EN Official Journal of the European Union L 114/1

COMMISSION DECISION

of 17 July 2013

on the aid scheme SA.21233 C/11 (ex NN/11, ex CP 137/06) implemented by Spain Tax scheme applicable to certain finance lease agreements also known as the Spanish Tax Lease System

(notified under document C(2013) 4426)

(Only the Spanish text is authentic)

(Text with EEA relevance)

(2014/200/EU)

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 the provisions cited above (1) and having regard to their comments,

Whereas:

1. PROCEDURE

(1) According to several complaints registered with the Commission since May 2006, the Spanish scheme applicable to shipping companies since 2002 (Spanish Tax Lease System) allowed maritime transport companies to buy ships in Spain at a 20-30 % rebate. In particular, two national federations of shipyards and one individual shipyard complained that this scheme resulted in the loss of shipbuilding contracts from their members to Spanish shipyards. On 13 July 2010, shipbuilding associations of seven European countries together signed a petition against the so-called Spanish Tax Lease system (hereinafter ‘STL’). At least one shipping company supported these complaints. In August 2010, a Member of the European Parliament asked a question on the same topic (2).

(2) By letters of 15 September 2006, 30 January 2007, 6 November 2007 and 3 March 2008, the Commission sent Spain requests for information. Spain answered by letters of 16 October 2006, 23 and 27 February 2007, and 11 January and 27 March 2008. At a meeting held on 29 April 2008, the Commission requested additional information which Spain provided by letter of 17 June 2008. The Commission requested further additional information by letter of 23 September 2008, which Spain provided by letter of 24 October 2008.

(3) Following new information from complainants, the Commission requested further additional information by letters of 11 January and 25 May 2010. Spain answered by letters of 10 March and 26 July 2010. A meeting with the Spanish authorities took place on 24 January 2011.

(4) By letter dated 29 June 2011, the Commission informed Spain that it had decided to initiate the procedure laid down in Article 108(2) of the Treaty on the Functioning of the European Union in respect of the aid.

(5) By letter dated 2 August 2011, Spain commented on the decision to open formal proceedings.

(6) The Commission decision to initiate the formal investigation procedure (hereinafter ‘Decision C(2011) 4494 final’) was published in the Official Journal of the European Union (3). The Commission invited interested parties to submit their comments on the measures.

(7) The Commission received comments from several interested parties. By letters of 23 February, 7 March, 11 July and 29 October 2012, and 12 and 25 February and 22 April 2013, it forwarded them to Spain, which was given the opportunity to react. Its comments were received by letters dated 30 April, 24 May, 9 and 23 July and 14 November 2012, and 25 February, 12 March and 21 May 2013. Spain also submitted additional observations by letters of 3 and 9 October 2012. At their request, the Commission had meetings with Pequeños y Medianos Astilleros en Reconversión (PYMAR) (4) on 13 November 2012 and 4 February 2013, and with the Spanish authorities on 6 March 2013.

2. DESCRIPTION OF THE SPANISH TAX LEASE SYSTEM

(8) The Spanish Tax Lease system is used in transactions involving the building by shipyards (sellers) and the acquisition by maritime shipping companies (buyers) of sea-going vessels and the financing of these transactions by means of an ad hoc legal and financial structure.

(9) The STL system is based on: — an ad hoc legal and financial structure organised by a bank and interposed between the shipping company and the shipyard, respectively the buyer and the seller of a vessel, — a complex network of contracts between the different parties, — the application of several Spanish tax measures.

(10) At the Commission’s request, the Spanish authorities have confirmed that the STL was used in 273 shipbuilding and acquisition transactions between 1 January 2002 and 30 June 2010, for a total value of EUR 8 727 997 332. The scheme continued to apply until 29 June 2011, when the formal investigation procedure was initiated. Buyers are shipping companies from all over Europe and beyond. All but one of the transactions (a contract for EUR 6 148 969) involved Spanish shipyards.

2.1. THE STL — LEGAL AND FINANCIAL STRUCTURE

(11) As stated, an STL operation allows a shipowner to have a new vessel built with a 20-30 % rebate on the price charged by the shipyard. In order to obtain the discounted price (after deducting the rebate), a shipping company must agree not to buy the vessel directly from the shipyard but from an economic interest grouping (EIG) incorporated under Spanish law and set up by a bank.

(12) The STL structure is a tax planning scheme generally organised by a bank in order to generate tax benefits for investors in a tax transparent EIG and transfer part of these tax benefits to the shipping company in the form of a rebate on the price of the vessel. The rest of the benefits are kept by the investors in the EIG as remuneration for their investment. In addition to the EIG, an STL operation also involves other intermediaries, such as a bank and a leasing company (see chart below).

(13) In practice, the EIG leases the vessel from a leasing company from the date that it starts to be built. Once it has been built, the EIG charters out the vessel to the shipping company, on a bareboat basis, and the shipping company starts operating the vessel. In any case, the EIG undertakes to buy the vessel at the end of the leasing contract and the shipping company undertakes to buy the vessel at the end of the bareboat charter contract, by means of reciprocal buy and sell option contracts (5). The date of exercising the options established by the leasing contract is set a few weeks before the exercise date of the option set by the bareboat charter. Both options are exercised once the EIG comes under the tonnage tax system (for a more detailed description, see Section 2.2.4 Measure 4: Tonnage tax). A framework agreement is signed by the parties involved to make sure that they all agree on the organisation and functioning of the STL structure.

(14) The transactions that take place between the different participants in the STL operation have been described in more detail in Decision C(2011) 4494 final (Section 2.2) (6) on the basis of the examples provided by Spain (7).

2.2. THE STL — TAX ASPECTS

(15) The purpose of the STL scheme described in Section 2.1 above is first to generate the benefits of certain tax measures in favour of the EIG and the investors participating in it, which will then pass on part of those benefits to the shipping company that acquires a new vessel.

(16) The EIG collects the tax benefits in two stages under two different sets of tax rules. In the first stage, early and accelerated depreciation of the leased vessel is applied within the ‘normal’ corporate income tax system. This generates heavy tax losses for the EIG. Because of the EIG’s tax transparency, these tax losses are deductible from the investors’ own revenues pro rata to their shares in the EIG.

(17) In normal circumstances, the tax savings made by this early and accelerated depreciation of the cost of the vessel should be offset later on by increased tax payments either when the vessel is completely depreciated and no more depreciation costs can be deducted or when the vessel is sold and a capital gain results from the sale (8). Because of the EIG’s tax transparency, its increased profits in later years would normally be added to the investors’ own revenues and would be liable to tax.

(18) However, in an STL operation, the EIGs do not keep the vessels after full depreciation is achieved. In the second stage, the tax savings resulting from the initial losses transferred to the investors are then safeguarded as a result of the EIG’s switchover to the tonnage tax (TT) system of income taxation and the full exemption of the capital gains resulting from the sale of the vessel — shortly after switching to the new system — to the shipping company (9). For further details about these two stages, see Decision C(2011) 4494 final (Section 2.3.1).

(19) According to information available to the Commission (10), the combined effect of the tax measures used in the STL enables the EIG and its investors to achieve a tax gain of approximately 30 % of the initial gross price of the vessel. Part of this tax gain — initially collected by the EIG/its investors — is kept by the investors (10-15 %) and part of it is passed on to the shipping company (85-90 %), which in the end becomes the owner of the vessel, with a 20 % to 30 % reduction in the initial gross price of the vessel.

