VAT Directive.

49

(50)  Decision of 10 December 2008 (OJ C 137, 17.6.2009).

50

(51)  Decision of 4 July 2006 (OJ C 276, 14.11.2006).

51

(52)  Decision of 7 June 2006 (OJ C 207, 31.8.2006).

52

(53)  Judgment of General Court of 24 March 2011 in Joined Cases T-443/08 and T-455/08 Freistaat Sachsen and others v Commission, cited above.

53

Freistaat Sachsen and others

Commission

(54)  Judgment of the Court of Justice of 22 May 2003, Korhonen, C-18/01, EU:C:2003:300.

54

(55)  Council Directive 92/50/EEC of 18 June 1992 relating to the coordination of procedures for the award of public service contracts (OJ L 209, 24.7.1992, p. 1).

55

(56)  Decision of 27 March 2014 GRW land development scheme for industrial and commercial use (OJ C 141, 9.5.2014, p. 1).

56

(57)  See Commission Decision in State aid case SA.36953 (2013/N) Port of Bahía de Cádiz, recital 29 (OJ C 335, 16.11.2013, p. 1), Commission decision in State aid case SA.30742 (N/2010) Klaipėda, recitals 8 and 9 (OJ C 121, 26.4.2012, p. 1), Commission Decision in State aid case N 44/2010 Port of Krievu Sala, recital 67 (OJ C 215, 21.7.2011, p. 21), Commission Decision in State aid case C 39/2009 (ex N 385/2009) Port of Ventspils, recitals 30, 57 and 58 (OJ C 62, 13.3.2010, p. 7).

57

(58)  See, for example, point 2.7 of the document General terms and conditions for concessions in the Antwerp port area. Also see the Tariff conditions of the port of Liège.

58

(59)  Answer to Parliamentary question No 397 of Mr Willem-Frederik Schiltz of 7 May 2013 (Lower House, Questions and Answers, 2012-2013, QRVA 53/128 of 9 September 2013, p. 86); answer to oral parliamentary question No 4288 of Mr Servais Verherstraeten of 11 May 2011 (Summary record 53, Finance and Budget Committee 229 of 11 May 2011, p. 22.). The Court of Justice also considers that this activity is an economic activity within the meaning of the VAT Directive (see Judgment of the Court of Justice of 25 October 2007, Ministero delle Finanze — Ufficio IVA di Milano v CO.GE.P. Srl, C-174/06, EU:C:2007:634, paragraphs 31-35).

59

Ministero delle Finanze — Ufficio IVA di Milano

CO.GE.P. Srl

(60)  See paragraph 207 of the Notice of 19 July 2016.

60

(61)  Judgment of the Court of Justice of 8 November 2001, Adria-Wien Pipeline, C-143/99, EU:C:2001:598.

61

Adria-Wien Pipeline

(62)  See Article 221 of the CIR.

62

(63)  See Article 225 of the CIR.

63

(64)  See paragraph 206 of the Notice of 19 July 2016 and, as regards SGEIs, the Judgment of the Court of Justice of 24 July 2003, Altmark Trans, C-280/00, EU:C:2003:415, paragraphs 87 to 95.

64

Altmark Trans

(65)  Judgment of the Court of Justice of 16 May 2000, France v Ladbroke Racing and Commission, C-83/98 P, EU:C:2000:248, paragraphs 48 to 51.

65

France

Ladbroke Racing and Commission

(66)  Judgment of the Court of Justice of 22 June 2006, Belgium and Forum 187 v Commission, Joined Cases C-182/03 and C-217/03, EU:C:2006:416, paragraph 128.

66

Belgium and Forum 187

Commission

(67)  Judgment of the Court of Justice of 15 December 2005, Italy v Commission, C-66/02, EU:C:2005:768, paragraph 94.

67

Italy

Commission

(68)  Judgment of the Court of Justice of 6 September 2006, Portugal v Commission, C-88/03, EU:C:2006:511, paragraph 56; Judgment of the Court of Justice of 8 September 2011, Paint Graphos and others, Joined Cases C-78/08 to C-80/08, EU:C:2011:550, paragraph 49.

68

Portugal

Commission

Paint Graphos and others

(69)  This is the case where a measure derives directly from the intrinsic basic or guiding principles of the reference system or where it is the result of inherent mechanisms necessary for the functioning and effectiveness of the system, see Judgment of the Court of Justice of 8 September 2011, Paint Graphos and others, Joined Cases C-78/08 to C-80/08, EU:C:2011:550, paragraph 69.

69

Paint Graphos and others

(70)  Judgment of the Court of Justice of 6 September 2006, Portugal v Commission, C-88/03, EU:C:2006:511, paragraph 81; Judgment of the Court of Justice of 8 September 2011, Paint Graphos and others, Joined Cases C-78/08 to C-80/08, EU:C:2011:550, paragraph 65.

70

Portugal

Commission

Paint Graphos and others

(71)  See comment 179/2: ‘Already now, attention is drawn to the fact that, although they may in principle be regarded as taxpayers subject to corporate tax, the following are excluded from corporate tax on the basis of Articles 180 to 182 of the CIR 92: 1. legal persons who are ‘unconditionally’ excluded from corporate tax (see comment on Article 180 of the CIR 92); [...]’.

71

(72)  See comment No 179/16: ‘Belgian commercial companies (SA, SCA, SNC, SCS, SPRL, SC and SCRIS) are in principle constituted to engage in a profit-making activity. As a general rule, they therefore in fact engage in either an industrial, commercial or agricultural business of some kind, or a profit-making occupation, or both at once, and all the profits in general of any kind that they make must be considered as resulting from this activity.’ Also see points A.2.1 and B3.1 of judgment No 148/2012 of the Constitutional Court of 6 December 2012 (Moniteur belge, 29 January 2013). In response to a parliamentary question, the Minister for Finance stated that, as far as the autonomous municipal authorities are concerned, it was necessary to examine on a case-by-case basis whether they were subject to corporate tax or the tax on legal persons, depending on the nature of the activities concerned. Since by virtue of the Royal Decree of 10 April 1995, these activities must be of an industrial or commercial nature, it can be considered, according to the Minister, that the autonomous municipal authorities are in principle subject to corporate tax (QRVA, Lower House, 1996-1997, No 86, 16 June 1997, pp. 11749-11750; QRVA, Lower House 2001-2002, 26 March 2002, CRIV 50 COM 702, pp. 8-9).

72

Moniteur belge

(73)  See Article 25(2): ‘The Flemish Government shall be authorised to create a joint concertation commission. A five-year promotion plan, based on an industrial economy model, shall be drawn up.’

73

(74)  See Article 26(1): ‘Disputes between port authorities in operational matters, especially with regard to the commercial activities of the port authorities [...] shall be regulated by the port disputes commission [...]’.

74

(75)  See Judgment No 136/98 of 16 December 1998 (Moniteur belge of 6 January 1999, p. 261), point A.7.1: ‘According to the Council of Ministers, the companies and legal persons referred to in Article 220(2) of the CIR are in comparable situations. Although Article 180 of the CIR excludes the aforementioned legal persons from corporate tax, they are in fact legal persons who engage in a business or transactions of a profit-making nature within the meaning of Article 2, § 2(1) and (2) of the CIR.’ Also see point A.7.2: ‘An objective criterion exists to distinguish between the legal persons referred to in Article 220(1) and (3), on the one hand, and those referred to in Article 220(2) [namely the ports] on the other hand, in that only the latter category engages in transactions of a profit-making nature. [...]’

75

Moniteur belge

(76)  Public meeting of Wednesday 29 January 1997, Finance and Budget Committee, Question by Mr Jacques Simonet to the Deputy Prime Minister and Minister for Finance and Foreign Trade on the liability of Belgian ports to the tax on legal persons (No 1017). See http://www3.dekamer.be/digidocanha/K0112/K01120466/K01120466.PDF p. 5.

76

(77)  The Court of Justice, in its judgment of 8 September 2011 (judgment Paint Graphos and others, Joined cases C-78/08 to C-80/08, EU:C:2011:550, paragraphs 55 and following), points out that the primacy of the individual principle, the ‘one man, one vote’ rule or the management in the interests of the members of the entity in question constitute particular operating principles, which are characteristics that do not arise in the case of the ports.

77

Paint Graphos and others

(78)  Judgment of the Court of Justice of 10 January 2006, Cassa di Risparmio di Firenze and others, C-222/04, EU:C:2006:8, paragraphs 136 and 137.

78

Cassa di Risparmio di Firenze and others

(79)  See Judgment of the Court of Justice of 15 November 2011, Commission and Spain v Government of Gibraltar and United Kingdom, Joined Cases C-106/09 P and C-107/09 P, EU:C:2011:732, paragraphs 101 et seq.

79

Commission and Spain

Government of Gibraltar and United Kingdom

et seq.

(80)  The interpretation according to which Article 180(2) of the CIR merely applies the general rules to the ports, considering that they are not ‘companies’, is examined below.

80

(81)  Judgment of the Court of Justice of 10 January 2006, Cassa di Risparmio di Firenze and others, C-222/04, EU:C:2006:8, paragraphs 136 and 137.

81

Cassa di Risparmio di Firenze and others

(82)  National law can decide on the conformity of a measure with higher sources of law in the light of criteria other than the smooth functioning of the tax system.

82

(83)  Certain entities, and especially the intermunicipal associations recently made subject to corporate tax in Belgium, also carry out tasks of general interest. See point 19.1 of judgment No 151/2016 of 1 December 2016 of the Belgian Constitutional Court recalling that the intermunicipal associations were ‘set up for a general interest purpose’ and ‘perform the task of fulfilling a municipal obligation’.

83

(84)  According to point 11 of the official comments on Article 49, the non-deductibility refers to ‘purely private transactions’, whereas it is argued in the present procedure that the costs incurred under the general interest would not be deductible.

84

(85)  The comments received by the Commission relate to the property of the public authorities ‘by definition’, referred to in Article 220(1) of the CIR, namely ‘the State, the Communities, the Regions, the provinces, the metropolitan districts, the federations of municipalities, the municipalities, the public intermunicipal social action centres, the public religious establishments and the polders and water boards’, not to the property of the ports: neither the autonomous municipal port authorities nor the other types of Belgian ports referred to in recital (13) and footnote No 12 are concerned by this Article.

85

(86)  See Judgment of the Court of Justice of 24 July 2003, Altmark Trans, C-280/00, EU:C:2003:415.

86

Altmark Trans

(87)  See Proposal for a Regulation of the European Parliament and of the Council establishing a framework on market access to port services and financial transparency of ports, COM(2013) 296 final (OJ C 327, 12.11.2013, p. 111) point 2.1. Also see Communication from the Commission on a European Ports Policy{SEC(2007)1339} {SEC(2007)1340}, COM(2007) 616 final, point II.4.2.

87

(88)  Judgment of the Court of Justice of 10 December 1969, Commission v France, Joined cases 6/69 and 11/69, EU:C:1969:68, paragraph 21; Judgment of the Court of Justice of 22 March 1977, Steinike & Weinlig, 78/76, EU:C:1977:52, paragraph 24; Judgment of the General Court of 30 April 1998, Vlaamse Gewest v Commission, T-214/95, ECLI:EU:T:1998:77, paragraph 54, and Judgment of the Court of Justice of 19 May 1999, Italy v Commission, C-6/97, EU:C:1999:251, paragraph 21.

88

Commission

France

Steinike & Weinlig

Vlaamse Gewest

Commission

Italy

Commission

(89)  Article 25(3): ‘The Flemish Government and the port authorities shall develop initiatives with a view to achieving [...] harmonious tariff structures in the Flemish seaports in order to guarantee a level playing field for Flemish seaports.’ Article 25(4): ‘Where the tariffs [...] are obviously contrary to the general interest or are contrary to fair competition between the port authorities, the regional ports commissioner shall present these decisions to the concertation commission. [...].’

89

(90)  See Communication from the Commission on the application of the European Union State aid rules to compensation granted for the provision of services of general economic interest (2012/C 8/02) (OJ C 8, 11.1.2012, p. 4). Also see Commission Decision 2012/21/EU of 20 December 2011 on the application of Article 106(2) of the Treaty on the Functioning of the European Union to State aid in the form of public service compensation granted to certain undertakings entrusted with the operation of services of general economic interest (OJ L 7, 11.1.2012, p. 3).

90

(91)  See opinion of Advocate General Kokott in case C-74/16, Congregación de Escuelas Pías Provincia Betania v Ayuntamiento de Getafe, EU:C:2017:135, paragraph 75.

91

Congregación de Escuelas Pías Provincia Betania

Ayuntamiento de Getafe

(92)  Commission Decision (EU) 2016/634 of 21 January 2016 on aid measure SA.25338 (2014/C) (ex E 3/2008 and ex CP 115/2004) implemented by the Netherlands — Corporate tax exemption for public undertakings (OJ L 113, 27.4.2016, p. 148).

92

(93)  See Parliamentary document, Lower House No 54 0672/001, pp. 8-9.

93

(94)  See footnote 92.

94

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| 14.12.2017 | EN | Official Journal of the European Union | L 332/24 |
| --- | --- | --- | --- |

14.12.2017

EN

Official Journal of the European Union

L 332/24

---

COMMISSION DECISION (EU) 2017/2116

of 27 July 2017

on aid scheme SA.38398 (2016/C, ex 2015/E) implemented by France — Taxation of ports in France

(notified under document C(2017) 5176)

(Only the French text is authentic)

(Text with EEA relevance)

THE EUROPEAN COMMISSION,

Having regard to the Treaty on the Functioning of the European Union, and in particular the first subparagraph of Article 108(2) thereof,

Having regard to the Agreement on the European Economic Area, and in particular Article 62(1)(a) thereof,

Having called on interested parties to submit their comments pursuant to those articles (1) and having regard to their comments,

Whereas:

1.   PROCEDURE

PROCEDURE

| (1) | On 3 July 2013, the Commission sent a questionnaire on the functioning and taxation of ports to all Member States to gain an overview of the state of play and clarify the situation of ports in the light of Union State aid rules. The French authorities responded by letter dated 25 October 2013. By letter of 3 February 2014, the Commission requested additional information on the rules concerning the French corporate tax applicable to ports. The French authorities responded by letter dated 1 April 2014. |
| --- | --- |

(1)

On 3 July 2013, the Commission sent a questionnaire on the functioning and taxation of ports to all Member States to gain an overview of the state of play and clarify the situation of ports in the light of Union State aid rules. The French authorities responded by letter dated 25 October 2013. By letter of 3 February 2014, the Commission requested additional information on the rules concerning the French corporate tax applicable to ports. The French authorities responded by letter dated 1 April 2014.

| (2) | By letter dated 9 July 2014, the Commission informed the French authorities, pursuant to Article 21 of Council Regulation (EU) 2015/1589 (2) (‘the Procedural Regulation’), of its preliminary assessment of the French rules on the taxation of ports. The letter stated that the Commission classified these rules as existing State aid and specified the reasons for which it considered them incompatible with the internal market. The Commission gave the French authorities the opportunity to present their comments on this preliminary assessment. The French authorities presented their comments by letter of 7 November 2014. A meeting between the Commission and the French authorities was held on 12 December 2014. On 15 January 2015, the latter sent additional comments to the Commission. By letter dated 1 June 2015, the Commission informed the French authorities that, at this stage, it maintained the preliminary point of view expressed in the letter of 9 July 2014. |
| --- | --- |

(2)

By letter dated 9 July 2014, the Commission informed the French authorities, pursuant to Article 21 of Council Regulation (EU) 2015/1589 (2) (‘the Procedural Regulation’), of its preliminary assessment of the French rules on the taxation of ports. The letter stated that the Commission classified these rules as existing State aid and specified the reasons for which it considered them incompatible with the internal market. The Commission gave the French authorities the opportunity to present their comments on this preliminary assessment. The French authorities presented their comments by letter of 7 November 2014. A meeting between the Commission and the French authorities was held on 12 December 2014. On 15 January 2015, the latter sent additional comments to the Commission. By letter dated 1 June 2015, the Commission informed the French authorities that, at this stage, it maintained the preliminary point of view expressed in the letter of 9 July 2014.

2

| (3) | By letter dated 21 January 2016, the Commission confirmed its position and proposed to the French authorities, as ‘appropriate measures’ under Article 108(1) of the Treaty on the Functioning of the European Union (‘TFEU’) and Article 22 of the Procedural Regulation, the abolition of the corporate tax exemption in favour of the ports in respect of the income from their economic activities from the start of the 2017 tax year. The French authorities were requested to state their unconditional and unequivocal opinion on the Commission proposal within two months, in accordance with Article 23(1) of the Procedural Regulation. |
| --- | --- |

(3)

By letter dated 21 January 2016, the Commission confirmed its position and proposed to the French authorities, as ‘appropriate measures’ under Article 108(1) of the Treaty on the Functioning of the European Union (‘TFEU’) and Article 22 of the Procedural Regulation, the abolition of the corporate tax exemption in favour of the ports in respect of the income from their economic activities from the start of the 2017 tax year. The French authorities were requested to state their unconditional and unequivocal opinion on the Commission proposal within two months, in accordance with Article 23(1) of the Procedural Regulation.

| (4) | By letter of 11 April 2016, the French authorities sent their comments to the Commission. A meeting between the French authorities and the Commission took place on 27 June 2016. |
| --- | --- |

(4)

By letter of 11 April 2016, the French authorities sent their comments to the Commission. A meeting between the French authorities and the Commission took place on 27 June 2016.

| (5) | Since the reply of the French authorities did not constitute unconditional and unequivocal acceptance of the proposal for appropriate measures, the Commission decided, by letter dated 8 July 2016, to initiate the procedure provided for in Article 108(2) TFEU, pursuant to Article 23(2) of the Procedural Regulation. The Commission decision to initiate the procedure was published in the Official Journal of the European Union (3). The Commission invited France to submit comments on the content of the decision. It also invited interested parties to submit their comments on the measure at issue. |
| --- | --- |

(5)

Since the reply of the French authorities did not constitute unconditional and unequivocal acceptance of the proposal for appropriate measures, the Commission decided, by letter dated 8 July 2016, to initiate the procedure provided for in Article 108(2) TFEU, pursuant to Article 23(2) of the Procedural Regulation. The Commission decision to initiate the procedure was published in the Official Journal of the European Union (3). The Commission invited France to submit comments on the content of the decision. It also invited interested parties to submit their comments on the measure at issue.