(20) As already stated, STL operations combine different individual — yet interrelated — tax measures in order to generate a tax benefit. The section below briefly describes these measures. For a more detailed description, see Decision C(2011) 4494 final (Section 2.4).

2.2.1. Measure 1 — Accelerated depreciation (11) of leased assets

(Article 115(6) TRLIS)

(21) In Spain, the tax treatment of a leasing transaction is different from its accounting treatment. Chapter XIII of Royal Legislative Decree 4/2004 of 5 March 2004 approving the consolidated version of the Law on Corporate Tax (TRLIS) (12) and Article 49 of Royal Decree 1777/2004 of 30 July 2004 approving the Regulation on Corporate Tax (RIS) (13), apply to finance leasing contracts with a minimum duration of two years if they relate to movable property and 10 years if they relate to immovable property or industrial establishments.

(22) For tax purposes only, the portion of the payments that allows the lessor to recover the cost of the asset (14) is considered tax-deductible expenditure within certain limits, namely: the amount deducted may not exceed the amount obtained by multiplying the cost of the asset by twice or three times the official coefficient of maximum straight-line depreciation for the type of asset.

(23) In the case of vessels, the normal straight-line depreciation is spread — for tax purposes — over 10 years (10 % per year). The maximum accelerated depreciation rate for leased assets ranges between 20 % and 30 % per year (from 40 to 60 months). Under Spanish law, owners of vessels can also depreciate according to the declining balance method (15) or the sum-of-the-years-digit method (SYD) (16).

2.2.2. Measure 2: Discretionary application of early depreciation of leased assets

(Articles 115(11) and 48(4) TRLIS and Article 49 RIS)

(24) Under Article 115(6) TRLIS, the accelerated depreciation of the leased asset starts on the date on which the asset becomes operational, i.e. not before the asset is delivered to and starts being used by the lessee. However, pursuant to Article 115(11) TRLIS (17), the Ministry of Economic Affairs and Finance may, upon formal request by the lessee, determine an earlier starting date for depreciation. In principle, this provision applies, under certain conditions, to all leased assets covered by a leasing contract and eligible for accelerated depreciation.

(25) In fact, Article 115(11) TRLIS imposes two general conditions. First, the new starting date should be determined taking account of ‘the specific characteristics of the contracting or construction period for the asset and the specific nature of its economic use’. Pursuant to Article 49 RIS, the tax authorities only authorise early depreciation from the beginning of the construction period when this construction period is over 12 months, and the leasing contract provides for anticipated lease payments. Second, ‘determining this date (should) not affect the calculation of the taxable amount arising from the actual use of the asset or the payments resulting from the transfer of ownership, which must be determined in accordance with either the general tax regime or the special regime provided for in Chapter VIII of Title VII TRLIS’.

(26) According to Article 48(4) TRLIS (18), the assets covered by the early depreciation scheme described in Article 115(1) TRLIS will be leased to EIGs registered in Spain, which, in turn, will sublease them to third parties. Furthermore, Article 49 RIS establishes the procedure to be followed when filing an application for the early depreciation of leased assets.

2.2.3. Measure 3: Economic interest groupings (EIGs)

(27) As already stated, Spanish EIGs have a separate legal personality from that of their members. As a result, EIGs can file an application both for the early depreciation measure and for the alternative tonnage taxation scheme provided for by Articles 124-128 TRLIS (see Section 2.2.4.) if they meet the eligibility requirements under Spanish law, even if none of their members is a shipping company.

(28) However, from a tax perspective, EIGs are transparent with respect to their Spanish resident shareholders. In other words, for tax purposes, profits (or losses) made by EIGs are directly attributed to their Spanish resident members on a pro rata basis. Since the EIGs involved in STL operations are regarded as an investment vehicle by their members — rather than as a way of carrying out an activity jointly — this Decision refers to them as investors.

(29) EIGs’ tax transparency means that the substantial losses incurred by the EIG through early and accelerated depreciation can be passed on directly to the investors, who can offset these losses against profits of their own and reduce the tax due.

2.2.4. Measure 4: Tonnage tax system (Articles 124 to 128 TRLIS)

(30) The Spanish TT legislation has applied since 2002. It provides for an alternative calculation of the taxable profits of shipping companies in respect of their eligible transport activities, based on tonnage operated rather than the difference between revenue and expenditure.

(31) The Commission authorised (19) the Spanish TT scheme as compatible State aid on the basis of the Community Guidelines on State aid to maritime transport (20) (hereinafter ‘the Maritime Guidelines’). The provisions governing the TT scheme are contained in Chapter XVII, Articles 124 to 128 TRLIS.

(32) Spain also adopted implementing measures contained in Title VI, Articles 50 to 52 of the RIS. The Commission notes that, contrary to the rules set out in Articles 124-128 TRLIS, which were notified to and approved by the Commission, these implementing measures — and in particular the exception contained in Article 50(3) RIS (see Section 2.2.5) — were not notified to or authorised by the Commission.

(33) As in other Member States, joining the Spanish TT scheme is optional and requires prior authorisation from the tax authorities, valid for 10 years. Revenues from non-shipping — or non-eligible — activities are subject to normal income tax rules.

(34) Under Spanish law, EIGs involved in the STL can be entered in one of the registers of shipping companies (21) because, according to the Spanish authorities, their activities include the operation of their own and chartered vessels. The concept of operating a vessel would therefore include making a vessel available to a third party under a bareboat charter.

(35) The tax base for eligible shipping activities is calculated according to gross tonnage: Net registered tonnage Daily amount per 100 tonnes (EUR) From 0 to 1 000 0,90 From 1 001 to 10 000 0,70 From 10 001 to 25 000 0,40 Over 25 001 0,20

(36) Once the alternative tax base is calculated according to the gross tonnage operated by the shipping company, the normal corporate tax rate is applied to this base.

(37) Pursuant to the first indent of Article 125(2) TRLIS, the TT taxable base is deemed to include all revenues from (eligible) shipping activities on the high seas including, in particular, the capital gains realised when vessels — acquired new by an undertaking benefiting from the TT system — are subsequently sold while the undertaking remains under the TT system. Conversely, under normal corporate income tax rules, since the tax base is determined as the difference between revenue and expenditure, when vessels are acquired by an undertaking and subsequently sold with a capital gain, these exceptional capital gains constitute taxable revenue and will thus increase the taxable base on which corporate tax will be levied.

Tax treatment of exceptional capital gains in the context of the transfer of vessels to the TT system

(38) Special rules apply where a vessel — which is no longer new — and the taxation of its revenue are transferred from the normal corporate tax system to the TT system. In the case of vessels already owned by an undertaking when it joins the TT system, or of second-hand vessels (hereinafter ‘used’ vessels) purchased when an undertaking already benefits from the TT system, a special procedure provided for in Article 125(2) TRLIS (22) applies. Under this procedure, the taxation of certain amounts takes place under normal corporate tax arrangements only when the vessel is subsequently sold: — In the first financial year in which the TT system is applied, or in which the used vessels have been acquired, non-distributable reserves equal to the difference between the normal market value and the net accounting value of each of the ships concerned by this rule must be set aside, or this difference must be stated separately in the annual report for each vessel, for each financial year in which ownership of them is retained. — The amount of the said positive reserve together with the positive difference, at the date of transfer of ownership, between the tax depreciation and the accounting depreciation for the vessel sold will be added to the TT taxable base referred to in Article 125(1) TRLIS once the sale of the vessel is completed.

(39) Thus, under normal application of the Spanish TT system, as approved by the Commission, potential capital gains are taxed on entry into the TT system and it is assumed that the taxation of capital gains, even though it is delayed, takes place later on when the vessel is sold or dismantled. As explained in Section 2.2.5, under the STL system, this taxation is not deferred but completely avoided because the vessels concerned are deemed to be new, not used. Hence, the special procedure does not apply.

2.2.5. Measure 5: Article 50(3) RIS

(40) In the case of the authorised STL transactions, the Commission observes that the EIGs can leave the normal corporate income taxation system to join the TT system without settling the hidden tax liability resulting from the early and accelerated depreciation either upon entry into the TT system or subsequently when the vessel is sold or dismantled.

(41) Indeed, by way of exception from the rule set out in Article 125(2) TRLIS, Article 50(3) RIS (23) states that when vessels are acquired through a call option as part of a leasing contract previously approved by the tax authorities, those vessels are deemed to be new (24) — not used — without taking into consideration whether they have already been operated or depreciated — as of the date the leasing option is exercised, i.e. after the EIG’s switch to the TT system. According to the information available to the Commission, this exception was only applied to specific leasing contracts approved by the tax authorities in the context of applications for early depreciation pursuant to Article 115(11) TRLIS (see Section 2.2.2 above, Measure 2: Discretionary application of early depreciation of leased assets) i.e. in relation to leased newly built sea-going vessels acquired through STL operations, and — with one exception — from Spanish shipyards.

(42) In such cases, the vessel is deemed to have been acquired new by the EIG on the date the leasing option was exercised, i.e. after the EIG’s entry into the TT system. The first consequence of the exception provided for in Article 50(3) RIS is that the application of the rules set out in Article 125(2) TRLIS is avoided. The EIG does not need to establish a non-distributable reserve and neither the positive difference between the price paid by the shipping company and the accounting value of the vessel in the EIG’s books (25), nor the positive difference between the accounting value and the tax value of the vessel (26) is taxed. The second consequence is that the revenue from the sale to the shipping company (the substantial bareboat charter option exercise price) is deemed to originate from a vessel bought and sold by an undertaking benefiting from the TT system and will be included in the TT taxable base pursuant to the first indent of Article 125(2) TRLIS.

3. REASONS FOR INITIATING THE FORMAL INVESTIGATION PROCEDURE

(43) As a first step, the Commission took the view that the Spanish Tax Lease system, in spite of the application of different tax measures, should be analysed as one single system (global approach) because the different measures could only be used jointly — de jure or de facto — and concluded that it constituted State aid.

(44) As a second step, the individual measures were assessed separately (individual approach) and the Commission concluded at that stage as follows: — The accelerated depreciation of leased assets (measure No 1) could constitute State aid, but would constitute existing aid in any case because it was implemented before accession. Consequently, the formal investigation procedure was not opened in respect of this measure. — The early depreciation of leased assets (measure No 2) could constitute State aid as it provides a selective advantage in view of the vague conditions established by the Spanish legislation and the discretionary powers exercised by the Spanish tax administration in interpreting these conditions. This measure, which came into force in 2002 (27), was regarded as unlawful and possibly incompatible State aid. — The EIG status (measure No 3) was not identified as potential State aid. The formal investigation procedure was not opened in respect of this measure. — The TT system (measure No 4) was authorised by the Commission as compatible State aid in 2002. The compatibility of the TT system as approved was not questioned in Decision C(2011) 4494 final. By virtue of the authorisation granted by the Commission, this measure should in any case be regarded as existing aid. However, the Commission questioned two aspects related to the TT system: — The Commission questioned the possibility given to certain undertakings, such as the EIGs involved in STL operations, of benefiting from the TT system where their activities are limited to renting or leasing out vessels on a bareboat basis. The Commission considered that these undertakings were not active in the sector of maritime transport of goods or passengers as defined in Council Regulation (EEC) No 4055/86 (28) and in Council Regulation (EEC) No 3577/92 (29), but rather in the sector of financial investment and the renting or leasing of goods. The Commission noted that their eligibility for the Spanish TT system was never notified to or authorised by the Commission. — The tax exemption for capital gains (measure No 5) resulting from the implementing measures of the TT system (Article 50(3) RIS) and presented by the Spanish authorities as part of the authorised TT system was regarded as an additional measure falling outside the scope of the authorisation granted by the Commission in 2002. This measure was also regarded as unlawful and possibly incompatible aid.

(45) The potential recipients of the aid were identified as: — the EIGs as the primary recipients of the tax advantages, — the members/investors in the EIGs which benefit from the tax advantages based on the EIGs’ transparency, — the shipping companies which receive part of the tax advantages in the form of a rebate on the price of the ship, — possibly the shipyards, the banks involved, the leasing companies and other intermediaries.

(46) The Commission considered that the aid did not appear to be compatible with the internal market.

4. COMMENTS FROM SPAIN AND FROM INTERESTED PARTIES

(47) Comments were received from the Spanish authorities and from 41 third parties including public authorities, sectoral associations and individual undertakings either involved in STL operations or competitors of those involved, such as foreign shipyards or shipbuilding associations.

(48) The observations address the following aspects of the Commission’s assessment made in Decision C(2011) 4494 final: — procedural aspects, — the general approach: assessment of the STL as a scheme as against assessment of the individual measures forming part of the STL, — whether the individual measures amount to State aid (presence of an advantage, state resources, imputability to the State, effect on competition and trade) and whether some of them constitute existing aid, — identification of the aid recipients, — compatibility of possible State aid, — obstacles to recovery of the aid (equal treatment, legitimate expectations, legal certainty).

4.1. PROCEDURE

(49) Spain considers that the Commission initiated the formal investigation procedure without duly checking its main conclusions with the Spanish authorities. As a consequence, the Spanish State’s right of defence and the adversarial principle essential to any administrative procedure has been infringed.

(50) According to a number of third parties, the Commission should have used the existing aid procedure, because if they constitute aid, the two tax measures involved (depreciation rules for leased assets and the TT system) would be existing aid.

4.2. ASSESSMENT OF THE STL AS A SCHEME/ASSESSMENT OF INDIVIDUAL MEASURES

4.2.1. Complainants

(51) Holland Shipbuilding considers that the STL should be viewed as a single system because it is an organised system which deliberately exploits different tax measures to produce an economic advantage which is far greater than the total advantage that could be gained from applying the different measures separately and because the measures are interdependent. The use of the TT system allows EIGs to make the temporary tax advantage generated by early and accelerated depreciation permanent. The vague conditions imposed on the application of early depreciation and their interpretation by the Spanish authorities confer discretionary powers on the tax administration. This is borne out by the fact that, in practice, the authorisation is only granted if the switch is made from the normal corporate taxation system to the TT system.

(52) Danish Maritime and […] (30) (31) also regard the STL as a whole as a State aid scheme that — regardless of who the recipients are — clearly gives an economic advantage to certain undertakings.