Official Journal of the European Union

3

| (6) | France presented its comments to the Commission by letter dated 19 September 2016. |
| --- | --- |

(6)

France presented its comments to the Commission by letter dated 19 September 2016.

| (7) | The Commission received comments from the following interested parties: major seaports of metropolitan France (Le Havre, Rouen, Dunkirk) and overseas (French Guiana, Guadeloupe), chambers of commerce and industry (‘CCIs’), port managers (CCI of Brest, CCI of Bayonne Pays Basque), trade associations or representatives of ports and the maritime community in general (Association française des ports intérieurs, ‘AFPI’), the liaison committee for the promotion of waterways/Provoideau, the Union des ports de France (‘UPF’), the Institut français de la mer, local and regional authorities (Department of Guadeloupe, Region of Guadeloupe, Region of Brittany), and the port of Rotterdam, acting on behalf of the five Dutch public seaports. |
| --- | --- |

(7)

The Commission received comments from the following interested parties: major seaports of metropolitan France (Le Havre, Rouen, Dunkirk) and overseas (French Guiana, Guadeloupe), chambers of commerce and industry (‘CCIs’), port managers (CCI of Brest, CCI of Bayonne Pays Basque), trade associations or representatives of ports and the maritime community in general (Association française des ports intérieurs, ‘AFPI’), the liaison committee for the promotion of waterways/Provoideau, the Union des ports de France (‘UPF’), the Institut français de la mer, local and regional authorities (Department of Guadeloupe, Region of Guadeloupe, Region of Brittany), and the port of Rotterdam, acting on behalf of the five Dutch public seaports.

Association française des ports intérieurs

Union des ports de France

Institut français de la mer

| (8) | The Commission forwarded those comments to France, which was given the opportunity to comment on them. It received comments from France by letter of 3 November 2016. A meeting between the French authorities and the Commission was held on 16 November 2016. |
| --- | --- |

(8)

The Commission forwarded those comments to France, which was given the opportunity to comment on them. It received comments from France by letter of 3 November 2016. A meeting between the French authorities and the Commission was held on 16 November 2016.

2.   DESCRIPTION OF THE MEASURE AND ITS CONTEXT

DESCRIPTION OF THE MEASURE AND ITS CONTEXT

2.1.   Ownership and management of ports in France

Ownership and management of ports in France

| (9) | The port system in France (fishing ports, commercial ports and marinas) consists of ports belonging to the State (the major seaports (grands ports maritimes — ‘GPMs’), formerly known as ‘autonomous ports’, and the major inland ports, in particular the autonomous ports of Paris and Strasbourg) and ports belonging to local and regional authorities. Although France indicates that the measure at issue focuses on the fishing ports and commercial ports, marinas may in fact be operated by entities covered by the corporate tax exemption (such as the CCIs) and are therefore also concerned by the procedure. |
| --- | --- |

(9)

The port system in France (fishing ports, commercial ports and marinas) consists of ports belonging to the State (the major seaports (grands ports maritimes — ‘GPMs’), formerly known as ‘autonomous ports’, and the major inland ports, in particular the autonomous ports of Paris and Strasbourg) and ports belonging to local and regional authorities. Although France indicates that the measure at issue focuses on the fishing ports and commercial ports, marinas may in fact be operated by entities covered by the corporate tax exemption (such as the CCIs) and are therefore also concerned by the procedure.

grands ports maritimes

| (10) | The GPMs, known as ‘autonomous ports’ until the reform of 2008 (4), are State public institutions. They handle more than 80 % of French maritime freight transport. According to France, the GPMs carry out the following tasks: regulation and policing of maritime traffic in the port areas and the access to them, through harbourmasters, development and maintenance of port infrastructure, management and renovation of the port area, general promotion of the port, and development of the supply of port services and port hinterland rail and waterway connections. They enjoy financial autonomy. |
| --- | --- |

(10)

The GPMs, known as ‘autonomous ports’ until the reform of 2008 (4), are State public institutions. They handle more than 80 % of French maritime freight transport. According to France, the GPMs carry out the following tasks: regulation and policing of maritime traffic in the port areas and the access to them, through harbourmasters, development and maintenance of port infrastructure, management and renovation of the port area, general promotion of the port, and development of the supply of port services and port hinterland rail and waterway connections. They enjoy financial autonomy.

4

| (11) | The State is responsible for the operation of the GPMs. They are assigned a public accountant, and they are audited by government officials. France states that, since the reform of 2008, which transferred handling activities to the private sector, the tasks of the GPMs have been redirected to security, safety and port police activities and to tasks relating to the renovation of the port area. The ports are henceforth owners of the area they occupy. |
| --- | --- |

(11)

The State is responsible for the operation of the GPMs. They are assigned a public accountant, and they are audited by government officials. France states that, since the reform of 2008, which transferred handling activities to the private sector, the tasks of the GPMs have been redirected to security, safety and port police activities and to tasks relating to the renovation of the port area. The ports are henceforth owners of the area they occupy.

| (12) | The autonomous inland ports, i.e. the autonomous port of Paris and the autonomous port of Strasbourg, are operated by State public institutions. The other inland ports are managed by concessionaires (CCIs in general). |
| --- | --- |

(12)

The autonomous inland ports, i.e. the autonomous port of Paris and the autonomous port of Strasbourg, are operated by State public institutions. The other inland ports are managed by concessionaires (CCIs in general).

| (13) | The ports belonging to local and regional authorities, known as decentralised ports, are under the control of those authorities and their operation is generally assigned to CCIs or maritime chambers of commerce (5). According to France, these ports are generally small and of local significance. |
| --- | --- |

(13)

The ports belonging to local and regional authorities, known as decentralised ports, are under the control of those authorities and their operation is generally assigned to CCIs or maritime chambers of commerce (5). According to France, these ports are generally small and of local significance.

5

2.2.   Corporate tax rules applicable to ports

Corporate tax rules applicable to ports

| (14) | Pursuant to Article 205, Article 206(1) and Article 1654 of the General Tax Code (Code général des impôts — ‘CGI’), legal persons governed by private or public law engaging in a business or transactions of a profit-making nature are subject to corporate tax. Second, pursuant to Article 165 of Annex 4 to the CGI, public institutions of an industrial or commercial nature are subject to all direct taxes and equivalent taxes applicable to similar private undertakings. Article 167 of Annex 4 to the same Code specifies that these provisions apply in particular to ‘chambers of commerce and industry’ and to ‘autonomous ports’ (which became major seaports in 2008, with some exceptions, such as the autonomous inland ports of Paris and Strasbourg). |
| --- | --- |

(14)

Pursuant to Article 205, Article 206(1) and Article 1654 of the General Tax Code (Code général des impôts — ‘CGI’), legal persons governed by private or public law engaging in a business or transactions of a profit-making nature are subject to corporate tax. Second, pursuant to Article 165 of Annex 4 to the CGI, public institutions of an industrial or commercial nature are subject to all direct taxes and equivalent taxes applicable to similar private undertakings. Article 167 of Annex 4 to the same Code specifies that these provisions apply in particular to ‘chambers of commerce and industry’ and to ‘autonomous ports’ (which became major seaports in 2008, with some exceptions, such as the autonomous inland ports of Paris and Strasbourg).

Code général des impôts

| (15) | However, ministerial decisions of 11 August 1942 and 27 April 1943 (6) exempted from corporate tax ‘the autonomous ports, maritime chambers of commerce, chambers of commerce and industry managing port installations, municipalities which are concessionaires of public equipment owned by the State in the seaports, and any undertakings to which they may have entrusted the operation of that equipment’. This exemption concerns, in general, all ‘buildings and services necessary to operate ports or depending directly on that operation’. The tax documentation specifies that ‘the aforementioned decision [decision of 11 August 1942] should be applied liberally and the tax exemption should be maintained not only with regard to the services of an undeniably maritime nature, but also for the installations of the maritime chambers of commerce which, without strictly speaking being port installations, are nevertheless attached to the operation of a port without which they would have no reason to exist’ and that the ‘financial proceeds received by the autonomous ports and maritime chambers of commerce and industry from the investment of sums deriving from the operation of maritime industrial and commercial installations’ are also exempt from corporate tax. |
| --- | --- |

(15)

However, ministerial decisions of 11 August 1942 and 27 April 1943 (6) exempted from corporate tax ‘the autonomous ports, maritime chambers of commerce, chambers of commerce and industry managing port installations, municipalities which are concessionaires of public equipment owned by the State in the seaports, and any undertakings to which they may have entrusted the operation of that equipment’. This exemption concerns, in general, all ‘buildings and services necessary to operate ports or depending directly on that operation’. The tax documentation specifies that ‘the aforementioned decision [decision of 11 August 1942] should be applied liberally and the tax exemption should be maintained not only with regard to the services of an undeniably maritime nature, but also for the installations of the maritime chambers of commerce which, without strictly speaking being port installations, are nevertheless attached to the operation of a port without which they would have no reason to exist’ and that the ‘financial proceeds received by the autonomous ports and maritime chambers of commerce and industry from the investment of sums deriving from the operation of maritime industrial and commercial installations’ are also exempt from corporate tax.

6

3.   GROUNDS FOR INITIATING THE FORMAL INVESTIGATION PROCEDURE

GROUNDS FOR INITIATING THE FORMAL INVESTIGATION PROCEDURE

| (16) | In its letter of 8 July 2016, the Commission pointed out that the French authorities had not accepted the timetable for the implementation of the appropriate measures indicated in its letter of 21 January 2016 and that, whilst stating at the outset that they did not contest the principle of the measures proposed by the Commission, they seemed to call into question the classification as State aid adopted by the Commission with regard to the small ports. The Commission considered that the appropriate measures that the Commission had proposed on 21 January 2016 had not been accepted by the French authorities unconditionally, unequivocally and in full. |
| --- | --- |

(16)

In its letter of 8 July 2016, the Commission pointed out that the French authorities had not accepted the timetable for the implementation of the appropriate measures indicated in its letter of 21 January 2016 and that, whilst stating at the outset that they did not contest the principle of the measures proposed by the Commission, they seemed to call into question the classification as State aid adopted by the Commission with regard to the small ports. The Commission considered that the appropriate measures that the Commission had proposed on 21 January 2016 had not been accepted by the French authorities unconditionally, unequivocally and in full.

| (17) | Since the Commission still considered that the corporate tax exemption in favour of ports, with respect to their economic activities, constituted an existing State aid scheme, and had doubts about the scheme's compatibility with the internal market, it decided to initiate the procedure provided for in Article 108(2) TFEU, pursuant to Article 23(2) of the Procedural Regulation. |
| --- | --- |

(17)

Since the Commission still considered that the corporate tax exemption in favour of ports, with respect to their economic activities, constituted an existing State aid scheme, and had doubts about the scheme's compatibility with the internal market, it decided to initiate the procedure provided for in Article 108(2) TFEU, pursuant to Article 23(2) of the Procedural Regulation.

4.   OBSERVATIONS BY THE FRENCH AUTHORITIES AND INTERESTED PARTIES AFTER THE INITIATION OF THE FORMAL INVESTIGATION PROCEDURE

OBSERVATIONS BY THE FRENCH AUTHORITIES AND INTERESTED PARTIES AFTER THE INITIATION OF THE FORMAL INVESTIGATION PROCEDURE

4.1.   Undertakings/economic activities

Undertakings/economic activities

| (18) | Certain operators of French seaports and representatives of port managers, principally the GPM of Le Havre, the CCI of Brest and the UPF, consider that ports are not ‘undertakings’ within the meaning of Article 107(1) TFEU. The French authorities share this reasoning and add that the ports ‘are not undertakings like others’, but ‘operators at the service of other undertakings’ and that ‘the fact that the Treaty on the Functioning of the European Union has provided for an ad hoc article [Article 93] to deal with State aid in the transport sector, shows that the European legislator wished to take this particularity into account’. |
| --- | --- |

(18)

Certain operators of French seaports and representatives of port managers, principally the GPM of Le Havre, the CCI of Brest and the UPF, consider that ports are not ‘undertakings’ within the meaning of Article 107(1) TFEU. The French authorities share this reasoning and add that the ports ‘are not undertakings like others’, but ‘operators at the service of other undertakings’ and that ‘the fact that the Treaty on the Functioning of the European Union has provided for an ad hoc article [Article 93] to deal with State aid in the transport sector, shows that the European legislator wished to take this particularity into account’.

4.1.1.   Activities of general interest or forming part of the essential functions of the State

Activities of general interest or forming part of the essential functions of the State

| (19) | According to the CCI of Brest, ports provide a non-economic service of general interest (SGI), and only the public authorities can define the scope of activities of general interest. Article 107(1) TFEU does not apply where the State acts ‘exercising official authority’, which is the case for the ports, which perform executive activities delegated by law by the State. According to the CCI of Brest, the ministerial decisions of 11 August 1942 and 27 April 1943 apply Article 165 of the CGI's Annex 4, and recognise that the activities of the ports do not have a profit motive. |
| --- | --- |

(19)

According to the CCI of Brest, ports provide a non-economic service of general interest (SGI), and only the public authorities can define the scope of activities of general interest. Article 107(1) TFEU does not apply where the State acts ‘exercising official authority’, which is the case for the ports, which perform executive activities delegated by law by the State. According to the CCI of Brest, the ministerial decisions of 11 August 1942 and 27 April 1943 apply Article 165 of the CGI's Annex 4, and recognise that the activities of the ports do not have a profit motive.

| (20) | The UPF and GPM of Le Havre add that certain French ports are critical installations, ‘the unavailability of which would be liable to bring about a significant reduction in the potential to wage war, economic potential, security or the ability of the nation to survive’ within the meaning of Article L. 1332-1 of the Defence Code (Code de la défense), which means that they constitute infrastructure intended for activities coming under the essential functions of the State. |
| --- | --- |

(20)

The UPF and GPM of Le Havre add that certain French ports are critical installations, ‘the unavailability of which would be liable to bring about a significant reduction in the potential to wage war, economic potential, security or the ability of the nation to survive’ within the meaning of Article L. 1332-1 of the Defence Code (Code de la défense), which means that they constitute infrastructure intended for activities coming under the essential functions of the State.

Code de la défense

| (21) | Referring to Case C-276/97, the GPM of Le Havre stresses that the GPMs are bodies governed by public law, carrying out their activities under the regime specific to them in terms of creation, control, governance and revenue. As ‘bodies governed by public law’ carrying out their activities ‘as public authorities’, the GPMs fulfil the conditions to benefit from the exemption from VAT provided for by Article 4(5) of the Sixth VAT Directive. |
| --- | --- |

(21)

Referring to Case C-276/97, the GPM of Le Havre stresses that the GPMs are bodies governed by public law, carrying out their activities under the regime specific to them in terms of creation, control, governance and revenue. As ‘bodies governed by public law’ carrying out their activities ‘as public authorities’, the GPMs fulfil the conditions to benefit from the exemption from VAT provided for by Article 4(5) of the Sixth VAT Directive.

| (22) | Finally, the French authorities and several port managers consider that dredging operations, whether they are carried out within or outside the ports, are non-economic, and that the Commission accepted this in a Decision of 20 October 2004 in Case N 520/200[3] (***) (7) (‘the Decision of 20 October 2004’). They explain that this activity enables all the terminals to be served and is necessary to ensure access, in total safety, to the channels and water areas of the port, for all operators needing it, and in this way permits free movement for all shipping. The dredging benefits all operators in the area served without distinction, and therefore the maritime community as a whole. |
| --- | --- |

(22)

Finally, the French authorities and several port managers consider that dredging operations, whether they are carried out within or outside the ports, are non-economic, and that the Commission accepted this in a Decision of 20 October 2004 in Case N 520/200[3] (***) (7) (‘the Decision of 20 October 2004’). They explain that this activity enables all the terminals to be served and is necessary to ensure access, in total safety, to the channels and water areas of the port, for all operators needing it, and in this way permits free movement for all shipping. The dredging benefits all operators in the area served without distinction, and therefore the maritime community as a whole.

***

7

4.1.2.   Activities which are not economic

Activities which are not economic

| (23) | The GPM of Le Havre states that the structure of the port charges is determined at national level and that the Court of Justice, in Case C-343/95, attaches importance to the fact that tariffs are approved by a public authority. It considers that all the tasks assigned to GPMs by Article L. 5312-2 of the Transport Code (Code des Transports) are of a non-economic nature according to the decision-making practice of the Commission, and especially the Decision of 20 October 2004 and the decisions referred to in point 17(a) and (f) of the Commission Notice of 19 July 2016 on the notion of State aid (8) (‘the Notice of 19 July 2016’). The GPM considers that the only activity which might previously have been considered an economic activity was the operation of public equipment, but that since the reform of 2008 GPMs can do this only on an exceptional basis. |
| --- | --- |

(23)

The GPM of Le Havre states that the structure of the port charges is determined at national level and that the Court of Justice, in Case C-343/95, attaches importance to the fact that tariffs are approved by a public authority. It considers that all the tasks assigned to GPMs by Article L. 5312-2 of the Transport Code (Code des Transports) are of a non-economic nature according to the decision-making practice of the Commission, and especially the Decision of 20 October 2004 and the decisions referred to in point 17(a) and (f) of the Commission Notice of 19 July 2016 on the notion of State aid (8) (‘the Notice of 19 July 2016’). The GPM considers that the only activity which might previously have been considered an economic activity was the operation of public equipment, but that since the reform of 2008 GPMs can do this only on an exceptional basis.

Code des Transports

8

| (24) | The GPM of Le Havre and the CCI of Brest consider that any residual economic activity of the ports should in any case be classified as ancillary, so that such an activity should not be regarded as economic in accordance with points 18 and 207 of the Notice of 19 July 2016. |
| --- | --- |

(24)

The GPM of Le Havre and the CCI of Brest consider that any residual economic activity of the ports should in any case be classified as ancillary, so that such an activity should not be regarded as economic in accordance with points 18 and 207 of the Notice of 19 July 2016.

| (25) | The AFPI argues that, for ports, ensuring a return on investment, a decisive objective in the investment choices of a traditional undertaking, takes second place after the general interest. The AFPI considers that the Commission has itself acknowledged, in the Decision of 20 October 2004, that the port infrastructure projects ‘would never be carried out on a purely commercial basis’. It adds that competition law must apply only to undertakings with a profit-making or commercial objective and that the profits made by inland ports (river ports), which have no shareholders, are systematically reinvested. |
| --- | --- |

(25)

The AFPI argues that, for ports, ensuring a return on investment, a decisive objective in the investment choices of a traditional undertaking, takes second place after the general interest. The AFPI considers that the Commission has itself acknowledged, in the Decision of 20 October 2004, that the port infrastructure projects ‘would never be carried out on a purely commercial basis’. It adds that competition law must apply only to undertakings with a profit-making or commercial objective and that the profits made by inland ports (river ports), which have no shareholders, are systematically reinvested.