4.2.2. Spain and the participants in tax lease transactions

(53) However, Spain and the undertakings identified by the Commission as potential recipients of aid (shipping companies, banks, investors in EIGs, shipyards involved in STL operations) challenge this global approach.

(54) They consider that the STL is not enshrined as such in the Spanish tax legislation, that STL operations are private agreements (leasing, bareboat charter, EIG) concluded by private parties that are free to choose the cheapest way to finance an asset and use the contractual and tax arrangements available to them. They also maintain that Spain should not be held responsible for advantages acquired by taxpayers in a move to reduce their tax burden. Moreover, the tax legislation does not require the use of all the measures mentioned by the Commission in Decision C(2011) 4494 final.

(55) The Asociación Española de Banca (the Spanish Banking Association — AEB) considers that it is the first time that the Commission has identified State aid in a combination of legal transactions between private entities rather than in a legal provision.

(56) Rather than a system, the AEB considers that there are two different schemes (the depreciation scheme and the TT) which can clearly be split and treated separately, regardless of whether they are used separately or jointly.

(57) In addition, the AEB considers that the Commission failed to identify a general system of reference before identifying a selective advantage. According to the AEB, there are very many ways of financing the acquisition of an asset using different combinations of legal instruments and tax measures and the Commission should compare all these alternative situations. Concluding that the STL confers a selective advantage on certain companies would therefore be artificial, especially if the Commission uses as a reference the most costly way — from a tax point of view — to finance an investment thereby ignoring all the incentive measures available to investors.

(58) Consequently, the STL does not confer a selective advantage. This is borne out in particular by the fact that the Commission identifies several potential recipients which do not correspond to economic sectors. Referring to the Commission Notice on the application of the State aid rules to measures relating to direct business taxation (32) (hereinafter ‘the Commission Notice on business taxation’) and to the Commission Decision concerning the Dutch Groepsrentebox (33), the AEB considers that it cannot be concluded that the measure is selective because it is of more benefit to members of EIGs investing in sea-going vessels rather than in other assets.

(59) As the STL consists solely of private parties using general tax measures in the context of private agreements, there are no state resources involved.

(60) According to the AEB, there is no effect on competition and trade between Member States because the main recipients identified by the Commission are shipping companies and the measure is available to all shipping companies from Europe and elsewhere in the world.

(61) In their comments, these third parties describe the STL as a series of unrelated measures (individual approach) and make no further comments about the STL as a whole.

4.3. OBSERVATIONS RELATED TO THE ASSESSMENT OF THE INDIVIDUAL MEASURES

4.3.1. Accelerated depreciation (Article 115(6) TRLIS (34) ) — Measure 1

(62) According to Spain and certain third parties, this measure is generally applicable to all types of assets and all sectors. The different tax and accounting treatment of leasing fees does not entail any de facto selectivity, which is borne out by the diversity of the sectors applying this measure. In addition, the Spanish corporate tax system allows alternative arrangements for accelerated depreciation. The AEB states that straight-line depreciation cannot be regarded as the (sole) reference for establishing the existence of an advantage because other methods of depreciation are generally allowed. Article 11 TRLIS and Articles 1-5 RIS provide for the possibility of applying degressive methods such as the declining balance (35) or the sum-of-the-year-digit (SYD) methods (36) as well as the possibility of depreciating an asset according to a specific plan agreed with the tax administration (37). The AEB cites as an example that the declining balance method would be applicable at a rate 2,5 times higher than the applicable straight-line depreciation rate, i.e. 25 %.

4.3.2. Discretionary application of early depreciation (Article 115(11) TRLIS, Article 48(4) TRLIS and Article 49 RIS) — Measure 2

(63) It is argued that early depreciation is just a method of accelerated depreciation which establishes that accelerated depreciation can start, under certain conditions, before the date when the asset is delivered to and operated by the final user. If it were not possible to deduct the amounts paid during the construction of the asset, this would in fact imply an anticipation of taxation. Early depreciation only restores neutrality and the correspondence between the financial flow and the tax treatment.

(64) The AEB insists that the possibility of anticipating the start of the depreciation period is a general measure that is also provided for in Article 11(1)(d) TRLIS and in Article 5 RIS, which define the general rules applicable to depreciation. These provisions allow the tax administration to approve a specific depreciation plan presented and justified by the taxable person, including for assets under construction.

(65) The sole aim of prior authorisation of early depreciation and the procedure followed by the tax administration is to check that the operation is real and that the objective criteria laid down in the legislation are met. In particular, it must be ensured in advance that: there is a lease agreement whose start date is prior to the commissioning or delivery of the asset; when the request is made it is indicated that payments for the recovery of the cost of the asset are deductible; the contract is for the acquisition of an asset requiring a long contractual/construction period in line with the operating conditions of the asset; the asset construction contract is signed, and that an indication is given of the specific contractual conditions governing use of the asset.

(66) Besides the general conditions set out in Article 49 RIS, an additional condition is imposed by Article 48(4) TRLIS when the applicant is an EIG. The authorisation does not depend on the application of other measures or the submission of additional documents. Finally, the absence of any discretion in the procedure is illustrated by the fact that no application filed with the tax administration has ever been rejected. In that respect, the AEB considers that the Commission should investigate more closely the reasons why financing operations are not carried out. If, as maintained by the Commission on the basis of informal information, some shipping companies were unable to find a bank to organise the operation, this has more to do with the fact that the parties could not agree on certain elements of the operations, such as the price. The AEB formally denies that any of its members participated in any meeting or informal contact with the Spanish authorities. In fact, the situation is not the same as that described in the Commission Decision on the French GIE fiscaux (38), where the condition that the operation should represent a significant economic and social interest was found to be imprecise and left to the discretion of the tax authorities. On the contrary, the AEB denies that any of the conditions specified by Article 49 RIS is imprecise and open to interpretation

(67) As a consequence, early depreciation — in the same way as accelerated depreciation — is generally applicable to all types of assets and all sectors. It is a general measure.

(68) As it is a method of applying accelerated depreciation, if it considered to be aid, it should be regarded as existing aid.

4.3.3. The tax transparency of economic interest groupings (Article 48 TRLIS) — Measure 3

(69) According to the AEB, the transparency of EIGs is consistent with the logic of the Spanish tax system. This transparency allows several investors to make a joint investment which none of them would undertake on its own and yet to apply — because of this transparency and in respect of their share in the investment — the tax treatment that would have applied had they invested on their own. Hence there is no advantage linked to the application of EIG status. Moreover, this status does not entail any sectoral limitations. Any Spanish taxpayer can be a member of an EIG. It is therefore not selective.

4.3.4. The TT system (Articles 124 to 128 TRLIS) — Measure 4

(70) As the Commission stated in Decision C(2011) 4494 final that it had authorised the Spanish TT system in 2002 as aid compatible with the Maritime Guidelines (39), the Spanish authorities and the third parties focus their comments on the scope of the 2002 approval and on the specific issues of whether financial EIGs (40) involved in STL operations should benefit from the TT scheme.

(71) As to the question whether financial EIGs (40) involved in STL operations — which do not operate vessels but invest in them and charter them out as part of financial investments — should benefit from the TT system, Spain maintains that the companies operate vessels by chartering them out and have therefore been listed in Spanish shipping registers (as shipping companies) since the entry into force of Article 1 of Royal Decree 1027/1989 (41) of 28 July 1989, repeated in Article 9 of Law 27/1992 of 24 November 1992. As the Commission has authorised the application of the TT system to all companies listed in the Spanish shipping registers (42), this authorisation includes companies that own vessels and rent or lease them out to third parties. If that measure is regarded as State aid, it should therefore be considered existing aid.