4.2.   Economic advantage

Economic advantage

| (26) | Several operators of French seaports and the representatives of operators of inland ports consider that the measure at issue compensates for the tasks assigned to ports by the public authorities. The GPM of Dunkirk maintains that the cost of these tasks systematically exceeds the theoretical corporate tax charge. Accordingly, the tax exemption does not confer an economic advantage on ports. |
| --- | --- |

(26)

Several operators of French seaports and the representatives of operators of inland ports consider that the measure at issue compensates for the tasks assigned to ports by the public authorities. The GPM of Dunkirk maintains that the cost of these tasks systematically exceeds the theoretical corporate tax charge. Accordingly, the tax exemption does not confer an economic advantage on ports.

4.3.   Selectivity

Selectivity

| (27) | The French authorities and several operators of French seaports consider that the measure is not selective since it applies to all French ports and that it has formed an integral part of the French tax system for over 70 years. |
| --- | --- |

(27)

The French authorities and several operators of French seaports consider that the measure is not selective since it applies to all French ports and that it has formed an integral part of the French tax system for over 70 years.

| (28) | They add that the Commission has not proved how the ports are in a factual and legal situation comparable to that of other companies, and argue that the ports, under national law, provide the operating conditions necessary for transport operators to carry out their tasks, without competing with or substituting themselves for the latter, and must carry out tasks constituting public service obligations or an exercise of the official powers of a public authority. The GPM of Le Havre specifies that the large share of port charges in the budget of the ports, the extent of State control over the GPMs, and the fact that there are no ‘operators acting under normal economic conditions ... in view of the legal monopoly exercised by the GPMs over the management of the ports’ differentiates them from other operators. For the Brittany region, the fact that certain small ports are managed by CCIs shows that they are in a different situation. |
| --- | --- |

(28)

They add that the Commission has not proved how the ports are in a factual and legal situation comparable to that of other companies, and argue that the ports, under national law, provide the operating conditions necessary for transport operators to carry out their tasks, without competing with or substituting themselves for the latter, and must carry out tasks constituting public service obligations or an exercise of the official powers of a public authority. The GPM of Le Havre specifies that the large share of port charges in the budget of the ports, the extent of State control over the GPMs, and the fact that there are no ‘operators acting under normal economic conditions ... in view of the legal monopoly exercised by the GPMs over the management of the ports’ differentiates them from other operators. For the Brittany region, the fact that certain small ports are managed by CCIs shows that they are in a different situation.

| (29) | The CCI of Brest, which is the manager of the port of Brest, and the GPM of Le Havre state that the basis of the corporate tax exemption for ports is Article 165 of Annex 4 to the CGI, because the ports do not engage in profit-making activities of a nature to be subject to corporate tax. Thus, the ministerial decisions of 11 August 1942 and 27 April 1943 are merely the confirmation of the application to ports of the general provisions of Article 165 of Annex 4 and Articles 205 and 206 of the CGI. |
| --- | --- |

(29)

The CCI of Brest, which is the manager of the port of Brest, and the GPM of Le Havre state that the basis of the corporate tax exemption for ports is Article 165 of Annex 4 to the CGI, because the ports do not engage in profit-making activities of a nature to be subject to corporate tax. Thus, the ministerial decisions of 11 August 1942 and 27 April 1943 are merely the confirmation of the application to ports of the general provisions of Article 165 of Annex 4 and Articles 205 and 206 of the CGI.

| (30) | Referring to the French Constitutional Council, which has held that a derogation is possible from the principle of equal treatment in matters of taxation, provided that the legislature bases the differences of treatment on objective, rational criteria in accordance with the aims pursued by the measure and provided that the measure does not entail any clear breach of equal treatment in terms of charges levied by the State (Decision No 2012-238 QPC, 20 April 2012) (9), several operators of French seaports also maintain that the measure at issue does not create any clear breach of equal treatment in terms of charges levied by the State. |
| --- | --- |

(30)

Referring to the French Constitutional Council, which has held that a derogation is possible from the principle of equal treatment in matters of taxation, provided that the legislature bases the differences of treatment on objective, rational criteria in accordance with the aims pursued by the measure and provided that the measure does not entail any clear breach of equal treatment in terms of charges levied by the State (Decision No 2012-238 QPC, 20 April 2012) (9), several operators of French seaports also maintain that the measure at issue does not create any clear breach of equal treatment in terms of charges levied by the State.

9

4.4.   Distortion of competition and effect on trade

Distortion of competition and effect on trade

| (31) | The French authorities and several operators of French seaports argue that the Commission has not demonstrated any restriction on competition, whereas the traffic in which there is competition is small and the attractiveness of a port is measured by a very large number of parameters (the performance of the other links of the logistics chain) on which subjecting ports to corporate tax will have no impact. The AFPI considers that, in contrast to the seaports, the inland ports are not in competition with one another as their hinterlands are far smaller and separate. |
| --- | --- |

(31)

The French authorities and several operators of French seaports argue that the Commission has not demonstrated any restriction on competition, whereas the traffic in which there is competition is small and the attractiveness of a port is measured by a very large number of parameters (the performance of the other links of the logistics chain) on which subjecting ports to corporate tax will have no impact. The AFPI considers that, in contrast to the seaports, the inland ports are not in competition with one another as their hinterlands are far smaller and separate.

| (32) | The French authorities and several operators of French seaports consider that the activity of the small ports (ports which do not belong to trans-European transport networks) has no effect on competition, due to their volume of business and the essentially local nature of their impact, especially since the combined activity of the small French ports accounts for only 1 % of the total traffic of the Union. The Commission itself has recognised that ‘in well-established case practice ... aid to infrastructure in ports with minor shares below 5 % of the EU passenger or freight traffic did not produce undue negative effects on competition and trade between Member States’ (Decision of 11 April 2016 in Case SA.43975 Port of Funchal) (10). |
| --- | --- |

(32)

The French authorities and several operators of French seaports consider that the activity of the small ports (ports which do not belong to trans-European transport networks) has no effect on competition, due to their volume of business and the essentially local nature of their impact, especially since the combined activity of the small French ports accounts for only 1 % of the total traffic of the Union. The Commission itself has recognised that ‘in well-established case practice ... aid to infrastructure in ports with minor shares below 5 % of the EU passenger or freight traffic did not produce undue negative effects on competition and trade between Member States’ (Decision of 11 April 2016 in Case SA.43975 Port of Funchal) (10).

10

| (33) | Several interested parties consider that the overseas ports do not have the capacity to compete with the ports of other Member States. |
| --- | --- |

(33)

Several interested parties consider that the overseas ports do not have the capacity to compete with the ports of other Member States.

| (34) | For the French authorities and several interested parties, subjecting the French ports to corporate tax now would in fact lead to a distortion of competition between European ports, as the States all apply different taxation rates. They add that a large number of States provide financial assistance for their ports under a variety of tax or other arrangements. |
| --- | --- |

(34)

For the French authorities and several interested parties, subjecting the French ports to corporate tax now would in fact lead to a distortion of competition between European ports, as the States all apply different taxation rates. They add that a large number of States provide financial assistance for their ports under a variety of tax or other arrangements.

| (35) | The port of Rotterdam considers that, for the Dutch ports, corporate tax will represent a considerable cost in 2017 which their competitors, and especially the ports of Dunkirk and Le Havre, do not have to pay. |
| --- | --- |

(35)

The port of Rotterdam considers that, for the Dutch ports, corporate tax will represent a considerable cost in 2017 which their competitors, and especially the ports of Dunkirk and Le Havre, do not have to pay.

4.5.   Compatibility

Compatibility

| (36) | The French authorities and several operators of French ports argue that the exemption at issue is in all cases compatible with the internal market as it allows compensation for certain tasks financed by the ports, constituting an exercise of the official powers of a public authority (tasks related to the harbourmaster's office, dredging of port accesses, maintenance work for coastal defences, land access, protection of the environment and security and safety). Since the amount of corporate tax from which each port is exempted does not exceed the amount of the costs arising from the exercise of the official powers of a public authority, and is even well below this latter amount, the exemption is compatible with the internal market. |
| --- | --- |

(36)

The French authorities and several operators of French ports argue that the exemption at issue is in all cases compatible with the internal market as it allows compensation for certain tasks financed by the ports, constituting an exercise of the official powers of a public authority (tasks related to the harbourmaster's office, dredging of port accesses, maintenance work for coastal defences, land access, protection of the environment and security and safety). Since the amount of corporate tax from which each port is exempted does not exceed the amount of the costs arising from the exercise of the official powers of a public authority, and is even well below this latter amount, the exemption is compatible with the internal market.

| (37) | The representatives of the inland port managers emphasise that the inland ports play an important role in the development of multimodal transport, that the investments made by the ports fall within the scope of Article 93 TFEU (coordination of transport) and that the corporate tax exemption also falls within the scope of Article 107(3)(b) TFEU concerning important projects of European interest, such as Seine Northern Europe and the trans-European transport corridors. The AFPI specifies that Article 93 TFEU could be applicable in that it provides for the ‘reimbursement for the discharge of certain obligations inherent in the concept of a public service’. |
| --- | --- |

(37)

The representatives of the inland port managers emphasise that the inland ports play an important role in the development of multimodal transport, that the investments made by the ports fall within the scope of Article 93 TFEU (coordination of transport) and that the corporate tax exemption also falls within the scope of Article 107(3)(b) TFEU concerning important projects of European interest, such as Seine Northern Europe and the trans-European transport corridors. The AFPI specifies that Article 93 TFEU could be applicable in that it provides for the ‘reimbursement for the discharge of certain obligations inherent in the concept of a public service’.

| (38) | The French authorities and several overseas interested parties argue that for the ports located overseas the compatibility of the measure should be examined specifically in the light of Article 349 TFEU. Due to the narrowness of the markets, the insular or isolated nature of these territories, and the remoteness from any other European port, the measure at issue has no impact on competition. The GPM of Guadeloupe mentions the proposal to integrate overseas transport operating aid in Commission Regulation (EU) No 651/2014 (11) (‘the General Block Exemption Regulation’). The GPM of French Guiana considers that it is carrying out a task of general interest (public safety, national defence, provisioning) without adversely affecting the conditions of trade, because the port is the only way of obtaining supplies. Due to its cost, freight transport by air to the territory accounts for only 1 % of total freight transport. The interested parties consider that the abolition of the corporate tax exemption would lead to an increase in the cost of provisioning the territory — which would be reflected in the price of goods for end customers — and to a reduction in investment capacity. They stress that abolition of the exemption would be counter to other derogating tax provisions accepted by the Commission, such as investment grants or zero rating of VAT, which enable the cost of consumption flows to be reduced. |
| --- | --- |

(38)

The French authorities and several overseas interested parties argue that for the ports located overseas the compatibility of the measure should be examined specifically in the light of Article 349 TFEU. Due to the narrowness of the markets, the insular or isolated nature of these territories, and the remoteness from any other European port, the measure at issue has no impact on competition. The GPM of Guadeloupe mentions the proposal to integrate overseas transport operating aid in Commission Regulation (EU) No 651/2014 (11) (‘the General Block Exemption Regulation’). The GPM of French Guiana considers that it is carrying out a task of general interest (public safety, national defence, provisioning) without adversely affecting the conditions of trade, because the port is the only way of obtaining supplies. Due to its cost, freight transport by air to the territory accounts for only 1 % of total freight transport. The interested parties consider that the abolition of the corporate tax exemption would lead to an increase in the cost of provisioning the territory — which would be reflected in the price of goods for end customers — and to a reduction in investment capacity. They stress that abolition of the exemption would be counter to other derogating tax provisions accepted by the Commission, such as investment grants or zero rating of VAT, which enable the cost of consumption flows to be reduced.

11

4.6.   Timetable for the procedure

Timetable for the procedure

| (39) | Several operators of French seaports asked the Commission for suspension of the procedure in progress until the current European port agenda has been finalised, and especially the revision of the General Block Exemption Regulation and the proposal for a Regulation establishing a framework for access to the port services market and financial transparency of ports (‘the proposal for a Regulation on port services’) (12). They were surprised by the rapidity of the procedure brought against France when the Commission exchanged views for about 20 years with the Netherlands before adopting a final decision. |
| --- | --- |

(39)

Several operators of French seaports asked the Commission for suspension of the procedure in progress until the current European port agenda has been finalised, and especially the revision of the General Block Exemption Regulation and the proposal for a Regulation establishing a framework for access to the port services market and financial transparency of ports (‘the proposal for a Regulation on port services’) (12). They were surprised by the rapidity of the procedure brought against France when the Commission exchanged views for about 20 years with the Netherlands before adopting a final decision.

12

| (40) | The port of Rotterdam asks the Commission to postpone subjecting the Dutch ports to corporate tax until a sector inquiry has been carried out and all the seaports in the north European range (ports on the southern coast of the North Sea) become subject simultaneously to the tax or, at the very least, to subject the Belgian and French ports to corporate tax rapidly and simultaneously. |
| --- | --- |

(40)

The port of Rotterdam asks the Commission to postpone subjecting the Dutch ports to corporate tax until a sector inquiry has been carried out and all the seaports in the north European range (ports on the southern coast of the North Sea) become subject simultaneously to the tax or, at the very least, to subject the Belgian and French ports to corporate tax rapidly and simultaneously.

5.   ASSESSMENT OF THE MEASURES

ASSESSMENT OF THE MEASURES

5.1.   Presence of State aid within the meaning of Article 107(1) TFEU

Presence of State aid within the meaning of Article 107(1) TFEU

| (41) | According to Article 107(1) TFEU, any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the internal market. |
| --- | --- |

(41)

According to Article 107(1) TFEU, any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the internal market.

5.1.1.   Undertakings/economic activities

Undertakings/economic activities

5.1.1.1.   General

General

| (42) | According to settled case-law, ‘the concept of an undertaking covers any entity engaged in an economic activity, regardless of its legal status and the way in which it is financed’ (13). The Court of Justice has held that ‘an economic activity is any activity consisting in offering goods and services on a given market’ (14). |
| --- | --- |

(42)

According to settled case-law, ‘the concept of an undertaking covers any entity engaged in an economic activity, regardless of its legal status and the way in which it is financed’ (13). The Court of Justice has held that ‘an economic activity is any activity consisting in offering goods and services on a given market’ (14).

13

14

| (43) | In line with the case-law (15), the Commission has established, in a series of decisions, that the commercial operation and construction of port infrastructure constitute economic activities (16). For example, the commercial operation of a port terminal by making it available to users against the payment of a fee constitutes an economic activity (17). Likewise, the Court of Justice has already implicitly, but quite definitely, recognised the economic nature of certain port operations, in particular the ‘loading, unloading, transhipment, storage and general movement of goods or material of any kind within the port’ (18). These principles apply not only to seaports, but also to inland ports (19). |
| --- | --- |

(43)

In line with the case-law (15), the Commission has established, in a series of decisions, that the commercial operation and construction of port infrastructure constitute economic activities (16). For example, the commercial operation of a port terminal by making it available to users against the payment of a fee constitutes an economic activity (17). Likewise, the Court of Justice has already implicitly, but quite definitely, recognised the economic nature of certain port operations, in particular the ‘loading, unloading, transhipment, storage and general movement of goods or material of any kind within the port’ (18). These principles apply not only to seaports, but also to inland ports (19).

15

16

17

loading, unloading

storage and general movement of goods or material of any kind within the port

18

19

| (44) | The Commission does not dispute that ports may be delegated to perform certain public authority or non-economic tasks, such as maritime traffic control and safety (20) or anti-pollution surveillance (21), or that, in carrying out these tasks, the ports are not undertakings within the meaning of Article 107(1) TFEU. The exemption from corporate tax at issue here is therefore of a nature to constitute State aid only if it relates to income generated by economic activities. On the other hand, the fact that an entity performs one or more functions of a sovereign state or one or more non-economic activities is not enough to take away the designation of ‘undertaking’ for all purposes. A port will be regarded as an ‘undertaking’ if — and to the extent that — it in fact carries out one or more economic activities. |
| --- | --- |

(44)

The Commission does not dispute that ports may be delegated to perform certain public authority or non-economic tasks, such as maritime traffic control and safety (20) or anti-pollution surveillance (21), or that, in carrying out these tasks, the ports are not undertakings within the meaning of Article 107(1) TFEU. The exemption from corporate tax at issue here is therefore of a nature to constitute State aid only if it relates to income generated by economic activities. On the other hand, the fact that an entity performs one or more functions of a sovereign state or one or more non-economic activities is not enough to take away the designation of ‘undertaking’ for all purposes. A port will be regarded as an ‘undertaking’ if — and to the extent that — it in fact carries out one or more economic activities.

20

21

| (45) | The French ports may engage in several types of economic activities corresponding to the supply of various services on several markets (22). First, ports supply a general service to ships by providing them with access to the port infrastructure in exchange for a remuneration. Second, certain ports provide more particular services to ships, such as piloting, lifting, handling, or mooring, also in exchange for remuneration. For piloting and lifting the remuneration received by the port is generally known as a ‘port charge’ (droit de port) (23). Third, the ports, for remuneration, make certain infrastructure or certain land available to undertakings, which use these areas for their own needs or to supply some of the aforementioned port services to ships (24). |
| --- | --- |

(45)

The French ports may engage in several types of economic activities corresponding to the supply of various services on several markets (22). First, ports supply a general service to ships by providing them with access to the port infrastructure in exchange for a remuneration. Second, certain ports provide more particular services to ships, such as piloting, lifting, handling, or mooring, also in exchange for remuneration. For piloting and lifting the remuneration received by the port is generally known as a ‘port charge’ (droit de port) (23). Third, the ports, for remuneration, make certain infrastructure or certain land available to undertakings, which use these areas for their own needs or to supply some of the aforementioned port services to ships (24).

22

droit de port

23

24

| (46) | All French ports do not necessarily carry out all the aforementioned activities. In particular, as pointed out by some of them, GPMs can as a general rule no longer operate ‘the equipment used for loading, unloading, handling and storage operations related to ships’ (Article L. 5312-4 of the French Transport Code). However, it seems that some GPMs do continue to operate this equipment and to provide the corresponding services (25). |
| --- | --- |

(46)

All French ports do not necessarily carry out all the aforementioned activities. In particular, as pointed out by some of them, GPMs can as a general rule no longer operate ‘the equipment used for loading, unloading, handling and storage operations related to ships’ (Article L. 5312-4 of the French Transport Code). However, it seems that some GPMs do continue to operate this equipment and to provide the corresponding services (25).