4.3.5. Article 50(3) RIS — Measure 5

(72) Spain, PYMAR and some banks argue that Article 50(3) RIS only contains implementing measures intended to provide legal certainty. They maintain that, in accordance with the principles of the Spanish legal system, substantive elements of a tax measure must always be governed by law and that this provision — which is contained in a Royal Decree — does not introduce anything new but only clarifies the scope of Article 125(2) TRLIS. It does not depart from the law or create additional benefits. The non-taxation of capital gains already formed part of the scheme authorised by the Commission and therefore, if it constitutes aid, it should be regarded as existing aid.

(73) Furthermore, Spain and the alleged recipients maintain that it is logical to consider the vessel to be ‘new’ since no one used it before the leaseholder, and the exercise of the option is agreed when the leasing contract is signed (43). The AEB states that normally an asset is considered to be new when it is acquired via the option of a leasing contract.

4.4. OBSERVATIONS RELATED TO THE TRANSFER OF STATE RESOURCES AND THE IMPUTABILITY OF THE MEASURES TO THE STATE

(74) According to the complainants, a tax deduction implies a transfer of state resources in the form of a loss of tax revenue. The STL/tax measures are imputable to the State because all the measures are contained in Spanish law. Moreover, the STL relies on an authorisation that is granted by the tax authorities. Even if these authorisations relate to individual measures, it is clear that, in practice, the authorisations are granted to the overall STL transactions. This is borne out by the fact that the request for early depreciation filed with the tax administration describes in detail the construction and the distribution of the tax advantage between EIG or the investors and the shipping company as well as a notice from the shipyard setting out the expected social and economic benefits from the arrangement. There is no reason why these documents would systematically be provided if they were not in fact a precondition for approval.

(75) The shipping companies, on the other hand, argue that the discount given by the shipyard or the EIG on the initial price is not imputable to the State because it results from private contractual relationships between the EIG and the shipping company involved in the operation.

4.5. OBSERVATIONS RELATED TO THE DISTORTION OF COMPETITION AND THE EFFECTS ON TRADE

(76) […] considers that the size of the advantages concerned (EUR 14 million in the example given in Decision C(2011) 4494 final) undoubtedly affects the recipients’ market position and therefore creates substantial distortions in markets characterised by a high level of competition. The scheme provides a great advantage to Spanish shipyards which can promote their ships at a price — lower than that of other European shipyards — which includes the benefits under the STL. […] refers to statistics from the Spanish Ministry for Industry showing that over time the Spanish shipyards have served more and more shipowners from abroad.

(77) As for the shipping companies, […] considers that buying ships from Spanish shipyards at a much lower price enables them to save millions of euros on a substantial part of their fixed costs. As it is spread over the duration of the recovery of the cost of the ships, this advantage gives them a competitive edge over other shipping operators and therefore distorts competition for many years.

(78) As already stated, shipowners argue that all shipping companies have access to the conditions offered by Spanish shipyards and can therefore benefit from any price rebates that Spanish shipyards might offer. They also argue that they have paid a fair market price and have not benefited from any economic advantage. Consequently, the acquisition of vessels from Spanish shipyards is unlikely to reduce their operating costs significantly or to strengthen their position in a durable manner, as stated by the Commission in Decision C(2011) 4494 final.

4.6. OBSERVATIONS RELATED TO THE IDENTIFICATION OF THE RECIPIENTS OF AID

(79) According to the AEB, EIGs cannot be recipients of aid. Because of their tax transparency, it is the investors who have to pay the tax resulting from the EIGs’ commercial activity. Hence EIGs cannot enjoy any economic advantage resulting from a tax reduction. In addition, any Spanish taxpayer can be an investor — a member — of an EIG.

(80) On the other hand, a number of shipping companies consider that the EIGs are the only possible recipients of aid. Shipowners cannot be recipients of aid because they are not Spanish taxpayers. Moreover, they argue that the Commission wrongly assumed — without giving any explanation — that the tax benefits would be transferred from the EIG to the shipping company through a price rebate. In fact, the price is fixed as a result of a commercial decision taken by the private owner of an asset.

(81) Shipowners argue that shipping companies from all over the world generally acquire vessels from shipyards from different countries, including, if they so wish, Spanish shipyards. All shipping companies can therefore benefit from any price rebates that Spanish shipyards are able to offer.

(82) Several shipowners argue that if the STL constitutes State aid, they are not the recipients of this aid. Two reasons are given: first, the way the STL structure functions shows that there is coordination between the EIG and the shipyard, which constitutes a single centre of interest and fixes the sales price; second, companies operating tugboats and salvage vessels give examples of offers received from shipyards outside Spain to build similar tugs. Those offers are in the same price range or even cheaper than those of the Spanish shipyards eventually selected. They argue that consequently they have paid a fair market price and have not benefited from any economic advantage within the meaning of Article 107(1) TFEU. If the STL were to offer an economic advantage, the recipients would be the shipyards involved in STL operations and not the shipping companies.

(83) Holland Shipbuilding considers that the recipients of aid are the EIGs and their investors, as well as the shipping companies, but also the Spanish shipyards because there is a substantial difference between the price paid by the shipowner and the price received by the shipyard, which is above the market price. According to a national shipbuilding association, the scheme was designed to benefit the shipyards. It would be incorrect to conclude that STL is of benefit to the shipping companies. The reduction in the building price does not necessarily imply an advantage for the purchaser of the ship. Moreover, Spanish shipyards can only offer this advantage to buyers that use the STL. The STL constitutes unlawful aid to shipbuilding that is damaging to national shipbuilders that are in direct competition with Spanish ones.

(84) PYMAR considers that the Commission did not give sufficient grounds in Decision C(2011) 4494 final as to why it identifies shipyards as potential recipients of State aid. It also points out that in the decisions in the GIE Fiscaux, Brittany Ferries, Air Caraïbes or Le Levant (44) cases concerning similar tax schemes, the Commission did not identify the producer of the asset as a recipient of State aid.

4.7. OBSERVATIONS RELATED TO THE CLASSIFICATION AS EXISTING OR UNLAWFUL AID

(85) As mentioned in Section 4.3 above, Spain and certain third parties consider that there are only two measures involved: first, the provisions of Article 115 TRLIS concerning the deduction of the cost of an asset acquired via a financial leasing contract. Spain adopted these provisions before it joined the EU. Therefore, if this measure constitutes aid, it is existing aid as stated by the Commission in Decision C(2011) 4494 final, and Article 115(11) TRLIS, which allows the administration to set the starting point for the deduction, is only a means of implementing Article 115. Second, the TT system enshrined in Articles 124 to 128 TRLIS was approved by the Commission in 2002 and is therefore also existing aid. The implementing provisions — in particular Article 50(3) RIS — do not alter the rules enshrined in the law and are therefore covered by the Commission authorisation.