25

| (47) | Although public authorities have a large degree of discretion to define which economic activities may constitute services of general economic interest (‘SGEIs’), this does not prevent these activities from being of an economic nature. It is settled case-law that the concept of ‘economic activity’ derives from matters of fact, in particular the existence of a market for the services concerned, and does not depend on the choices or assessments made in one country. Thus the fact that the activities of the ports are not profit-making within the meaning of the provisions of the CGI, even supposing this to be the case, is insufficient to take away their economic nature within the meaning of State aid law. Likewise, the mere fact that the tasks carried out by the ports were delegated to them by the State does not suffice to classify the activities in question as non-economic. All SGEIs are tasks delegated by the State to undertakings. And SGEIs do involve carrying out economic activities. |
| --- | --- |

(47)

Although public authorities have a large degree of discretion to define which economic activities may constitute services of general economic interest (‘SGEIs’), this does not prevent these activities from being of an economic nature. It is settled case-law that the concept of ‘economic activity’ derives from matters of fact, in particular the existence of a market for the services concerned, and does not depend on the choices or assessments made in one country. Thus the fact that the activities of the ports are not profit-making within the meaning of the provisions of the CGI, even supposing this to be the case, is insufficient to take away their economic nature within the meaning of State aid law. Likewise, the mere fact that the tasks carried out by the ports were delegated to them by the State does not suffice to classify the activities in question as non-economic. All SGEIs are tasks delegated by the State to undertakings. And SGEIs do involve carrying out economic activities.

| (48) | In addition, the fact that some ports can be classified as critical infrastructure within the meaning of Article L. 1332-1 of the French Defence Code does mean that port activities are essential functions of the State within the meaning of State aid law. A large number of economic activities in the energy, telecommunications and transport sectors may also prove to be critical for the life of the nation without this depriving them of their economic nature. The Commission would also point out that the Defence Code (see Articles L. 1332-4, L. 1332-5 and L. 1332-6) explicitly mentions the classification of ‘undertaking’ of some at least of the operators concerned. |
| --- | --- |

(48)

In addition, the fact that some ports can be classified as critical infrastructure within the meaning of Article L. 1332-1 of the French Defence Code does mean that port activities are essential functions of the State within the meaning of State aid law. A large number of economic activities in the energy, telecommunications and transport sectors may also prove to be critical for the life of the nation without this depriving them of their economic nature. The Commission would also point out that the Defence Code (see Articles L. 1332-4, L. 1332-5 and L. 1332-6) explicitly mentions the classification of ‘undertaking’ of some at least of the operators concerned.

| (49) | Next, the alleged fact that the GPMs meet the criteria which are laid down in Article 4(5) of the Sixth VAT Directive (26) and which were considered by the Court of Justice in Case C-276/97 is not relevant to this case. That article of the VAT Directive provides that ‘States, regional and local government authorities and other bodies governed by public law shall not be considered taxable persons in respect of the activities or transactions in which they engage as public authorities, even where they collect dues, fees, contributions or payments in connection with these activities or transactions’, and the Court of Justice considers that ‘activities pursued as public authorities within the meaning of the first paragraph of Article 4(5) of the Sixth Directive are those engaged in by bodies governed by public law under the special legal regime applicable to them’ (27). Although ports may be acting in the context of the special legal regime applicable to them, this characteristic alone will not cause them to cease to be regarded as taxable persons for VAT purposes (28). Far from contradicting the economic nature of the activities carried out, invoking the exemption confirms that the activities carried out are indeed economic, as the exemption (which directly affects the status of taxable person) is meaningful only if the activities carried out are economic (29). Above all, this criterion (pursuit of an activity under the special legal regime applicable to public bodies) was developed by the Court in connection with Article 4(5) of the VAT Directive and has no equivalent in State aid law. On the contrary, in accordance with the case-law recalled in recital 43, the legal regime to which the operators are subject is not sufficient to exclude the existence of an economic activity within the meaning of Article 107 TFEU. |
| --- | --- |

(49)

Next, the alleged fact that the GPMs meet the criteria which are laid down in Article 4(5) of the Sixth VAT Directive (26) and which were considered by the Court of Justice in Case C-276/97 is not relevant to this case. That article of the VAT Directive provides that ‘States, regional and local government authorities and other bodies governed by public law shall not be considered taxable persons in respect of the activities or transactions in which they engage as public authorities, even where they collect dues, fees, contributions or payments in connection with these activities or transactions’, and the Court of Justice considers that ‘activities pursued as public authorities within the meaning of the first paragraph of Article 4(5) of the Sixth Directive are those engaged in by bodies governed by public law under the special legal regime applicable to them’ (27). Although ports may be acting in the context of the special legal regime applicable to them, this characteristic alone will not cause them to cease to be regarded as taxable persons for VAT purposes (28). Far from contradicting the economic nature of the activities carried out, invoking the exemption confirms that the activities carried out are indeed economic, as the exemption (which directly affects the status of taxable person) is meaningful only if the activities carried out are economic (29). Above all, this criterion (pursuit of an activity under the special legal regime applicable to public bodies) was developed by the Court in connection with Article 4(5) of the VAT Directive and has no equivalent in State aid law. On the contrary, in accordance with the case-law recalled in recital 43, the legal regime to which the operators are subject is not sufficient to exclude the existence of an economic activity within the meaning of Article 107 TFEU.

26

27

28

29

| (50) | Likewise, whether or not the ports act on a purely commercial basis of profit maximisation, whether or not they put the general interest before the return on investment, whether or not their objective is to seek a profit, and whether or not they systematically reinvest their profits are not considerations sufficient to exclude the economic nature of an activity consisting in offering goods or services on a market (30). The Commission would also point out that certain French ports make profits and pay dividends to the State (31), and consequently do not systematically reinvest their profits in the infrastructure. |
| --- | --- |

(50)

Likewise, whether or not the ports act on a purely commercial basis of profit maximisation, whether or not they put the general interest before the return on investment, whether or not their objective is to seek a profit, and whether or not they systematically reinvest their profits are not considerations sufficient to exclude the economic nature of an activity consisting in offering goods or services on a market (30). The Commission would also point out that certain French ports make profits and pay dividends to the State (31), and consequently do not systematically reinvest their profits in the infrastructure.

30

31

| (51) | Finally, the argument of the French authorities that the TFEU contains a specific article (Article 93) to deal with State aid in the transport sector merely confirms that transport activities are economic activities (otherwise there would be no State aid). |
| --- | --- |

(51)

Finally, the argument of the French authorities that the TFEU contains a specific article (Article 93) to deal with State aid in the transport sector merely confirms that transport activities are economic activities (otherwise there would be no State aid).

5.1.1.2.   Access to port infrastructure in general

Access to port infrastructure in general

| (52) | As regards, more specifically, the services offered by the ports in exchange for the payment of port charges, the fact that the structure of the port charges is determined at national level and that the charges are approved by the public authorities is not in itself sufficient to deprive these services of their economic nature (32). As a basis to assess the economic nature of the activities at issue in Case C-343/95, cited by the GPM of Le Havre, the Court of Justice looked primarily at the nature of the activities (see recitals 18 and 23) and only in the second place at the approval of the tariffs at national level. For the rest, under the French Transport Code (33), the ports themselves are responsible for setting the tariffs. |
| --- | --- |

(52)

As regards, more specifically, the services offered by the ports in exchange for the payment of port charges, the fact that the structure of the port charges is determined at national level and that the charges are approved by the public authorities is not in itself sufficient to deprive these services of their economic nature (32). As a basis to assess the economic nature of the activities at issue in Case C-343/95, cited by the GPM of Le Havre, the Court of Justice looked primarily at the nature of the activities (see recitals 18 and 23) and only in the second place at the approval of the tariffs at national level. For the rest, under the French Transport Code (33), the ports themselves are responsible for setting the tariffs.

32

33

| (53) | Concerning the reference made by the GPM of Le Havre to the Commission Decision of 20 October 2004 in case N 520/200[3] (***), the Commission would point out that its decision-making practice has evolved since 2004, in conjunction with the development of the Court of Justice case-law. The construction and the maintenance of port access infrastructure, where the infrastructure is available to all users without discrimination and free of charge, are normally considered general measures, carried out by the State in the framework of its responsibility for developing maritime transport. Unless specific features of the case point to a different conclusion, the Commission considers in principle that access infrastructure located outside the area of a port benefits the maritime community as a whole and that its public funding does not constitute State aid. Conversely, public funding of access infrastructure located within the area of a port is in principle assumed to specifically benefit the operation of the port itself, and constitutes State aid (34). |
| --- | --- |

(53)

Concerning the reference made by the GPM of Le Havre to the Commission Decision of 20 October 2004 in case N 520/200[3] (***), the Commission would point out that its decision-making practice has evolved since 2004, in conjunction with the development of the Court of Justice case-law. The construction and the maintenance of port access infrastructure, where the infrastructure is available to all users without discrimination and free of charge, are normally considered general measures, carried out by the State in the framework of its responsibility for developing maritime transport. Unless specific features of the case point to a different conclusion, the Commission considers in principle that access infrastructure located outside the area of a port benefits the maritime community as a whole and that its public funding does not constitute State aid. Conversely, public funding of access infrastructure located within the area of a port is in principle assumed to specifically benefit the operation of the port itself, and constitutes State aid (34).

34

5.1.1.3.   The making available of specific land and infrastructures to undertakings against remuneration

The making available of specific land and infrastructures to undertakings against remuneration

| (54) | It cannot be inferred from the Commission Decision in case SA.36346 (35), cited in point 17(f) of the Notice of 19 July 2016, that the management or development of the port area, and in particular the renting or making available of specific land and infrastructure against remuneration, is not an economic activity. Case SA.36346 concerned support for the revitalisation of public land and not the renting of land against remuneration. |
| --- | --- |

(54)

It cannot be inferred from the Commission Decision in case SA.36346 (35), cited in point 17(f) of the Notice of 19 July 2016, that the management or development of the port area, and in particular the renting or making available of specific land and infrastructure against remuneration, is not an economic activity. Case SA.36346 concerned support for the revitalisation of public land and not the renting of land against remuneration.

35

| (55) | In general, the renting of public property against remuneration constitutes an economic activity, especially where the port's co-contracting party provides port services to its customers (36). The French administration itself has already taken the view that the income from renting land (redevances domaniales, State fees) should be subject to corporate tax under national law (37). The comments on tax legislation published by the Directorate-General of Public Finance (Direction générale des finances publiques), which constitute the French tax administration's official interpretation of the law (38), also make it clear that the concession fees for all or part of a port (for example, a concession for public equipment) are subject to VAT, which constitutes further evidence of their economic nature. |
| --- | --- |

(55)

In general, the renting of public property against remuneration constitutes an economic activity, especially where the port's co-contracting party provides port services to its customers (36). The French administration itself has already taken the view that the income from renting land (redevances domaniales, State fees) should be subject to corporate tax under national law (37). The comments on tax legislation published by the Directorate-General of Public Finance (Direction générale des finances publiques), which constitute the French tax administration's official interpretation of the law (38), also make it clear that the concession fees for all or part of a port (for example, a concession for public equipment) are subject to VAT, which constitutes further evidence of their economic nature.

36

redevances domaniales

37

Direction générale des finances publiques

38

5.1.1.4.   Dredging operations

Dredging operations

| (56) | The construction and maintenance of port access infrastructure, and especially the dredging of rivers, access routes and channels, which is available to all users without discrimination and free of charge, are normally considered to be general measures, carried out by the State in the framework of its responsibility for developing maritime transport. As a general rule, the Commission draws a distinction according to whether the access infrastructure is located inside or outside the port and is accessible to the general public. Unless specific features of the case point to a different conclusion, the Commission considers in principle that access infrastructure located outside the area of a port benefits the maritime community as a whole and that its public funding does not constitute State aid. Conversely, public funding of access infrastructure located within the area of a port is in principle assumed to specifically benefit the operation of the port itself and constitutes State aid (39). |
| --- | --- |

(56)

The construction and maintenance of port access infrastructure, and especially the dredging of rivers, access routes and channels, which is available to all users without discrimination and free of charge, are normally considered to be general measures, carried out by the State in the framework of its responsibility for developing maritime transport. As a general rule, the Commission draws a distinction according to whether the access infrastructure is located inside or outside the port and is accessible to the general public. Unless specific features of the case point to a different conclusion, the Commission considers in principle that access infrastructure located outside the area of a port benefits the maritime community as a whole and that its public funding does not constitute State aid. Conversely, public funding of access infrastructure located within the area of a port is in principle assumed to specifically benefit the operation of the port itself and constitutes State aid (39).

39

| (57) | For example, the Commission has stated that dredging in an estuary, which would improve access to the river and benefit indistinctly all the operators located in the estuary and along further inland waterways, is a general measure for the benefit of the maritime community as a whole. The Commission therefore considered in that case that dredging did not constitute an economic activity (40). |
| --- | --- |

(57)

For example, the Commission has stated that dredging in an estuary, which would improve access to the river and benefit indistinctly all the operators located in the estuary and along further inland waterways, is a general measure for the benefit of the maritime community as a whole. The Commission therefore considered in that case that dredging did not constitute an economic activity (40).

40

5.1.1.5.   The ancillary or principal nature of the economic activities

The ancillary or principal nature of the economic activities

| (58) | The fact that the economic activities of an entity are minor or marginal in relation to its non-economic activities does not in principle allow these economic activities to be regarded as exempt from the State aid rules. |
| --- | --- |

(58)

The fact that the economic activities of an entity are minor or marginal in relation to its non-economic activities does not in principle allow these economic activities to be regarded as exempt from the State aid rules.

| (59) | In addition, and without it being necessary to undertake a port-by-port evaluation of the proportion of the different economic activities, it will be clear from the argument above that a very large part of the activities considered to be non-economic by certain interested parties and the French authorities are in fact of an economic nature. In addition, the port charges and concession fees account for the vast bulk of the income of the major seaports (41) and greatly help the ports to generate a positive tax base for the purposes of corporate tax. |
| --- | --- |

(59)

In addition, and without it being necessary to undertake a port-by-port evaluation of the proportion of the different economic activities, it will be clear from the argument above that a very large part of the activities considered to be non-economic by certain interested parties and the French authorities are in fact of an economic nature. In addition, the port charges and concession fees account for the vast bulk of the income of the major seaports (41) and greatly help the ports to generate a positive tax base for the purposes of corporate tax.

41

| (60) | Finally, the Commission accepts that all the financing of an infrastructure can be excluded from the State aid rules if this infrastructure is used almost exclusively for the purposes of a non-economic activity and any economic use remains purely ancillary (42). However, the fact that the ports engage in non-economic activities within the site they occupy does not mean that the port infrastructure itself is used almost exclusively for a non-economic activity, or that the economic activities are ancillary to the non-economic activities. |
| --- | --- |

(60)

Finally, the Commission accepts that all the financing of an infrastructure can be excluded from the State aid rules if this infrastructure is used almost exclusively for the purposes of a non-economic activity and any economic use remains purely ancillary (42). However, the fact that the ports engage in non-economic activities within the site they occupy does not mean that the port infrastructure itself is used almost exclusively for a non-economic activity, or that the economic activities are ancillary to the non-economic activities.

42

5.1.1.6.   Conclusion

Conclusion

| (61) | The autonomous ports (most of which have become GPMs, with the exception in particular of the autonomous inland ports of Paris and Strasbourg), maritime chambers of commerce, chambers of commerce and industry managing port installations, municipalities which are concessionaires of public equipment owned by the State in the seaports, and undertakings to which they may have entrusted the operation of that equipment, which operate the infrastructure directly or supply services in a port, are, as regards their economic activities — especially those identified in recital 45 — ‘undertakings’ within the meaning of Article 107(1) TFEU. |
| --- | --- |

(61)

The autonomous ports (most of which have become GPMs, with the exception in particular of the autonomous inland ports of Paris and Strasbourg), maritime chambers of commerce, chambers of commerce and industry managing port installations, municipalities which are concessionaires of public equipment owned by the State in the seaports, and undertakings to which they may have entrusted the operation of that equipment, which operate the infrastructure directly or supply services in a port, are, as regards their economic activities — especially those identified in recital 45 — ‘undertakings’ within the meaning of Article 107(1) TFEU.

5.1.2.   State resources and imputability to the State

State resources and imputability to the State

| (62) | According to Article 107(1) TFEU, only measures granted by Member States or through State resources are liable to constitute State aid. It is settled case-law that waiving revenues that would — in principle — otherwise have been paid to the State constitutes a transfer of State resources within the meaning of that provision (43). |
| --- | --- |

(62)

According to Article 107(1) TFEU, only measures granted by Member States or through State resources are liable to constitute State aid. It is settled case-law that waiving revenues that would — in principle — otherwise have been paid to the State constitutes a transfer of State resources within the meaning of that provision (43).

43

| (63) | Through the tax exemption from which the operators of the French ports benefit, the French State waives tax revenue, which is why this exemption implies a transfer of State resources within the meaning of Article 107(1) TFEU. Since this tax exemption is based on a series of ministerial decisions, it is also imputable to France. |
| --- | --- |

(63)

Through the tax exemption from which the operators of the French ports benefit, the French State waives tax revenue, which is why this exemption implies a transfer of State resources within the meaning of Article 107(1) TFEU. Since this tax exemption is based on a series of ministerial decisions, it is also imputable to France.

5.1.3.   Economic advantage

Economic advantage

| (64) | To constitute State aid, the measure at issue must confer a financial advantage on the beneficiary. An advantage comprises not only a positive benefit, but also all the measures which in various forms mitigate the charges which are normally included in the budget of an undertaking (44). |
| --- | --- |

(64)

To constitute State aid, the measure at issue must confer a financial advantage on the beneficiary. An advantage comprises not only a positive benefit, but also all the measures which in various forms mitigate the charges which are normally included in the budget of an undertaking (44).

44

| (65) | As pointed out above, under French tax legislation, ‘the autonomous ports, maritime chambers of commerce, chambers of commerce and industry managing port installations, municipalities which are concessionaires of public equipment owned by the State in the seaports, and undertakings to which they may have entrusted the operation of that equipment’ (45) should be subject to corporate tax as regards their economic activities, but are in fact exempt from it. Consequently, these entities do not have to bear the cost of corporate tax normally assumed by French undertakings in relation to their economic activities. They therefore benefit from an economic advantage within the meaning of Article 107(1) TFEU. |
| --- | --- |

(65)

As pointed out above, under French tax legislation, ‘the autonomous ports, maritime chambers of commerce, chambers of commerce and industry managing port installations, municipalities which are concessionaires of public equipment owned by the State in the seaports, and undertakings to which they may have entrusted the operation of that equipment’ (45) should be subject to corporate tax as regards their economic activities, but are in fact exempt from it. Consequently, these entities do not have to bear the cost of corporate tax normally assumed by French undertakings in relation to their economic activities. They therefore benefit from an economic advantage within the meaning of Article 107(1) TFEU.