4.8. OBSERVATIONS RELATED TO THE COMPATIBILITY OF AID

(86) The Spanish authorities and the alleged recipients argue that the aid is compatible on the basis of the TT system approved in 2002 because it covers ‘maritime companies registered under Spanish law (45), whose activity includes the operation of owned and chartered ships’. As Article 50(3) RIS only implements the TT system, it is also covered by the 2002 Decision.

(87) The third parties also argue that any aid would be compatible with the Maritime Guidelines, which also include the operation of owned and chartered ships and this aid would remain within the aid ceiling imposed by these Guidelines.

(88) The Asociación de Ingenieros Navales y Oceánicos de España (Spanish Association of Naval Architects and Marine Engineers) considers that the compatibility of any aid should be analysed in the global competitive context rather than focus on the internal market since shipyards in non-EU countries receive support that is not subject to competition rules, as is the case in the EU.

(89) By contrast, […] considers that the scheme cannot be regarded as compatible aid at all, not even — as stated in Decision C(2011) 4494 final — under the Maritime Guidelines. Indeed, it considers, first, that Spain will not be able to prove that all ships built were eligible to benefit from these Guidelines and, second, that the aid can only reduce to zero the amount of tax due by the beneficiary in the country that adopts the scheme. Therefore, non-Spanish shipowners would not benefit from the scheme and the tax paid by Spanish shipowners is likely to be limited since they benefit from the TT system and a reduction in social charges.

4.9. OBSERVATIONS RELATED TO RECOVERY

(90) Both the Spanish authorities and the potential recipients maintain that recovery should be ruled out because that would breach fundamental principles of EU law (46) such as equal treatment, the protection of legitimate expectations or legal certainty.

4.9.1. Equal treatment

(91) PYMAR argues that similar fiscal measures were investigated in two other cases (Brittany Ferries (47), and GIE Fiscaux) where no recovery was ordered. If the Commission concluded that aid existed, this aid should be deemed compatible up to the limit set in Chapter 11 of the Maritime Guidelines and, for the amount in excess of that limit, the protection of legal certainty should, as in the French case, prevent the Commission from requiring the recovery. […] argues that because no aid was recovered from the French operators, recovering aid from Spanish operators in a very similar case would put the latter at a competitive disadvantage and breach the principle of equal treatment.

(92) Spain and PYMAR invoke a number of decisions where the Commission has already decided to refrain from recovery because of public statements by the Commission or one of its members. Reference is made to the decisions on Belgian coordination centres, Luxembourg 1929 holding companies and other coordination centres and intragroup activities of multinational companies (48), Spanish Goodwill (49), an Italian case of aid to large firms in difficulty (50) and two fisheries cases (51) (Shetland and Orkney Islands).

4.9.2. Legitimate expectations/legal certainty

(93) According to Spain (52) and certain third parties involved in STL operations, the following elements led the parties to these operations to believe that the tax measures used in them did not constitute State aid: (1) the statement by the Commission in the 2001 Brittany Ferries decision (53) to the effect that a similar scheme to the STL — the French GIE Fiscaux — was a general measure; (2) the publication of the draft measures (early depreciation and TT system) in the Official Gazette of the Spanish Parliament on 10 October 2001 (54); (3) a 2001 Commission letter requesting information from Spain in the context of an investigation about several alleged aid measures, including a tax leasing system, in favour of shipbuilding; (4) a 2004 Commission Decision (55) rejecting the award of aid to Dutch shipyards to compensate for aid allegedly offered to Spanish shipyards competing for the same shipbuilding contracts; (5) the 2006 Decision in the French GIE Fiscaux (56) case; (6) a 2009 letter from Commissioner Kroes (57) — at the time in charge of competition — to the Norwegian Minister for Trade and Industry in response to a complaint that the Spanish tax lease scheme would favour Spanish shipyards; (7) the time that elapsed between the publication of the draft measures in 2001, the start of the scheme in 2002 or the first complaints received by the Commission in 2006 and the opening of the proceedings in June 2011. Such a long time period allegedly corroborated the belief that there were not enough elements to proceed; (8) a diligent economic operator could not have foreseen the possible existence of State aid in the combination of different schemes that were either a long-established feature of national taxation (accelerated depreciation of leased assets, EIG status) or had been previously approved by the Commission (TT system); (9) the statements concerning the absence of aid in measures concerning depreciation methods in the Commission notice on business taxation (58).

4.9.2.1. The 2001 Commission Decision in the Brittany Ferries case (BAI)

(94) In recital 193 of that Decision, the Commission stated that: ‘… with regard to economic interest groupings and the tax advantages they may confer, the Commission considers that they constitute a general measure, given that they are common in France, can be set up in all sectors of economic activity and come under common law.’

(95) The Decision was published in the Official Journal on 15 January 2002. In the 2006 Decision on the French GIE Fiscaux, the Commission considered that: ‘While it is true that the scheme at issue in that case was that in force before 1998, it must nevertheless be observed that that fact was not made clear in the grounds for the Decision and that that circumstance may have helped to mislead recipients under the scheme here at issue.’

(96) Spain (59) and some third parties argued that this statement had either created a situation of legal uncertainty as to the lawfulness of the STL — which is very similar in its construction and effects — or had given rise to legitimate expectations that the STL did not constitute State aid.

4.9.2.2. The publication of the draft measures in the Official Gazette of the Spanish Parliament

(97) According to PYMAR, the Commission became aware of the existence of the STL system when its constituent measures (discretionary application of early depreciation of leased assets and the TT system) were published as part of the same draft law in the Official Gazette of the Spanish Parliament on 10 October 2001. Following this, shipyards started to include the benefits of these measures in their bids for new shipbuilding projects, without awaiting the entry into force of the measures, in order to move forward in the negotiation and implementation of the first STL structures.

4.9.2.3. The 2001 request for information about the Spanish tax leasing scheme

(98) PYMAR refers to a letter sent by the Commission on 21 December 2001 following a complaint about several state measures that allegedly reduced the cost of ships bought from Spanish shipyards. In that letter, the Commission notably requested information about a tax leasing system: ‘It has come to the attention of the Commission that a number of measures seem to exist that reduce the cost of buying ships from Spanish shipyards. In particular the Commission has been provided information that the following measures are available: … 3. A tax-leasing system, whereby ships built in Spain can be used to reduce taxes through the use of SPVs (special purpose vehicles). The gain from this combination appears to be transferred to the shipowner through a lower price or through reduced leasing costs. Could Spain please provide all relevant information that allows it to evaluate this issue’.

(99) According to PYMAR, this letter indicates that the Commission had information and was aware of the existence of the tax lease system and that it has investigated the matter in 2001 already without taking any action, which created the legitimate expectation that the Spanish measure did not constitute aid.

4.9.2.4. The 2004 Decision concerning the Dutch notification

(100) On 9 September 2002, the Dutch authorities notified a ‘matching aid’ that they intended to award Dutch shipyards with a view to matching aid allegedly offered by Spain (60). At the end of a formal investigation (61), the Commission concluded in its final Decision (62) that ‘the Spanish authorities hav[ing] clearly denied that the aid would ever be available’ it did not have ‘sufficient proof of the alleged Spanish aid’ (63) and declared the notified aid incompatible with the internal market.

(101) According to PYMAR, because the STL was in force in 2002, before the Netherlands notified the aid, the 2004 Commission decision would have created the legitimate expectation that the STL system did not constitute aid.