45

| (66) | Moreover, the alleged fact that the exemption from corporate tax compensates for the additional costs deriving from tasks of general interest assigned to the ports by the public authorities would call into question the classification as an advantage only if, on the one hand, the amount of the advantage resulting from the tax exemption were in fact intended to compensate for the additional costs associated with tasks of general interest and, on the other hand, this amount were limited to the net additional cost of performing these tasks (no overcompensation) (46). That is not so in the present case. No provision of national law establishes any connection of any kind between the exemption from corporate tax and any public service tasks assigned to the ports (47). Nor does national law guarantee that the amount of the compensation (i.e. the amount of corporate tax not paid) is limitedto the amount needed to cover all or part of the costs arising from the fulfilment of public service obligations. The corporate tax exemption, the amount of which is proportional to the profit made, is not subject to a maximum limit and may therefore lead to an advantage which is disproportionate to the additional cost resulting from the public service obligations. Finally, the assertion by the GPM of Dunkirk that the cost of the public service tasks systematically exceeds the theoretical corporate tax charge is not demonstrated by any figures or any historical data; in the absence of a legal guarantee (also valid for the future) of absence of overcompensation, even if this assertion had been proved to be true for the past, that would not be sufficient to comply with the no overcompensation requirement. |
| --- | --- |

(66)

Moreover, the alleged fact that the exemption from corporate tax compensates for the additional costs deriving from tasks of general interest assigned to the ports by the public authorities would call into question the classification as an advantage only if, on the one hand, the amount of the advantage resulting from the tax exemption were in fact intended to compensate for the additional costs associated with tasks of general interest and, on the other hand, this amount were limited to the net additional cost of performing these tasks (no overcompensation) (46). That is not so in the present case. No provision of national law establishes any connection of any kind between the exemption from corporate tax and any public service tasks assigned to the ports (47). Nor does national law guarantee that the amount of the compensation (i.e. the amount of corporate tax not paid) is limitedto the amount needed to cover all or part of the costs arising from the fulfilment of public service obligations. The corporate tax exemption, the amount of which is proportional to the profit made, is not subject to a maximum limit and may therefore lead to an advantage which is disproportionate to the additional cost resulting from the public service obligations. Finally, the assertion by the GPM of Dunkirk that the cost of the public service tasks systematically exceeds the theoretical corporate tax charge is not demonstrated by any figures or any historical data; in the absence of a legal guarantee (also valid for the future) of absence of overcompensation, even if this assertion had been proved to be true for the past, that would not be sufficient to comply with the no overcompensation requirement.

46

47

5.1.4.   Selectivity

Selectivity

| (67) | To be considered State aid, a measure must be selective, in the sense that it favours certain undertakings or the production of certain goods within the meaning of Article 107(1) TFEU (48). |
| --- | --- |

(67)

To be considered State aid, a measure must be selective, in the sense that it favours certain undertakings or the production of certain goods within the meaning of Article 107(1) TFEU (48).

48

| (68) | According to settled case-law (49), the assessment of the material selectivity of a tax measure mitigating the charges which are normally included in the budget of an undertaking proceeds in three steps. First, it is necessary to identify the common or ‘normal’ tax regime (the ‘reference system’) applicable in the Member State concerned. Second, it is necessary to determine whether the measure in question derogates from the reference system by differentiating between economic operators which, in the light of the objective pursued by said tax regime, are in a comparable factual and legal situation. If this is the case, the measure is prima facie selective. As a third step, it is necessary to establish whether the derogating measure is justified by the nature or overall structure of the reference system. As regards this third step, the Member State must demonstrate that the differential tax treatment results directly from the basic or guiding principles of its tax system (50) identified as reference system. |
| --- | --- |

(68)

According to settled case-law (49), the assessment of the material selectivity of a tax measure mitigating the charges which are normally included in the budget of an undertaking proceeds in three steps. First, it is necessary to identify the common or ‘normal’ tax regime (the ‘reference system’) applicable in the Member State concerned. Second, it is necessary to determine whether the measure in question derogates from the reference system by differentiating between economic operators which, in the light of the objective pursued by said tax regime, are in a comparable factual and legal situation. If this is the case, the measure is prima facie selective. As a third step, it is necessary to establish whether the derogating measure is justified by the nature or overall structure of the reference system. As regards this third step, the Member State must demonstrate that the differential tax treatment results directly from the basic or guiding principles of its tax system (50) identified as reference system.

49

prima facie

50

Reference system

Reference system

| (69) | The reference system is the French corporate tax, levied in principle on all profits or income obtained by companies and other legal persons (Article 205 of the CGI). Under the provisions of Article 206(1) and Article 1654 of the CGI, legal persons governed by private or public law engaging in a business or transactions of a profit-making nature are subject to corporate tax. Under the provisions of Article 165 of Annex 4 to the CGI, public institutions of an industrial or commercial nature are liable to all direct and assimilated taxes applicable to similar private undertakings. Article 167 of Annex 4 to the same Code specifies that these provisions apply in particular to chambers of commerce and industry and to the autonomous ports. Neither the French authorities nor interested third parties made any comments on this point following the opening decision. |
| --- | --- |

(69)

The reference system is the French corporate tax, levied in principle on all profits or income obtained by companies and other legal persons (Article 205 of the CGI). Under the provisions of Article 206(1) and Article 1654 of the CGI, legal persons governed by private or public law engaging in a business or transactions of a profit-making nature are subject to corporate tax. Under the provisions of Article 165 of Annex 4 to the CGI, public institutions of an industrial or commercial nature are liable to all direct and assimilated taxes applicable to similar private undertakings. Article 167 of Annex 4 to the same Code specifies that these provisions apply in particular to chambers of commerce and industry and to the autonomous ports. Neither the French authorities nor interested third parties made any comments on this point following the opening decision.

Derogation from the reference system

Derogation from the reference system

| (70) | By virtue of the ministerial decisions of 1942 and 1943 referred to above, ‘the autonomous ports, maritime chambers of commerce, chambers of commerce and industry managing port installations, municipalities which are concessionaires of public equipment owned by the State in the seaports, and undertakings to which they may have entrusted the operation of that equipment’ are exempt from corporate tax. Contrary to the arguments of certain French ports, the corporate tax exemption in favour of the ports results therefore not from the general provisions of the CGI (and in particular Article 165 of Annex 4 to the CGI) and the non-profit-making nature of the activity of the ports, but from the ministerial decisions of 1942 and 1943, which explicitly derogate from these general provisions and implicitly take the view that the ports engage in profit-making activities (51). This is confirmed by the decision of the Council of State cited by the interested parties (52). |
| --- | --- |

(70)

By virtue of the ministerial decisions of 1942 and 1943 referred to above, ‘the autonomous ports, maritime chambers of commerce, chambers of commerce and industry managing port installations, municipalities which are concessionaires of public equipment owned by the State in the seaports, and undertakings to which they may have entrusted the operation of that equipment’ are exempt from corporate tax. Contrary to the arguments of certain French ports, the corporate tax exemption in favour of the ports results therefore not from the general provisions of the CGI (and in particular Article 165 of Annex 4 to the CGI) and the non-profit-making nature of the activity of the ports, but from the ministerial decisions of 1942 and 1943, which explicitly derogate from these general provisions and implicitly take the view that the ports engage in profit-making activities (51). This is confirmed by the decision of the Council of State cited by the interested parties (52).

51

52

| (71) | However, in the light of the objective of the reference system, which is to tax the profits made by companies and legal persons, the entities covered by the ministerial decisions of 1942 and 1943 are in a comparable factual and legal situation to that of the other companies or legal persons subject to the tax in so far as all these undertakings generate profits. The exemption in question therefore constitutes a derogation from the rules established by the reference tax system. |
| --- | --- |

(71)

However, in the light of the objective of the reference system, which is to tax the profits made by companies and legal persons, the entities covered by the ministerial decisions of 1942 and 1943 are in a comparable factual and legal situation to that of the other companies or legal persons subject to the tax in so far as all these undertakings generate profits. The exemption in question therefore constitutes a derogation from the rules established by the reference tax system.

| (72) | The Commission therefore considers that the tax exemption in favour of the above-mentioned entities is prima facie selective. |
| --- | --- |

(72)

The Commission therefore considers that the tax exemption in favour of the above-mentioned entities is prima facie selective.

prima facie

| (73) | The fact that the measure applies to all French ports, assuming it to have been established (53), does not call this conclusion into question. The measure at issue is not general in relation to the reference system, since it applies only to certain undertakings, the port operators, which are nevertheless in a factual and legal situation comparable to that of the other companies or legal persons subject to the tax, in other words to all profit-making undertakings. The measure would be general only if a reference system were to be considered which was confined to the ports themselves (a reference system formed by the ministerial decisions of 1942 and 1943), whereas it has been shown above that the reference system consists of the general corporate tax provisions to which undertakings of all sectors are subject. |
| --- | --- |

(73)

The fact that the measure applies to all French ports, assuming it to have been established (53), does not call this conclusion into question. The measure at issue is not general in relation to the reference system, since it applies only to certain undertakings, the port operators, which are nevertheless in a factual and legal situation comparable to that of the other companies or legal persons subject to the tax, in other words to all profit-making undertakings. The measure would be general only if a reference system were to be considered which was confined to the ports themselves (a reference system formed by the ministerial decisions of 1942 and 1943), whereas it has been shown above that the reference system consists of the general corporate tax provisions to which undertakings of all sectors are subject.

53

| (74) | Furthermore, in the light of the objective of the reference system, which is to subject the profits made by any legal person to income tax, characteristics such as those cited by the French authorities and the interested parties (tasks imposed on the ports for the benefit of other undertakings, special obligations, operation by CCI, absence of competition, financing by port charges and exercise of the official powers of a public authority) will not serve to establish the existence of a different factual and legal situation. Although those circumstances can in some cases explain that the operators of ports assigned general interest tasks have a lower profitability and therefore lower taxable profits, they cannot justify the exemption from corporate tax of the profits made, in spite of the costs associated with such general interest tasks. |
| --- | --- |

(74)

Furthermore, in the light of the objective of the reference system, which is to subject the profits made by any legal person to income tax, characteristics such as those cited by the French authorities and the interested parties (tasks imposed on the ports for the benefit of other undertakings, special obligations, operation by CCI, absence of competition, financing by port charges and exercise of the official powers of a public authority) will not serve to establish the existence of a different factual and legal situation. Although those circumstances can in some cases explain that the operators of ports assigned general interest tasks have a lower profitability and therefore lower taxable profits, they cannot justify the exemption from corporate tax of the profits made, in spite of the costs associated with such general interest tasks.

| (75) | The French administration has already recognised, with regard to a request to create a derogating tax regime in favour of the autonomous marina authorities, that ‘the European regulations on competition rules preclude the possibility of granting derogating tax measures in favour of certain activities’ (54). |
| --- | --- |

(75)

The French administration has already recognised, with regard to a request to create a derogating tax regime in favour of the autonomous marina authorities, that ‘the European regulations on competition rules preclude the possibility of granting derogating tax measures in favour of certain activities’ (54).

54

Justification based on the nature and general scheme of the system

Justification based on the nature and general scheme of the system

| (76) | The French authorities state that the measure has been an integral part of the French tax system for over 70 years, but the passage of time cannot suffice to consider a derogation from the normal rules of the system to be justified by the nature and general scheme of the system. The passage of time can, on the other hand, be used to justify the use of the procedure for existing aid (see below). The Commission considers that the inherent logic of the reference system in this case is to tax profits. A tax exemption based solely on belonging to a certain category of undertakings or granted only to certain entities identified by law is not in keeping with this logic. |
| --- | --- |

(76)

The French authorities state that the measure has been an integral part of the French tax system for over 70 years, but the passage of time cannot suffice to consider a derogation from the normal rules of the system to be justified by the nature and general scheme of the system. The passage of time can, on the other hand, be used to justify the use of the procedure for existing aid (see below). The Commission considers that the inherent logic of the reference system in this case is to tax profits. A tax exemption based solely on belonging to a certain category of undertakings or granted only to certain entities identified by law is not in keeping with this logic.

| (77) | Finally, as regards the assertion by certain interested parties that the measure at issue does not create any ‘clear breach of the principle of equal treatment’, the Commission would point out that the fact that a measure does not create any ‘clear breach of the principle of equal treatment’ in French law does not mean that it derives directly from the intrinsic basic or guiding principles of the reference system or is the result of inherent mechanisms necessary for the functioning and effectiveness of the system (***) (55) within the meaning of State aid law. As found in the decision of the Constitutional Council (56), the evaluation of the principle of equality in French law takes into consideration the objectives pursued by the derogating measure, i.e. objectives of generalinterest extrinsic to the tax system, which cannot be used at the stage of justification by the nature and general scheme of the tax system. Although objectives extrinsic to the system may possibly be taken into account at the stage of the assessment of the compatibility of aid, they do not permit justification of the selectivity of a derogation or, therefore, demonstration of the absence of State aid. In addition, the decision of the Constitutional Council mentioned by the interested parties does not concern the ministerial decisions exempting the ports from corporate tax, but a legislative text exempting certain sports meetings from a tax with a different intrinsic logic to that of corporate tax. |
| --- | --- |

(77)

Finally, as regards the assertion by certain interested parties that the measure at issue does not create any ‘clear breach of the principle of equal treatment’, the Commission would point out that the fact that a measure does not create any ‘clear breach of the principle of equal treatment’ in French law does not mean that it derives directly from the intrinsic basic or guiding principles of the reference system or is the result of inherent mechanisms necessary for the functioning and effectiveness of the system (***) (55) within the meaning of State aid law. As found in the decision of the Constitutional Council (56), the evaluation of the principle of equality in French law takes into consideration the objectives pursued by the derogating measure, i.e. objectives of generalinterest extrinsic to the tax system, which cannot be used at the stage of justification by the nature and general scheme of the tax system. Although objectives extrinsic to the system may possibly be taken into account at the stage of the assessment of the compatibility of aid, they do not permit justification of the selectivity of a derogation or, therefore, demonstration of the absence of State aid. In addition, the decision of the Constitutional Council mentioned by the interested parties does not concern the ministerial decisions exempting the ports from corporate tax, but a legislative text exempting certain sports meetings from a tax with a different intrinsic logic to that of corporate tax.

55

56

| (78) | The Commission therefore considers that the corporate tax exemption is not justified by the nature and general scheme of the French tax system. |
| --- | --- |

(78)

The Commission therefore considers that the corporate tax exemption is not justified by the nature and general scheme of the French tax system.

5.1.5.   Distortion of competition and effect on trade

Distortion of competition and effect on trade

| (79) | In order to be classified as State aid, the measure must affect intra-EU trade and distort, or threaten to distort, competition. These two criteria are closely linked. |
| --- | --- |

(79)

In order to be classified as State aid, the measure must affect intra-EU trade and distort, or threaten to distort, competition. These two criteria are closely linked.

| (80) | As the Court recalled in particular in the Eventech judgment (57):






  ‘65. | ... in accordance with the Court's settled case-law, for the purpose of categorising a national measure as State aid, it is necessary, not to establish that the aid has a real effect on trade between Member States and that competition is actually being distorted, but only to examine whether that aid is liable to affect such trade and distort competition (the judgment in Libert and Others, C-197/11 and C-203/11, EU:C:2013:288, paragraph 76 and case-law cited). |
| --- | --- | --- |

(80)

As the Court recalled in particular in the Eventech judgment (57):

Eventech

57

‘65.

... in accordance with the Court's settled case-law, for the purpose of categorising a national measure as State aid, it is necessary, not to establish that the aid has a real effect on trade between Member States and that competition is actually being distorted, but only to examine whether that aid is liable to affect such trade and distort competition (the judgment in Libert and Others, C-197/11 and C-203/11, EU:C:2013:288, paragraph 76 and case-law cited).

Libert and Others

| 66. | In particular, when aid granted by a Member State strengthens the position of an undertaking compared with other undertakings competing in intra-Community trade, the latter must be regarded as affected by that aid (see, to that effect, the judgment in Libert and Others, EU:C:2013:288, paragraph 77 and case-law cited). |
| --- | --- |

66.

In particular, when aid granted by a Member State strengthens the position of an undertaking compared with other undertakings competing in intra-Community trade, the latter must be regarded as affected by that aid (see, to that effect, the judgment in Libert and Others, EU:C:2013:288, paragraph 77 and case-law cited).

Libert and Others

| 67. | In that regard, it is not necessary that the beneficiary undertakings are themselves involved in intra-Community trade. Where a Member State grants aid to undertakings, internal activity may be maintained or increased as a result, so that the opportunities for undertakings established in other Member States to penetrate the market in that Member State are thereby reduced (see, to that effect, the judgment in Libert and Others, EU:C:2013:288, paragraph 78 and case-law cited). |
| --- | --- |

67.

In that regard, it is not necessary that the beneficiary undertakings are themselves involved in intra-Community trade. Where a Member State grants aid to undertakings, internal activity may be maintained or increased as a result, so that the opportunities for undertakings established in other Member States to penetrate the market in that Member State are thereby reduced (see, to that effect, the judgment in Libert and Others, EU:C:2013:288, paragraph 78 and case-law cited).

Libert and Others

| 68. | Further, according to the Court's case-law, there is no threshold or percentage below which it may be considered that trade between Member States is not affected. The relatively small amount of aid or the relatively small size of the undertaking which receives it does not as such exclude the possibility that trade between Member States might be affected (the judgment in Altmark Trans and Regierungspräsidium Magdeburg, C-280/00, EU:C:2003:415, paragraph 81). |
| --- | --- |

68.

Further, according to the Court's case-law, there is no threshold or percentage below which it may be considered that trade between Member States is not affected. The relatively small amount of aid or the relatively small size of the undertaking which receives it does not as such exclude the possibility that trade between Member States might be affected (the judgment in Altmark Trans and Regierungspräsidium Magdeburg, C-280/00, EU:C:2003:415, paragraph 81).

Altmark Trans and Regierungspräsidium Magdeburg

| 69. | Consequently, the condition that the aid must be capable of affecting trade between Member States does not depend on the local or regional character of the transport services supplied or on the scale of the field of activity concerned (the judgment in Altmark Trans and Regierungspräsidium Magdeburg, EU:C:2003:415, paragraph 82).’ |
| --- | --- |

69.