4.9.2.5. The 2006 Decision in the French GIE Fiscaux case

(102) According to PYMAR, the French scheme GIE Fiscaux is very similar to the STL system. As a result, the 2006 Decision in the French case gave rise to legitimate expectations on the part of operators that: (1) the STL system would be considered compatible with the internal market within the limits of Chapter 11 of the Maritime Guidelines and (2) the recovery of the State aid exceeding the ceilings of Chapter 11 of the Guidelines would not be required, given the procedural similarities of both cases.

(103) In addition, PYMAR invokes a number of Commission decisions where the similarity of a measure with a measure previously approved by the Commission was a factor that justified the legitimate expectations of operators. In particular, PYMAR recalls that no recovery was ordered in cases (64) such as Foreign Income (Ireland), International Financing Activities (the Netherlands), Coordination Centres and Finance Companies (Luxembourg), Coordination Centres in Vizcaya (Spain), Control and Coordination Centres (Germany), Central Corporate Treasuries and Headquarters and Logistics Centres (France), Tax Ruling for US Foreign Sales Corporations (Belgium) and Gibraltar Qualifying Companies (UK), because those schemes were very similar to the Belgian Coordination Centres schemes which had been previously approved by the Commission.

4.9.2.6. The 2009 letter sent by Commissioner Kroes

(104) In response to a letter from the Norwegian authorities complaining about alleged discrimination against Norwegian shipyards in connection with the Spanish tax lease system, Commissioner Kroes replied that DG Competition: ‘[had] already investigated the matter’ and that at its request, Spain had issued a public statement in the form of an answer of the tax administration to a question from a taxpayer (65) — a tax ruling — confirming that the measure was not restricted to Spanish shipyards and could also be used for the acquisition of ships produced in other Member States. The letter concluded that, in view of that clarification, no further action was considered necessary.

(105) According to PYMAR, on 2 April 2009 a Norwegian shipowner shared the content of Commissioner Kroes’s letter with a Spanish shipyard with which it was involved in STL operations. PYMAR also submitted a letter of 13 September 2012 from Gerencia del Sector de la Construcción Naval (66) (GSN) testifying that, back in 2009, it knew about the content of Commissioner Kroes’s letter and had shared it with entities participating in STL operations and with PYMAR in the course of their regular meetings.

4.9.2.7. Time elapsed between the complaint and the opening of the procedure

(106) According to PYMAR, nine years elapsed between the time the Commission became aware of the scheme in December 2001/the start of the scheme in 2002 (five years from the first complaints received by the Commission in 2006) and the opening of the proceedings in June 2011. The time elapsed without action from the Commission corroborated the belief that there were not enough elements to proceed.

4.9.2.8. A diligent economic operator could not have foreseen the possible existence of State aid in the combination of several measures

(107) According to PYMAR and other third parties, this is the first time that the Commission has considered that the joint application of several measures constitutes State aid — something which normally prudent operators could not have foreseen.

4.9.2.9. The statements on depreciation methods in the Commission Notice on business taxation

(108) PYMAR argues that according to Article 13 of the Commission Notice on business taxation, measures of a purely technical nature such as depreciation rules do not constitute State aid. On that basis, operators had legitimately considered that the early depreciation measure did not constitute State aid.

4.9.3. Considerations relevant for State aid recovery

(109) From the moment the Commission became aware of the existence of the STL, its actions and also the time elapsed have created legitimate expectations that there was no aid and consequently that the aid granted for operations carried out previously would not be recovered. Hence the Commission should refrain from ordering recovery of the aid for all the operations.

(110) Similarly, the letter from Commissioner Kroes in 2009 confirms that the scheme had been analysed by the Commission. All parties involved in tax lease operations (shipping companies, EIGs, banks and intermediaries, etc.) could have legitimate expectations that the Commission would have discovered any aid in the system and that, because no further investigations were planned, no aid was involved.

(111) PYMAR also refers to decisions in which the Commission acknowledged that actions by EU institutions (Court of Justice, Commission, etc.) could generate legitimate expectations that aid awarded in the past would not be recovered, which would prevent the Commission from ordering recovery including when the aid was granted prior to the action that gave rise to legitimate expectations. They refer to decisions in the Spanish goodwill case, the Belgian coordination centres case, an Austrian energy tax rebate case and an Italian case of aid to large firms in difficulty (67).

4.9.4. Contractual clauses

(112) The Spanish authorities and PYMAR state that any aid identified by the Commission in favour of shipping companies or EIGs and investors would in any case affect the shipyards, which would receive claims to reimburse the EIGs or their investors or investing companies by virtue of the contractual relationships between the different participants in the STL operations. Indeed, according to PYMAR, some clauses in the contracts require the shipyards to compensate the investors and shipping companies, in particular, in the event of a change to the legislation — including tax legislation — affecting the operation.

5. ASSESSMENT

5.1. PROCEDURE

(113) The Commission considers that the procedure followed has neither breached Spain’s rights of defence nor any third party’s right to be heard. On the contrary, the decision to open formal proceedings is the initial formal step that the Commission must take pursuant to Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for the application of Article 93 of the EC Treaty (68) (hereinafter ‘Regulation (EC) No 659/1999’) if, after a preliminary investigation, it has doubts about the compatibility of a State aid measure with the internal market (Articles 13 and Article 4(4) of Regulation (EC) No 659/1999). The purpose of the decision to open proceedings is precisely to summarise the relevant issues of fact and law, make a preliminary assessment as to the aid character of the measure, set out the doubts as to its compatibility with the internal market and call upon the Member State concerned and other interested parties to submit comments (Article 6 of Regulation (EC) No 659/1999).

(114) Moreover, the Commission did not open the formal investigation procedure in respect of the accelerated depreciation of leased assets (Article 115(6) TRLIS) since it has indicated that if the measure constituted State aid, it could in any event be regarded as existing aid. It did not raise doubts about the TT system, at least to the extent that it had been notified and authorised by the Commission (Articles 124 to 128 TRLIS) because this measure was also regarded as existing aid. These two measure are only mentioned and described in Decision C(2011) 4494 final because they are important elements of the STL and are linked to the measures subject to the formal investigation (Articles 115(11) and 48(4) TRLIS and Article 49 RIS, as well as Article 50(3) RIS and the application of the TT system to non-transport activities).

(115) The Commission considers that Articles 115(11) and 48(4) TRLIS and Article 49 RIS, as well as Article 50(3) RIS and the application of the TT system to non-transport activities can be separated from the other measures mentioned in the previous recital (i.e. Article 115(6) TRLIS and Articles 124 to 128 TRLIS) and do not constitute existing aid pursuant to Article 1(b) of Regulation (EC) No 659/1999, since those measures were introduced in 2002 and 2003, after Spain’s accession to the EU, and put into effect without prior authorisation by the Commission. Therefore, in respect of those measures, the Commission has rightly followed the procedure applicable to unlawful aid (Articles 1(f), 13 and 4(4) of Regulation (EC) No 659/1999).