Consequently, the condition that the aid must be capable of affecting trade between Member States does not depend on the local or regional character of the transport services supplied or on the scale of the field of activity concerned (the judgment in Altmark Trans and Regierungspräsidium Magdeburg, EU:C:2003:415, paragraph 82).’

Altmark Trans and Regierungspräsidium Magdeburg

| (81) | In the Wam judgment (58), the Court stressed the following in particular:






  ‘53. | ... the fact that an economic sector has been liberalised at Community level may serve to determine that the aid has a real or potential effect on competition and affects trade between Member States (Cassa di Risparmio di Firenze and Others, paragraph 142 and the case-law cited). |
| --- | --- | --- |

(81)

In the Wam judgment (58), the Court stressed the following in particular:

Wam

58

‘53.

... the fact that an economic sector has been liberalised at Community level may serve to determine that the aid has a real or potential effect on competition and affects trade between Member States (Cassa di Risparmio di Firenze and Others, paragraph 142 and the case-law cited).

Cassa di Risparmio di Firenze and Others

| 54. | With regard to the condition of the distortion of competition, it should be borne in mind in that regard that, in principle, aid intended to release an undertaking from costs which it would normally have to bear in its day-to-day management or normal activities distorts the conditions of competition (see Case C-156/98 Germany v Commission [2000] ECR I-6857, paragraph 30, and Heiser, paragraph 55).’ |
| --- | --- |

54.

With regard to the condition of the distortion of competition, it should be borne in mind in that regard that, in principle, aid intended to release an undertaking from costs which it would normally have to bear in its day-to-day management or normal activities distorts the conditions of competition (see Case C-156/98 Germany v Commission [2000] ECR I-6857, paragraph 30, and Heiser, paragraph 55).’

Germany

Commission

Heiser

| (82) | In the present case, the tax advantage in favour of the ports concerned frees them from a current charge which they would normally have to bear. It is of a nature to favour them in relation to French ports and foreign ports of the European Union which do not benefit from that advantage. Thus it is liable to affect intra-Community trade and to distort competition. |
| --- | --- |

(82)

In the present case, the tax advantage in favour of the ports concerned frees them from a current charge which they would normally have to bear. It is of a nature to favour them in relation to French ports and foreign ports of the European Union which do not benefit from that advantage. Thus it is liable to affect intra-Community trade and to distort competition.

| (83) | There is competition in the port sector, and it is exacerbated by the nature and characteristics specific to transport, and especially maritime and inland waterway transport. Even though it may be considered that the ports hold a legal monopoly to offer port services within the port they operate, the transport services they offer are, at least to a certain extent, in competition with those offered by or in other ports and by other providers of transport services both in France (59) and in other Member States. |
| --- | --- |

(83)

There is competition in the port sector, and it is exacerbated by the nature and characteristics specific to transport, and especially maritime and inland waterway transport. Even though it may be considered that the ports hold a legal monopoly to offer port services within the port they operate, the transport services they offer are, at least to a certain extent, in competition with those offered by or in other ports and by other providers of transport services both in France (59) and in other Member States.

59

| (84) | For instance, in the context of the public consultation of interested parties on a draft Regulation in the ports sector, ‘all stakeholders stressed the need for a stable and fair level playing field ... for inter-port (competition between ports) ... competition in the EU’ (60). Likewise, the ports, and especially the inland ports and more generally inland waterway transport of which they form a constituent part, are in competition with other forms of transport. In so far as other solutions exist or could exist to transport freight in the overseas regions, the measure can, even for these ports located far from metropolitan France or other European ports, lead to a distortion of competition and have an impact on trade between Member States. |
| --- | --- |

(84)

For instance, in the context of the public consultation of interested parties on a draft Regulation in the ports sector, ‘all stakeholders stressed the need for a stable and fair level playing field ... for inter-port (competition between ports) ... competition in the EU’ (60). Likewise, the ports, and especially the inland ports and more generally inland waterway transport of which they form a constituent part, are in competition with other forms of transport. In so far as other solutions exist or could exist to transport freight in the overseas regions, the measure can, even for these ports located far from metropolitan France or other European ports, lead to a distortion of competition and have an impact on trade between Member States.

60

| (85) | It is true that the attractiveness of a port is measured by a number of parameters, in particular its connections with the hinterland (61), but the price of the services provided by the port (port charges and other fees paid by shipowners) is nevertheless a factor in the relative competitiveness of the ports (62). Contrary to the arguments put forward by the French authorities and certain interested parties, the fact that this aspect is more or less important in relation to other factors of the competitiveness of ports does not permit the conclusion that the measure at issue does not affect competition, since the measure may influence the prices practised by the ports and, all other things being equal, this price will be decisive in the shipowners' choice of a route or a logistics solution involving one port rather than another. |
| --- | --- |

(85)

It is true that the attractiveness of a port is measured by a number of parameters, in particular its connections with the hinterland (61), but the price of the services provided by the port (port charges and other fees paid by shipowners) is nevertheless a factor in the relative competitiveness of the ports (62). Contrary to the arguments put forward by the French authorities and certain interested parties, the fact that this aspect is more or less important in relation to other factors of the competitiveness of ports does not permit the conclusion that the measure at issue does not affect competition, since the measure may influence the prices practised by the ports and, all other things being equal, this price will be decisive in the shipowners' choice of a route or a logistics solution involving one port rather than another.

61

62

| (86) | Moreover, it should be pointed out that European ports also compete to attract operators (or concessionaires) providing shipowners with certain port services, where the port authority does not provide these services directly itself. The level of the fee charged by the ports in exchange for land and infrastructure (port equipment) being made available to concessionaires also plays a role in the choice made by concessionaires to establish themselves in one port rather than another, and in the choice of the resources to be used there. More generally, the ports are in competition with other economic operators on the financing and investment market; all other things being equal, the measure confers an advantage on the ports in relation to investors, compared to other operators not benefiting from the measure (the ports represent a more lucrative investment). |
| --- | --- |

(86)

Moreover, it should be pointed out that European ports also compete to attract operators (or concessionaires) providing shipowners with certain port services, where the port authority does not provide these services directly itself. The level of the fee charged by the ports in exchange for land and infrastructure (port equipment) being made available to concessionaires also plays a role in the choice made by concessionaires to establish themselves in one port rather than another, and in the choice of the resources to be used there. More generally, the ports are in competition with other economic operators on the financing and investment market; all other things being equal, the measure confers an advantage on the ports in relation to investors, compared to other operators not benefiting from the measure (the ports represent a more lucrative investment).

| (87) | In addition, as the measure at issue constitutes an aid scheme which applies to ports of very different size, geographical location, type (inland port, seaport) or activities, it is not necessary, in order to establish that the measure examined is State aid, to demonstrate individually that that measure results for each port in a distortion of competition and an effect on trade. |
| --- | --- |

(87)

In addition, as the measure at issue constitutes an aid scheme which applies to ports of very different size, geographical location, type (inland port, seaport) or activities, it is not necessary, in order to establish that the measure examined is State aid, to demonstrate individually that that measure results for each port in a distortion of competition and an effect on trade.

| (88) | It suffices in this respect to mention that the French authorities and interested parties accept that certain large ports, such as the ports of Le Havre, Rouen or Marseilles, are in competition with other ports of the European Union, so that the measure has an impact on commerce and affects trade. The comments of the port of Rotterdam are also on these lines. |
| --- | --- |

(88)

It suffices in this respect to mention that the French authorities and interested parties accept that certain large ports, such as the ports of Le Havre, Rouen or Marseilles, are in competition with other ports of the European Union, so that the measure has an impact on commerce and affects trade. The comments of the port of Rotterdam are also on these lines.

| (89) | Moreover, the alleged fact that similar State aid measures exist in other Member States and the behaviour of the Commission concerning these possible measures have no bearing on the classification of the measure concerned as State aid (63), since the corporate tax exemption of the French ports has the consequence of improving their competitive situation in relation to a reference situation in which they would be taxed under the normal conditions of the corporate tax system (64). Similarly, the existence of different corporate tax rates in the Member States is just a consequence of the lack of harmonisation of direct taxation between Member States and merely reflects the sovereign choices of the Member States to use tax to finance certain services — or a certain level of services — to taxpayers. |
| --- | --- |

(89)

Moreover, the alleged fact that similar State aid measures exist in other Member States and the behaviour of the Commission concerning these possible measures have no bearing on the classification of the measure concerned as State aid (63), since the corporate tax exemption of the French ports has the consequence of improving their competitive situation in relation to a reference situation in which they would be taxed under the normal conditions of the corporate tax system (64). Similarly, the existence of different corporate tax rates in the Member States is just a consequence of the lack of harmonisation of direct taxation between Member States and merely reflects the sovereign choices of the Member States to use tax to finance certain services — or a certain level of services — to taxpayers.

63

64

| (90) | For the rest, it is not necessary for the distortion of competition or the effect on trade to be significant or substantial. Thus the alleged fact that the traffic in which there is competition is small, far from demonstrating the absence of distortion of competition, tends to prove that a competitive relationship, of greater or lesser intensity, does exist between French ports and other ports of the Union. Likewise, the fact that the combined activity of the small French ports accounts for only 1 % of the total traffic of the Union does not mean that their market share on one or more markets relevant to an analysis of the distortions of competition is of the same order. In addition, the Decision of 11 April 2016, cited by the French authorities and the interested parties, concerns the compatibility of an investment aid measure, which means that the measure in question is recognised as State aid affecting competition and trade between Member States. |
| --- | --- |

(90)

For the rest, it is not necessary for the distortion of competition or the effect on trade to be significant or substantial. Thus the alleged fact that the traffic in which there is competition is small, far from demonstrating the absence of distortion of competition, tends to prove that a competitive relationship, of greater or lesser intensity, does exist between French ports and other ports of the Union. Likewise, the fact that the combined activity of the small French ports accounts for only 1 % of the total traffic of the Union does not mean that their market share on one or more markets relevant to an analysis of the distortions of competition is of the same order. In addition, the Decision of 11 April 2016, cited by the French authorities and the interested parties, concerns the compatibility of an investment aid measure, which means that the measure in question is recognised as State aid affecting competition and trade between Member States.

| (91) | Furthermore, even if the ‘small ports’, as defined by France (65), account for only a small proportion of the traffic of the Union, the fact that the beneficiary undertaking is of modest size does not in itself exclude distortion or threat of distortion of competition in the internal market, especially where the activity of the beneficiaries is located in border areas. The observations of the Bayonne Pays Basque CCI, concessionaire of the commercial port of Bayonne and the fishing port of Saint-Jean-de-Luz/Ciboure, which are ‘small ports’ according to the definition proposed by France, illustrate moreover the perception held by those ports close to a border of the existence of actual cross-border competition (66). Although the Commission recognises, in certain cases (67), that it is possible that an advantageous measure does not affect trade between Member States, it does not base its recognition only on the size of the beneficiary undertaking, but on an individual assessment of several criteria (68). |
| --- | --- |

(91)

Furthermore, even if the ‘small ports’, as defined by France (65), account for only a small proportion of the traffic of the Union, the fact that the beneficiary undertaking is of modest size does not in itself exclude distortion or threat of distortion of competition in the internal market, especially where the activity of the beneficiaries is located in border areas. The observations of the Bayonne Pays Basque CCI, concessionaire of the commercial port of Bayonne and the fishing port of Saint-Jean-de-Luz/Ciboure, which are ‘small ports’ according to the definition proposed by France, illustrate moreover the perception held by those ports close to a border of the existence of actual cross-border competition (66). Although the Commission recognises, in certain cases (67), that it is possible that an advantageous measure does not affect trade between Member States, it does not base its recognition only on the size of the beneficiary undertaking, but on an individual assessment of several criteria (68).

65

66

67

68

| (92) | The Commission does not exclude the possibility that in the particular case of certain ports — those fulfilling the conditions laid down by its decision-making practice, in particular — the measure at issue may be considered to have no effect on trade. |
| --- | --- |

(92)

The Commission does not exclude the possibility that in the particular case of certain ports — those fulfilling the conditions laid down by its decision-making practice, in particular — the measure at issue may be considered to have no effect on trade.

| (93) | However, for the more systematic reasons set out above, the measure examined, as a general corporate tax exemption scheme for all the beneficiaries mentioned by the ministerial decisions of 1942 and 1943, affects trade within the Union and distorts or may distort competition. |
| --- | --- |

(93)

However, for the more systematic reasons set out above, the measure examined, as a general corporate tax exemption scheme for all the beneficiaries mentioned by the ministerial decisions of 1942 and 1943, affects trade within the Union and distorts or may distort competition.

5.1.6.   Conclusion

Conclusion

| (94) | Consequently, the Commission concludes that the tax exemption in favour of the autonomous ports (some of which are now classified as major seaports), maritime chambers of commerce, chambers of commerce and industry managing port installations, municipalities which are concessionaires of public equipment owned by the State in the seaports, and undertakings to which they may have entrusted the operation of that equipment constitutes State aid within the meaning of Article 107(1) TFEU. |
| --- | --- |

(94)

Consequently, the Commission concludes that the tax exemption in favour of the autonomous ports (some of which are now classified as major seaports), maritime chambers of commerce, chambers of commerce and industry managing port installations, municipalities which are concessionaires of public equipment owned by the State in the seaports, and undertakings to which they may have entrusted the operation of that equipment constitutes State aid within the meaning of Article 107(1) TFEU.

5.2.   Compatibility of the measure with the internal market

Compatibility of the measure with the internal market

| (95) | It is for the Member State concerned to demonstrate that a State aid measure can be regarded as compatible with the internal market. As a basis for the compatibility of the measure, the French authorities rely only on compensation for certain tasks carried out by the ports, referring to Article 106(2) TFEU, and on Article 107(3)(a) TFEU; certain interested parties also invoke Articles 93 (coordination of transport) and Article 107(3)(b) TFEU (important projects of European interest). |
| --- | --- |

(95)

It is for the Member State concerned to demonstrate that a State aid measure can be regarded as compatible with the internal market. As a basis for the compatibility of the measure, the French authorities rely only on compensation for certain tasks carried out by the ports, referring to Article 106(2) TFEU, and on Article 107(3)(a) TFEU; certain interested parties also invoke Articles 93 (coordination of transport) and Article 107(3)(b) TFEU (important projects of European interest).

| (96) | First, Article 106(2) TFEU provides that compensation for carrying out public service tasks can be declared compatible with the internal market if it meets certain conditions (69). In this respect, the French authorities and certain interested parties consider that the measure at issue is compatible with the internal market because it allows compensation for certain tasks financed by the ports which constitute an exercise of the official powers of a public authority. However, the Commission would point out that the measure at issue, which links the amount of aid to the profits made, is not linked or limited to the net costs of the public service tasks (70). Nor does it derive from a clear mandate given to the beneficiaries of the measure to carry out such tasks (71). Consequently, the measure cannot be regarded as public service compensation compatible with the internal market and is not compatible on the basis of Article 106(2) TFEU. |
| --- | --- |

(96)

First, Article 106(2) TFEU provides that compensation for carrying out public service tasks can be declared compatible with the internal market if it meets certain conditions (69). In this respect, the French authorities and certain interested parties consider that the measure at issue is compatible with the internal market because it allows compensation for certain tasks financed by the ports which constitute an exercise of the official powers of a public authority. However, the Commission would point out that the measure at issue, which links the amount of aid to the profits made, is not linked or limited to the net costs of the public service tasks (70). Nor does it derive from a clear mandate given to the beneficiaries of the measure to carry out such tasks (71). Consequently, the measure cannot be regarded as public service compensation compatible with the internal market and is not compatible on the basis of Article 106(2) TFEU.

69

70

71

| (97) | Second, Article 93 TFEU stipulates that aids which meet the needs of coordination of transport or represent reimbursement for the discharge of certain obligations inherent in the concept of a public service can also be declared compatible with the internal market. Although, as the representatives of managers of French inland ports stress, the inland ports play a major role in the development of multimodal transport, not all the investments made by the ports are covered by Article 93 TFEU, which is limited to aids which meet the needs of coordination of transport. The corporate tax exemption does not constitute investment aid, but operating aid which is not targeted at investment. The measure favours undertakings making the most profit and therefore having greater capacity to accumulate profit and hence to finance investments. Nor is the measure targeted at the reimbursement of certain obligations inherent in the concept of a public service, as pointed out above. Moreover, the advantage derived from a tax exemption pure and simple is not limited to the amount needed for coordination of transport or for reimbursement for the discharge of certain obligations inherent in the concept of a public service, and therefore does not guarantee compliance with the principle of proportionality. It has no clearly identified incentive effect either, in particular because the exemption is more beneficial to the most profitable ports, which therefore have the most resources — and the least need of incentives. Consequently, Article 93 TFEU is not applicable. |
| --- | --- |

(97)

Second, Article 93 TFEU stipulates that aids which meet the needs of coordination of transport or represent reimbursement for the discharge of certain obligations inherent in the concept of a public service can also be declared compatible with the internal market. Although, as the representatives of managers of French inland ports stress, the inland ports play a major role in the development of multimodal transport, not all the investments made by the ports are covered by Article 93 TFEU, which is limited to aids which meet the needs of coordination of transport. The corporate tax exemption does not constitute investment aid, but operating aid which is not targeted at investment. The measure favours undertakings making the most profit and therefore having greater capacity to accumulate profit and hence to finance investments. Nor is the measure targeted at the reimbursement of certain obligations inherent in the concept of a public service, as pointed out above. Moreover, the advantage derived from a tax exemption pure and simple is not limited to the amount needed for coordination of transport or for reimbursement for the discharge of certain obligations inherent in the concept of a public service, and therefore does not guarantee compliance with the principle of proportionality. It has no clearly identified incentive effect either, in particular because the exemption is more beneficial to the most profitable ports, which therefore have the most resources — and the least need of incentives. Consequently, Article 93 TFEU is not applicable.

| (98) | Third, according to Article 107(3)(b) TFEU, aid to promote the execution of an important project of common European interest can also be declared compatible with the internal market. The representatives of the managers of French inland ports consider in general that the corporate tax exemption comes within the scope of this article. For the same reasons as above, it is not possible to concur with this reasoning. The measure at issue is not targeted at the execution of an important project of European interest and is not proportionate to the costs of such a project. It is an advantage benefiting the ports merely in so far as they make profits, the fact that they contribute to an important project of common European interest being irrelevant in this respect. |
| --- | --- |

(98)

Third, according to Article 107(3)(b) TFEU, aid to promote the execution of an important project of common European interest can also be declared compatible with the internal market. The representatives of the managers of French inland ports consider in general that the corporate tax exemption comes within the scope of this article. For the same reasons as above, it is not possible to concur with this reasoning. The measure at issue is not targeted at the execution of an important project of European interest and is not proportionate to the costs of such a project. It is an advantage benefiting the ports merely in so far as they make profits, the fact that they contribute to an important project of common European interest being irrelevant in this respect.

| (99) | Fourth, in accordance with Article 107(3)(a) TFEU, aid to promote ‘the economic development ... of the regions referred to in Article 349 TFEU, in view of their structural, economic and social situation’ may be considered compatible with the internal market. This stipulation is invoked by the French authorities and several overseas interested parties with regard to the ports located overseas. However, the measure at issue is not targeted at the regions in question. |
| --- | --- |

(99)

Fourth, in accordance with Article 107(3)(a) TFEU, aid to promote ‘the economic development ... of the regions referred to in Article 349 TFEU, in view of their structural, economic and social situation’ may be considered compatible with the internal market. This stipulation is invoked by the French authorities and several overseas interested parties with regard to the ports located overseas. However, the measure at issue is not targeted at the regions in question.

| (100) | Even if the measure benefited only the ports located in the regions referred to in Article 349 TFEU, its objective is in any event not the economic development of those regions, or compensation for their structurally unfavourable situation, since it is confined to granting a sectoral advantage to a specific type of undertaking in the transport sector, whatever the undertaking's activities. France does not show that the measure has an effect on the cost of imported goods, and in this respect it can be noted that certain overseas ports make profits, pay dividends to the State (72) and therefore prima facie have margins available to reduce the amount of the port charges if they are seen as a handicap for the economic development of the regions concerned; thus the corporate tax exemption may have an impact on various financial flows (in particular dividends), but not necessarily on the cost of the goods imported. In this respect, France does not argue that the ports are in a particularly unfavourable situation in relation to other undertakings located in the regions referred to in Article 349. The very nature of the measure and its functioning (an advantage reserved to certain undertakings, without considering their activity, proportional to the profits made rather than to needs, and not limited to a clearly defined objective the attainment of which requires a financial incentive) clearly distinguish it from the tax schemes constituting operating aid referred to by the interested parties and accepted by the Commission. Tax measures to assist investment or zero rating of VAT are general measures, with a scope covering undertakings located in the regions referred to in Article 349 TFEU without discrimination. |
| --- | --- |

(100)

Even if the measure benefited only the ports located in the regions referred to in Article 349 TFEU, its objective is in any event not the economic development of those regions, or compensation for their structurally unfavourable situation, since it is confined to granting a sectoral advantage to a specific type of undertaking in the transport sector, whatever the undertaking's activities. France does not show that the measure has an effect on the cost of imported goods, and in this respect it can be noted that certain overseas ports make profits, pay dividends to the State (72) and therefore prima facie have margins available to reduce the amount of the port charges if they are seen as a handicap for the economic development of the regions concerned; thus the corporate tax exemption may have an impact on various financial flows (in particular dividends), but not necessarily on the cost of the goods imported. In this respect, France does not argue that the ports are in a particularly unfavourable situation in relation to other undertakings located in the regions referred to in Article 349. The very nature of the measure and its functioning (an advantage reserved to certain undertakings, without considering their activity, proportional to the profits made rather than to needs, and not limited to a clearly defined objective the attainment of which requires a financial incentive) clearly distinguish it from the tax schemes constituting operating aid referred to by the interested parties and accepted by the Commission. Tax measures to assist investment or zero rating of VAT are general measures, with a scope covering undertakings located in the regions referred to in Article 349 TFEU without discrimination.

72

prima facie

| (101) | In addition, contrary to the argument put forward by the GPM of Guadeloupe, the revised General Block Exemption Regulation (73), which, to some extent, covers operating aid for overseas transport, is not applicable to the measure at issue. Article 15(4) of the Regulation applies only to measures where the amount is limited according to certain indicators (gross value added, labour costs, or turnover), which the corporate tax exemption is not. |
| --- | --- |

(101)

In addition, contrary to the argument put forward by the GPM of Guadeloupe, the revised General Block Exemption Regulation (73), which, to some extent, covers operating aid for overseas transport, is not applicable to the measure at issue. Article 15(4) of the Regulation applies only to measures where the amount is limited according to certain indicators (gross value added, labour costs, or turnover), which the corporate tax exemption is not.

73

| (102) | Consequently, the measure examined cannot be declared compatible with the internal market on the basis of Article 107(3)(a) TFEU. |
| --- | --- |

(102)

Consequently, the measure examined cannot be declared compatible with the internal market on the basis of Article 107(3)(a) TFEU.

| (103) | Fifth, and although Article 107(3)(c) has not been invoked either by France or by the interested parties, the Commission will consider whether the measure at issue is of a nature to ‘facilitate the development of certain economic activities or of certain economic areas’ without adversely affecting trading conditions to an extent contrary to the common interest. For the reasons already set out above, however (absence of proportionality, absence of incentive effect and absence of a link with an identified common interest objective), the Commission takes the view that Article 107(3)(c) TFEU is not applicable. |
| --- | --- |

(103)

Fifth, and although Article 107(3)(c) has not been invoked either by France or by the interested parties, the Commission will consider whether the measure at issue is of a nature to ‘facilitate the development of certain economic activities or of certain economic areas’ without adversely affecting trading conditions to an extent contrary to the common interest. For the reasons already set out above, however (absence of proportionality, absence of incentive effect and absence of a link with an identified common interest objective), the Commission takes the view that Article 107(3)(c) TFEU is not applicable.

| (104) | Finally, although certain interested parties consider that the abolition of the measure will have an impact on the investment capacity of the ports, the Commission would emphasise that the measure at issue does not target investment (74). |
| --- | --- |

(104)

Finally, although certain interested parties consider that the abolition of the measure will have an impact on the investment capacity of the ports, the Commission would emphasise that the measure at issue does not target investment (74).

74

5.3.   Existing aid or new aid

Existing aid or new aid

| (105) | In accordance with Article 1(b)(i) of the Procedural Regulation, aid schemes that were put into effect prior to the entry into force of the Treaty are existing aid schemes. |
| --- | --- |

(105)

In accordance with Article 1(b)(i) of the Procedural Regulation, aid schemes that were put into effect prior to the entry into force of the Treaty are existing aid schemes.

| (106) | Since the tax exemption in question entered into force in 1942 and has not undergone any substantial changes since then, the Commission considers that the measure constitutes existing State aid. |
| --- | --- |

(106)

Since the tax exemption in question entered into force in 1942 and has not undergone any substantial changes since then, the Commission considers that the measure constitutes existing State aid.

6.   THE REQUESTS TO SUSPEND THE PROCEDURE

THE REQUESTS TO SUSPEND THE PROCEDURE

| (107) | In accordance with the mandatory role allotted to it by Articles 107 and 108 TFEU, the Commission must end State aid deemed incompatible with the internal market and re-establish the conditions for a level playing field as quickly as possible. |
| --- | --- |

(107)

In accordance with the mandatory role allotted to it by Articles 107 and 108 TFEU, the Commission must end State aid deemed incompatible with the internal market and re-establish the conditions for a level playing field as quickly as possible.

| (108) | In accordance with Article 9(6) of the Procedural Regulation, the Commission must adopt a final decision as soon as the doubts raised in the opening decision have been removed. If, at this stage in the procedure, the Commission considers that incompatible aid has been granted to certain undertakings, it cannot in principle suspend the State aid procedure in question or grant a transitional period. Moreover, this would lead to authorising the payment of aid incompatible with the internal market for a longer period, which would also be unfair in relation to competitors not receiving aid or receiving a lower amount of aid. The Commission notes in this respect that the Dutch ports, which have been subject to corporate tax since 1 January 2017, have asked it to take rapid action to ensure that French ports are subject to corporate tax. |
| --- | --- |

(108)

In accordance with Article 9(6) of the Procedural Regulation, the Commission must adopt a final decision as soon as the doubts raised in the opening decision have been removed. If, at this stage in the procedure, the Commission considers that incompatible aid has been granted to certain undertakings, it cannot in principle suspend the State aid procedure in question or grant a transitional period. Moreover, this would lead to authorising the payment of aid incompatible with the internal market for a longer period, which would also be unfair in relation to competitors not receiving aid or receiving a lower amount of aid. The Commission notes in this respect that the Dutch ports, which have been subject to corporate tax since 1 January 2017, have asked it to take rapid action to ensure that French ports are subject to corporate tax.

| (109) | As pointed out above, the possible existence of other State aid to other ports in other Member States does not justify a suspension of the procedure during which the incompatible aid would continue to be paid. It should be pointed out that ‘the effects of more than one distortion of competition on trade between Member States do not cancel one another out but accumulate and the damaging consequences to the common market are increased’ (75). Moreover, suspending the procedure abolishing the tax exemptions for French ports would have the effect of prolonging the current distortions between northern European ports, since the Dutch ports abolished these tax benefits from 1 January 2017. |
| --- | --- |

(109)

As pointed out above, the possible existence of other State aid to other ports in other Member States does not justify a suspension of the procedure during which the incompatible aid would continue to be paid. It should be pointed out that ‘the effects of more than one distortion of competition on trade between Member States do not cancel one another out but accumulate and the damaging consequences to the common market are increased’ (75). Moreover, suspending the procedure abolishing the tax exemptions for French ports would have the effect of prolonging the current distortions between northern European ports, since the Dutch ports abolished these tax benefits from 1 January 2017.

75

| (110) | The fact that the procedure initiated by the Commission in the case of the tax regime for the Dutch ports (76) lasted longer than the procedure in the case of the French ports is not relevant in support of a request for a transitional period in the present case. The Commission treats all cases fairly and each case in the light of its specific characteristics. The Commission endeavours to determine the timeframe for its decisions so as to enable the Member State to implement the decision within a reasonable period, in the light of the circumstances, and not in order to allow the undertakings concerned to go on receiving aid declared incompatible. |
| --- | --- |

(110)

The fact that the procedure initiated by the Commission in the case of the tax regime for the Dutch ports (76) lasted longer than the procedure in the case of the French ports is not relevant in support of a request for a transitional period in the present case. The Commission treats all cases fairly and each case in the light of its specific characteristics. The Commission endeavours to determine the timeframe for its decisions so as to enable the Member State to implement the decision within a reasonable period, in the light of the circumstances, and not in order to allow the undertakings concerned to go on receiving aid declared incompatible.

76

| (111) | Finally, France does not specify how the revision of the General Block Exemption Regulation and the proposal for a Regulation on port services might require suspension of the procedure. Be that as it may, the revised version of the General Block Exemption Regulation was adopted on 17 May 2017, and does not cover pure and simple corporate tax exemption measures. As for the Regulation on port services which was adopted on 15 February 2017 (77), it does not have either the object or the effect of influencing the action of the Commission based on Articles 107 and 108 TFEU. |
| --- | --- |

(111)

Finally, France does not specify how the revision of the General Block Exemption Regulation and the proposal for a Regulation on port services might require suspension of the procedure. Be that as it may, the revised version of the General Block Exemption Regulation was adopted on 17 May 2017, and does not cover pure and simple corporate tax exemption measures. As for the Regulation on port services which was adopted on 15 February 2017 (77), it does not have either the object or the effect of influencing the action of the Commission based on Articles 107 and 108 TFEU.

77

| (112) | Consequently, it is not appropriate to suspend the procedure. |
| --- | --- |

(112)

Consequently, it is not appropriate to suspend the procedure.

7.   THE REQUESTS OF THE DUTCH PORTS

THE REQUESTS OF THE DUTCH PORTS

| (113) | As regards the request of Dutch ports to defer their liability to corporate tax, the Commission would point out that the present procedure does not concern Dutch ports, but [French] (***) ports. In its final decision in case SA.25338 concerning Dutch ports (78), the Commission refused to delay the liability of Dutch ports to corporate tax for the same reasons of principle as those set out in the present Decision. The liability of the Dutch ports to corporate tax derives from Dutch national law and the Commission, in any case under Article 107 TFEU, is unable to require a Member State to change its legislation so as to grant State aid to certain economic operators. |
| --- | --- |

(113)

As regards the request of Dutch ports to defer their liability to corporate tax, the Commission would point out that the present procedure does not concern Dutch ports, but [French] (***) ports. In its final decision in case SA.25338 concerning Dutch ports (78), the Commission refused to delay the liability of Dutch ports to corporate tax for the same reasons of principle as those set out in the present Decision. The liability of the Dutch ports to corporate tax derives from Dutch national law and the Commission, in any case under Article 107 TFEU, is unable to require a Member State to change its legislation so as to grant State aid to certain economic operators.

78

8.   CONCLUSION

CONCLUSION

| (114) | The corporate tax exemption in favour of the entities referred to in the ministerial decisions of 11 August 1942 and 27 April 1943 (autonomous ports — some of which are now classified as major seaports — maritime chambers of commerce, chambers of commerce and industry managing port installations, municipalities which are concessionaires of public equipment owned by the State in the seaports, and undertakings to which they may have entrusted the operation of that equipment) constitutes an existing State aid scheme which is incompatible with the internal market. |
| --- | --- |

(114)

The corporate tax exemption in favour of the entities referred to in the ministerial decisions of 11 August 1942 and 27 April 1943 (autonomous ports — some of which are now classified as major seaports — maritime chambers of commerce, chambers of commerce and industry managing port installations, municipalities which are concessionaires of public equipment owned by the State in the seaports, and undertakings to which they may have entrusted the operation of that equipment) constitutes an existing State aid scheme which is incompatible with the internal market.

| (115) | It is therefore appropriate for the French authorities to abolish the exemption from corporate tax at issue and to subject the entities in question to corporate tax. This measure should be adopted before the end of the calendar year running on the date of this Decision and should apply at the latest to the income generated by the economic activities from the start of the tax year following its adoption, |
| --- | --- |

(115)

It is therefore appropriate for the French authorities to abolish the exemption from corporate tax at issue and to subject the entities in question to corporate tax. This measure should be adopted before the end of the calendar year running on the date of this Decision and should apply at the latest to the income generated by the economic activities from the start of the tax year following its adoption,

HAS ADOPTED THIS DECISION:

Article 1

The exemption from corporate tax in favour of autonomous ports (some of which are now classified as major seaports), maritime chambers of commerce, chambers of commerce and industry managing port installations, municipalities which are concessionaires of public equipment owned by the State in the seaports, and undertakings to which they may have entrusted the operation of that equipment, constitutes an existing State aid scheme which is incompatible with the internal market.

Article 2

1.   France shall remove the corporate tax exemption referred to in Article 1 and subject the entities for which this exemption applies to corporate tax.

2.   The measure by which France fulfils its obligations under paragraph 1 shall be adopted before the end of the calendar year running on the date of notification of this Decision. This measure shall apply at the latest to the income from the economic activities generated from the start of the tax year following its adoption.

Article 3

France shall inform the Commission, within two months of the date of notification of this Decision, of the measures taken to comply with it.

Article 4

This Decision is addressed to the French Republic.

Done at Brussels, 27 July 2017.

For the Commission

Margrethe VESTAGER

Member of the Commission

---

(1)  
  OJ C 302, 19.8.2016, p. 23.

1

(2)  Council Regulation (EU) 2015/1589 of 13 July 2015 laying down detailed rules for the application of Article 108 of the Treaty on the Functioning of the European Union (OJ L 248, 24.9.2015, p. 9).

2

(3)  
  OJ C 302, 19.8.2016, p. 23.

3

(4)  See Commission Decision of 29 June 2011 on measure SA.27106 (C 13/09 — ex N 614/08) which France is planning to implement for ports (OJ L 221, 27.8.2011, p. 8).

4

(5)  Chambers of commerce with their registered office located in a coastal town and chambers of commerce which, wherever their geographical location, are concessionaires of public equipment at a seaport.

5

(6)  See French tax documentation BOI-IS-CHAMP-30-60, paragraphs 230 et seq.

6

(***)  Correction of a clerical error.

***

(7)  Commission Decision of 20 October 2004 on State aid in case N 520/2003 — Belgium — Financial support for infrastructure works in Flemish ports, recital 35 (OJ C 176, 16.7.2005, p. 11).

7

(8)  
  OJ C 262, 19.7.2016, p. 1.

8

(9)  
  Journal officiel de la République française, 21 April 2012, p. 7198.

9

Journal officiel de la République française

(10)  Commission Decision of 11 April 2016 on State aid SA.43975 (2016/NN) — Portugal — Investment aid for the Port of Funchal (OJ C 183, 11.5.2016, p. 1).

10

(11)  Commission Regulation (EU) No 651/2014 of 17 June 2014 declaring certain categories of aid compatible with the internal market in application of Articles 107 and 108 of the Treaty (OJ L 187, 26.6.2014, p. 1).

11

(12)  COM(2013) 296 final — 2013/0157 (COD) (OJ C 327, 12.11.2013, p. 111). This proposal has been adopted in the meantime: Regulation (EU) 2017/352 of the European Parliament and of the Council of 15 February 2017 establishing a framework for the provision of port services and common rules on the financial transparency of ports (OJ L 57, 3.3.2017, p. 1).

12

(13)  Judgment of the Court of Justice of 12 September 2000, Pavlov and Others, Joined Cases C-180/98 to C-184/98, EU:C:2000:428, paragraph 74.

13

Pavlov and Others

(14)  See judgments of the Court of Justice of 16 June 1987, Commission v Italy, C-118/85, EU:C:1987:283, paragraph 7, and of 18 June 1998, Commission v Italy, C-35/96, EU:C:1998:303, paragraph 36.

14

Commission

Italy

Commission

Italy

(15)  Judgment of the General Court of 12 December 2000, Aéroports de Paris v Commission, T-128/98, EU:[T] (***):2000:290, paragraph 125, upheld on appeal in the judgment of the Court of Justice of 24 October 2002, Aéroports de Paris v Commission, C-82/01 P, EU:C:2002:617. Also see judgment of the General Court of 17 December 2008, Ryanair v Commission, T-196/04, EU:T:2008:585, paragraph 88; and judgment of the General Court of 24 March 2011, Freistaat Sachsen and Land Sachsen-Anhalt and Others v Commission, Joined Cases T-443/08 and T-455/08, EU:T:2011:117, in particular paragraphs 93 and 94, upheld on appeal in the judgment of the Court of Justice of 19 December 2012, Mitteldeutsche Flughafen and Flughafen Leipzig-Halle v Commission, C-288/11 P, EU:C:2012:821, in particular paragraphs 40-43 and 47.

15

Aéroports de Paris

Commission

Aéroports de Paris

Commission

Ryanair

Commission

Freistaat Sachsen and Land Sachsen-Anhalt and Others

Commission

Mitteldeutsche Flughafen and Flughafen Leipzig-Halle

Commission

(16)  See, for example, Commission Decision of 15 December 2009 in State aid case N 385/2009 — Public financing of port infrastructure in Ventspils Port (OJ C 62, 13.3.2010, p. 7); Commission Decision of 15 June 2011 in State aid case 44/2010 — Latvia — Public financing of port infrastructure in Krievu Sala (OJ C 215, 21.7.2011, p. 21); Commission Decision of 22 February 2012 in State aid case SA.30742 (N/2010) — Lithuania — Construction of infrastructure for the ferry terminal in Klaipėda (OJ C 121, 26.4.2012, p. 1); Commission Decision of 2 July 2013 in State aid case SA.35418 (2012/N) — Greece — Extension of Piraeus port (OJ C 256, 5.9.2013, p. 2); Commission Decision of 18 September 2013 in State aid case SA.36953 (2013/N) — Spain — Port Authority of Bahía de Cádiz (OJ C 335, 16.11.2013, p. 1).

16

(17)  See, for example, Commission Decision of 18 September 2013 in State aid case SA.36953 (2013/N) — Spain — Port Authority of Bahía de Cádiz (OJ C 335, 16.11.2013, p. 1).

17

(18)  Judgment of the Court of Justice of 10 December 1991, Merci Convenzionali Porto di Genova, C-179/90, EU:C:1991:464, paragraphs 3 and 27; judgment of the Court of Justice of 17 July 1997, GT-Link A/S v De Danske Statsbaner, C-242/95, EU:C:1997:376, paragraph 52: ‘It does not follow, however, that the operation of any commercial port constitutes the operation of a service of general economic interest or, in particular, that all the services provided in such a port amount to such a task.’

18

Merci Convenzionali Porto di Genova

GT-Link A/S

De Danske Statsbaner

(19)  See, for example, Commission Decision of 18 December 2013 in State aid case SA.37402 — Freeport of Budapest (OJ C 141, 9.5.2014, p. 1); Commission Decision of 17 October 2012 in State aid case SA.34501 — Inland port Königs Wusterhausen/Wildau (OJ C 176, 21.6.2013, p. 1); Commission Decision of 1 October 2014 in State aid case SA.38478 — Györ-Gönyü Public Port (OJ C 418, 21.11.2014, p. 1).

19

(20)  Commission Decision of 16 October 2002 in State aid case N 438/02 — Belgium — Subsidies to port authorities for carrying out public authority tasks (OJ C 284, 21.11.2002, p. 2).

20

(21)  Judgment of the Court of Justice of 18 March 1997, Calì & Figli, C-343/95, EU:C:1997:160, paragraph 22.

21

Calì & Figli

(22)  These activities relate to the buildings and services necessary for the operation of the ports and are therefore exempt from corporate tax.

22

(23)  Article L. 5321-1 of the French Transport Code indicates that a ‘port charge can be levied in the seaports coming under the State, local or regional authorities or their groupings, based on the commercial operations or stays by ships there’ and that this charge ‘may comprise several elements’ or ‘fees’ (according to Article L. 5321-3 of the same Code). These provisions are also applicable to inland ports according to Article L. 4323-1 of the Code. In Decision No 76-92 L of 6 October 1976, the French Constitutional Council held that the provisions in question ‘establish charges, in connection with stays of ships in ports and operations carried out there, the amount of which is assigned in full to financing the port expenses ... in exchange for the use of the public equipment and the services which are provided on this occasion [and that these charges] have the nature of charges for services rendered’.

23

(24)  According to Article L. 5312-2 of the Transport Code, the GPM is entrusted in particular with ‘the management and development of the land it owns or which is assigned to it’. Also see Article L. 5313-2 for the autonomous ports and Article L. 4322-1 for the autonomous port of Paris.

24

(25)  See French Court of Auditors, Le bilan de la réforme des grands ports maritimes, Rapport public annuel 2017 — février 2017, La documentation française: ‘
  Le maintien d'activités de manutention dans certains ports
  ’.

25

Le bilan de la réforme des grands ports maritimes, Rapport public annuel 2017 — février 2017

Le maintien d'activités de manutention dans certains ports

(26)  This provision is now included in substance in Article 13 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ L 347, 11.12.2006, p. 1).

26

(27)  Judgment of the Court of Justice of 12 September 2000, Commission of the European Communities v French Republic, C-276/97, EU:C:2000:424, paragraph 40.

27

Commission of the European Communities

French Republic

(28)  Beyond a condition related to the absence of ‘significant distortions of competition’, Article 4(5) indicates that ‘in any event, bodies governed by public law shall be regarded as taxable persons in respect of the activities listed in Annex I, provided that those activities are not carried out on such a small scale as to be negligible’. Port services are listed in Annex I.

28

(29)  In Case C-276/97, the Court of Justice clearly classifies the activity in question (providing access to roads in return for payment) as an economic activity (paragraph 32), before examining whether the exemption provided for in Article 4(5) applies (paragraph 37).

29

(30)  See judgment of the Court of Justice of 10 January 2006, Cassa di Risparmio di Firenze and Others, C-222/04, EU:C:2006:8, paragraphs 122 and 123.

30

Cassa di Risparmio di Firenze and Others

(31)  The autonomous port of Paris paid EUR 8 million for the financial year 2014 and EUR 11 million for the financial year 2016. The GPM of Dunkirk for its part paid EUR 5 million for the financial year 2014 and EUR 4 million for the financial year 2016. See orders of 18 February 2016 and 23 February 2017 setting the amount of the dividends payable to the State by the autonomous port of Paris and the major seaports (arrêtés des 18 février 2016 et 23 février 2017 fixant le montant des dividendes dus à l'État par le port autonome de Paris et les grands ports maritimes), Journal officiel de la République française No 0048, 26 February 2016, and No 53, 3 March 2017. The dividends paid vary considerably over time in proportion to the net result (between 14 % and 33 % for the GPM of Le Havre over the period 2008-2013, between 22 % and 35 % for the GPM of Marseilles over the period 2009-2014).

31

arrêtés des 18 février 2016 et 23 février 2017 fixant le montant des dividendes dus à l'État par le port autonome de Paris et les grands ports maritimes

Journal officiel de la République française

(32)  See Commission Decision of 22 February 2012 in State aid case SA.30742 (N/2010) — Lithuania — Port of Klaipėda, recital 9 (OJ C 121, 26.4.2012, p. 1).

32

(33)  See in particular Articles R. 5321-2 and R. 5321-11.

33

(34)  See points 5 and 7 of the analytical grid for port infrastructure (http://ec.europaen.pdf.eu/competition/state_aid/modernisation/grid_ports) and Commission Decision of 30 April 2015 in State aid case SA.39608 Extension of the port of Wismar, recital 31 (OJ C 203, 19.6.2015, p. 3).

34

(35)  Commission Decision of 27 March 2014 in State aid case SA.36346 (2013/N) GRW land development scheme for industrial and commercial use (OJ C 141, 9.5.2014, p. 1).

35

(36)  See Commission Decision in State aid case SA.36953 (2013/N) Port of Bahía de Cádiz, recital 29 (OJ C 335, 16.11.2013, p. 1), Commission Decision in State aid case SA.30742 (N/2010) Klaipėda, recitals 8 and 9 (OJ C 121, 26.4.2012, p. 1), Commission Decision in State aid case N 44/2010 Port of Krievu Sala, recital 67 (OJ C 215, 21.7.2011, p. 21), Commission Decision in State aid case C 39/2009 (ex N 385/2009) Port of Ventspils, recitals 30, 57 and 58 (OJ C 62, 13.3.2010, p. 7).

36

(37)  See the report of the Inspectorate-General of Finance (Inspection générale des finances) (No 2007-M-031-01) and of the General Council of Bridges and Highways (Conseil général des ponts et chaussées) (No 005126-01) on the modernisation of the autonomous ports, July 2008, page 53 (‘The current fees for equipment come within the scope of taxable profit-generating activities but they are set to disappear in the medium term, as resources of the ports, with the proposed reform. Under these conditions, the State fees constitute, in the medium term, the main and lasting source of taxable activity’) (http://www.ladocumentationfrancaise.fr/var/storage/rapports-publics/084000035.pdf).

37

Inspection générale des finances

Conseil général des ponts et chaussées

(38)  See BOI-TVA-BASE-10-20-40-10 §§230 to 270 (http://bofip.impots.gouv.fr/bofip/1474-PGP.html). Also see the reply to written question No 17487 by Mr Jean Arthuis, published in JO Sénat, 10 March 2011, p. 573; http://www.senat.fr/questions/base/2011/qSEQ110317487.html

38

JO Sénat

(39)  See points 5 and 7 of the analytical grid for port infrastructure (http://ec.europa.eu/competition/state_aid/modernisation/grid_ports_en.pdf).

39

(40)  See Commission Decision of 11 March 2014 in State aid case SA.35720 (2014/NN) — United Kingdom — Liverpool City Council Cruise Liner Terminal, recitals 64-69 (OJ C 120, 23.4.2014, p. 4).

40

(41)  As a percentage of turnover, port charges and State fees represent, for example, 42 % and 34 % respectively (and together 55 % of the operating costs) for the GPM of Bordeaux (in 2013, see French Court of Auditors, special report published on 8 March 2016, pp. 60 and 64), and 62 % and 18 % respectively (and together 76 % of the operating costs) for the GPM of Le Havre (in 2013, see Court of Auditors, special report published on 30 March 2016, pp. 112 and 113).

41

(42)  See point 207 of the Notice of 19 July 2016.

42

(43)  Judgment of the Court of Justice of 16 May 2000, France v Ladbroke Racing and Commission, C-83/98 [P] (***), EU:C:2000:248, paragraphs 48 to 51.

43

France

Ladbroke Racing and Commission

(44)  See judgment of the Court of Justice of 8 November 2001, Adria-Wien Pipeline, C-143/99, EU:C:2001:598, paragraph 38.

44

Adria-Wien Pipeline

(45)  And their successors (notably the GPMs) considered exempt from corporate tax by the tax administration on the same basis.

45

(46)  See point 206 of the Notice of 19 July 2016 and, with regard to SGEIs, judgment of the Court of Justice of 24 July 2003, Altmark Trans, C-280/00, EU:C:2003:415, paragraphs 87 to 95.

46

Altmark Trans

(47)  Historically, the tax exemption granted in 1942 aimed to speed up the reconstruction of the ports destroyed by acts of war, and not to provide some kind of compensation for public service tasks.

47

(48)  See judgment of the Court of Justice of 15 December 2005, Italy v Commission, C-66/02, EU:C:2005:768, paragraph 94.

48

Italy

Commission

(49)  See judgment of the Court of Justice of 8 September 2011, Paint Graphos and Others, Joined Cases C-78/08 to C-80/08, EU:C:2011:550, paragraph 49; judgment of the Court of Justice of 6 September 2006, Portugal v Commission, C-88/03, EU:C:2006:511, paragraph 56.

49

Paint Graphos and Others

Portugal

Commission

(50)  See judgment of the Court of Justice of 8 September 2011, Paint Graphos and Others, Joined Cases C-78/08 to C-80/08, EU:C:2011:550, paragraph 65; judgment of the Court of Justice of 6 September 2006, Portugal v Commission, C-88/03, EU:C:2006:511, paragraph 81.

50

Paint Graphos and Others

Portugal

Commission

(51)  See Bulletin officiel des finances publiques-Impôts — BOI-IS-CHAMP-30-60, II (paragraph 240): ‘successive ministerial decisions have exempted the ports from direct taxes’.

51

Bulletin officiel des finances publiques-Impôts —

(52)  Council of State, 2 July 2014, Minister for the Budget, No 374807, FR:CESSR:2014:374807.20140702.

52

(53)  Certain ports are operated by legal persons not covered by the decisions of 1942 and 1943, for example the commercial and fishing port of Sète (operated by a regional public institution — see judgment of the Administrative Court of Appeal of Marseilles of 19 January 2016, No 13MA03445), the port of Lorient (managed by a mixed-ownership company, see parliamentary question No 23815 published Journal officiel de la République française, 9 April 2013, p. 3694) or the marina of Saint-Cyprien (operated by the public institution of the port of Saint-Cyprien, a municipal authority with legal personality — see judgment of the Administrative Court of Appeal of Marseilles of 27 November 2012, No 12MA01312).

53

Journal officiel de la République française

(54)  Reply to parliamentary question No 18664, published Journal officiel de la République française, 3 March 2009, p. 2040.

54

Journal officiel de la République française

(55)  See judgment of the Court of Justice of 8 September 2011, Paint Graphos and Others, Joined Cases C-78/08 to C-80/08, EU:C:2011:550, paragraph 69.

55

Paint Graphos and Others

(56)  Decision No 2012-238 QPC, 20 April 2012, Journal officiel de la République française, 21 April 2012, p. 7198.

56

Journal officiel de la République française

(57)  Judgment of the Court of Justice of 14 January 2015, Eventech, Case C-518/13, EU:C:2015:9, paragraphs 65 to 69.

57

Eventech

(58)  Judgment of the Court of Justice of 30 April 2009, Commission v Italy and Wam, Case C-494/06, EU:C:2009:272, paragraphs 53 and 54.

58

Commission

Italy and Wam

(59)  In particular the French ports not benefiting from the corporate tax exemption. See footnote 51 to the present Decision.

59

(60)  See point 2.1 of the proposal for a Regulation on port services. Also see ‘Communication from the Commission on a European Ports Policy’, COM/2007/0616 final, point II.4.2.

60

(61)  See ‘Communication from the Commission on a European Ports Policy’, COM/2007/0616 final, point II.1.

61

(62)  The price of transport services provided by the ports often represents a large share of the total transport cost. See Europe's Seaports 2030: challenges ahead, European Commission memo of 23 May 2013: ‘The costs and quality of port services are a major factor for European business. Port costs may account for a significant part of the total costs in the logistics chain. Handling cargo, port dues and port nautical services can account for between 40 %-60 % of the total door-to-door logistic costs for business using short sea shipping to transport goods.’

62

Europe's Seaports 2030: challenges ahead

(63)  Judgment of the Court of Justice of 10 December 1969, Commission v France, Joined Cases 6/69 and 11/69, EU:C:1969:68, paragraph 21; judgment of the Court of Justice of 19 May 1999, Italy v Commission, C-6/97, EU:C:1999:251, paragraph 21.

63

Commission

France

Italy

Commission

(64)  Judgment of the Court of Justice of 2 July 1974, Italy v Commission, 173/73, EU:C:1974:71, paragraph 36.

64

Italy

Commission

(65)  Ports with traffic below the level defined in Article 20(2)(b) of Regulation (EU) No 1315/2013 of the European Parliament and of the Council of 11 December 2013 on Union guidelines for the development of the trans-European transport network and repealing Decision No 661/2010/EU (OJ L 348, 20.12.2013, p. 1) (0,1 % of the total annual cargo volume handled in all maritime ports of the Union).

65

(66)  The CCI states that making it subject to corporate tax would jeopardise the ports it manages in view of their geographical location on the border with Spain and the proximity of the Spanish ports.

66

(67)  Also see the Decisions of the European Commission of 29 April 2015 in cases SA.37432 Czech Republic — Public hospitals in the Hradec Králové Region (OJ C 203, 19.6.2015, p. 1), SA.37904 Germany — Medical centre in Durmersheim (OJ C 188, 26.6.2015, p. 1), and SA.33149 Germany — Städtische Projektgesellschaft ‘Wirtschaftsbüro Gaarden — Kiel’ (OJ C 188, 5.6.2015, p. 1).

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(68)  The activity of the beneficiary port must have a purely local dimension, for example where the port supplies goods or services within a limited area of the country and is unlikely to attract customers from other Member States. The measure must also have no foreseeable effect — or only marginal effects — on transnational investments in the sector concerned or on the location of undertakings within the single market.

68

(69)  See ‘Communication from the Commission on the application of the European Union State aid rules to compensation granted for the provision of services of general economic interest’ — 2012/C 8/02 (OJ C 8, 11.1.2012, p. 4). Also see Commission Decision 2012/21/EU of 20 December 2011 on the application of Article 106(2) of the Treaty on the Functioning of the European Union to State aid in the form of public service compensation granted to certain undertakings entrusted with the operation of services of general economic interest (OJ L 7, 11.1.2012, p. 3).

69

(70)  See opinion of Advocate General Kokott in Case C-74/16, Congregación de Escuelas Pías Provincia Betania v Ayuntamiento de Getafe, EU:C:2017:135, paragraph 75.

70

Congregación de Escuelas Pías Provincia Betania

Ayuntamiento de Getafe

(71)  Article L. 5312-2 of the Transport Code, which refers to a list of tasks imposed on the ports, concerns only the major seaports. It does not define the parameters for the calculation of compensation or the safeguard measures to avoid overcompensation.

71

(72)  EUR 1,196 million to be paid in 2016 by the major seaport of Guadeloupe (see order of 18 February 2016, published in Journal officiel de la République française, No 0048, 26 February 2016).

72

Journal officiel de la République française

(73)  The revised version of the Regulation was published on 20 June 2017: Commission Regulation (EU) 2017/1084 of 14 June 2017 amending Regulation (EU) No 651/2014 as regards aid for port and airport infrastructure, notification thresholds for aid for culture and heritage conservation and for aid for sport and multifunctional recreational infrastructures, and regional operating aid schemes for outermost regions and amending Regulation (EU) No 702/2014 as regards the calculation of eligible costs (OJ L 156, 20.6.2017, p. 1).

73

(74)  On the other hand, other measures targeted at investment and fulfilling the criteria for compatibility (in particular the existence of a general interest and the appropriateness and proportionality of the measure) might, under certain conditions, be declared compatible with the internal market.

74

(75)  Judgment of the Court of Justice of 22 March 1977, Steinike & Weinlig v Federal Republic of Germany, 78/76, EU:C:1977:52, paragraph 24.

75

Steinike & Weinlig

Federal Republic of Germany

(76)  See the final Decision in State aid case SA.25338 (OJ L 113, 27.4.2016, p. 148).

76

(77)  Regulation (EU) 2017/352 of the European Parliament and of the Council of 15 February 2017 establishing a framework for the provision of port services and common rules on the financial transparency of ports (OJ L 57, 3.3.2017, p. 1).

77

(78)  Commission Decision of 21 January 2016 in State aid case SA.25338 (2014/C ex E 3/2008 ex CP 115/2004) — Netherlands — Corporate tax exemption for public undertakings (OJ L 113, 27.4.2016, p. 148).

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