5.2. ASSESSMENT OF THE STL AS A SYSTEM/ASSESSMENT OF INDIVIDUAL MEASURES

(116) The fact that the STL system is composed of various measures that are not all enshrined in the Spanish tax legislation is not sufficient to prevent the Commission from describing and assessing it as a system. Indeed, as explained in Decision C(2011) 4494 final, the Commission considers that the different tax measures used in the STL operations were linked together de jure or de facto. De jure, the discretionary application of early depreciation of leased assets (Article 115(11) TRLIS) corresponds to an early application of the accelerated depreciation of leased assets (Article 115(6) TRLIS). Similarly, Article 50(3) RIS establishes an exception to a special procedure applicable in the context of the TT system. De jure, Article 50(3) RIS only concerns ves0sels eligible for the TT system and leasing contracts authorised by the tax administration. De facto, leasing contracts were only regarded as authorised by the tax administration in the context of authorisations granted for early depreciation of leased assets. De jure, early depreciation can be envisaged for a wide range of assets possibly acquired via a leasing contract. However, the conditions for early depreciation are subject to interpretation and were de facto only considered to be met — and authorisations were only delivered — with respect to vessels eligible for the TT system.

(117) In addition, the Commission notes that two of the three main measures involved in the STL (discretionary application of early depreciation and rules on eligibility for the TT system) entered into force on the same date (1 January 2002) under the same law.

(118) The Commission also notes that, when arguing about legitimate expectations and equal treatment, the same third parties that challenge the Commission’s global approach present the STL system as being very similar to the French GIE Fiscaux scheme. The fact that all the features of the French measure were included in one legal provision necessarily implied a global assessment. In that respect, the fact that the different elements of the STL are spread among different legal provisions that are de facto linked together would not — as such — warrant a different approach.

(119) For those reasons, the Commission considers that it is necessary to describe the Spanish Tax Lease as a system of connected tax measures and to assess their effects in their reciprocal context, taking into account, in particular, the de facto relationships introduced — or approved — by the State.

(120) In any case, the Commission does not rely exclusively on a global approach. In parallel to a global approach, the Commission also analysed the individual measures that make up the STL. The Commission considers that the two approaches are complementary and lead to consistent conclusions. Individual assessment is necessary to determine which part of the economic advantages generated by the STL system results from general measures and which from selective measures. Individual assessment also allows the Commission to determine, where necessary, which part of the aid is compatible with the internal market and which part should be recovered.

(121) This dual approach, which was already followed in Decision C(2011) 4494 final, enables the Commission to define a reference system for each of the individual measures and for the STL system as a whole, in order to identify selective advantages that constitute State aid. For every STL operation, the counterfactual situation against which the presence of aid will be assessed is the operation itself, with the same contractual provisions but carried out without the measures identified as State aid. In this respect, an alternative operation with actual different arrangements — contractual and financial — would not constitute a proper counterfactual situation.

(122) Economic operators are free to structure their asset financing operations as they wish and use for that purpose the general tax measures which they consider the most suitable. However, inasmuch as these operations entail the application of selective tax measures, which are subject to State aid control, the undertakings involved in these transactions are potential recipients of State aid. On the one hand, the fact that several sectors or categories of undertakings are identified as potential recipients is not an indication that the STL system is a general measure (69). On the other hand, the fact that the system is used to finance the acquisition, bareboat chartering and resale of sea-going vessels can be seen as a clear indication that the measure is selective from a sectoral point of view.

5.3. EXISTENCE OF AID WITHIN THE MEANING OF ARTICLE 107(1) TFEU

(123) 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’.

(124) State aid rules apply only to aid granted to undertakings involved in economic activities. Furthermore, the criteria laid down in Article 107(1) TFEU are cumulative. Therefore, the measures under assessment constitute State aid within the meaning of the Treaty if all the above-mentioned conditions are fulfilled. Basically, the financial support should: — be granted by the State and through state resources, — favour certain undertakings or the production of certain goods, — distort or threaten to distort competition, and — affect trade between Member States.

(125) The Commission has carried out its assessment at two different levels: — At the level of the individual measures involved, where the Commission considers whether each measure constitutes State aid irrespective of its use in the STL. — At the level of the STL system as a whole: as already stated, the STL relies on a combination of these measures which are de jure or de facto connected to one other.

5.3.1. Undertakings within the meaning of Article 107 TFEU

(126) The Commission considers that all parties involved in STL operations are undertakings within the meaning of Article 107(1) TFEU — and this is not contested by Spain (70) or any third-party — since their activities consist in offering goods and services in a market (71). More precisely, shipyards offer newly built vessels or construction, repair and renovation services; leasing companies offer financing facilities; EIGs charter out and sell vessels; investors offer goods and services on a wide range of markets, except if they are individuals not exercising any economic activity, in which case they are not covered by this Decision; shipping companies offer maritime transport services; organising banks offer intermediation and financing services and other intermediaries provide intermediation or consulting services.

5.3.2. Existence of a selective advantage

(127) According to settled case-law: ‘Article 107(1) of the Treaty requires it to be determined whether, under a particular statutory scheme, a State measure is such as to favour ‘certain undertakings or the production of certain goods’ in comparison with others which, in the light of the objective pursued by the scheme in question, are in a comparable legal and factual situation. If it is, the measure concerned fulfils the condition of selectivity.’ (72)

5.3.2.1. Accelerated depreciation (Article 115(6) TRLIS) — Measure 1

(128) In Decision C(2011) 4494 final, the Commission said that, if the measure constituted aid, it would be existing aid and it did not conduct an assessment. As a result of the formal investigation, the Commission has now come to the conclusion that this measure, taken in isolation, does not constitute State aid because it does not favour certain undertakings or the production of certain goods. The Commission notes that the measure is applicable to all companies which are subject to income tax in Spain without any limitation as to their sector of activity, place of establishment, size, legal status or location of the assets. It also applies without exception to all goods that are subject to depreciation.

(129) Moreover, the limitation to leased assets does not constitute an element of selectivity as the acquisition of any assets can be financed through financial leasing contracts which are generally accessible to companies of all sectors and sizes. There is no indication that the recipients of the measure are de facto concentrated in certain sectors or types of production. The statistics provided by Spain concerning the use of Article 115 TRLIS by Spanish taxpayers (see graphs below) confirm that financial leasing is used by companies exhibiting a wide range of taxable revenues (45 % of the declared users of Article 115 earn less than EUR 1 million and 70 % less than EUR 3 million) (see left-hand chart). The absolute amount of the tax advantage that can result from the deduction of an extra expense (73) pursuant to Article 115 TRLIS also varies according to the taxpayer’s revenue (see right-hand chart). Source: Ministry for Economic Affairs and Finance

(130) The Spanish authorities have also confirmed that leasing contracts and Article 115 TRLIS can be used with respect to assets built (or originating) in other Member States. Finally, the Commission notes that the conditions of application of Article 115(6) TRLIS are clear, objective and neutral and that no prior authorisation is necessary for it to apply. As a consequence, the tax administration does not have the power to authorise or reject at its own discretion the application of that measure (74).

(131) The Commission therefore concludes that the accelerated depreciation of leased assets (Article 115(6) TRLIS) as such does not confer a selective advantage on the EIGs in STL operations.

5.3.2.2. Discretionary application of early depreciation (Article 115(11) Article 48(4)TRLIS and Article 49 RIS) — Measure 2

(132) The rules on depreciation in Spanish tax legislation (Article 11 TRLIS) generally provide that the cost of an asset should be spread over its economic life — hence from the moment it is used for an economic activity. According to Article 115(6) TRLIS, accelerated depreciation of leased assets should take account of the date on which the asset became operational. Since it allows accelerated depreciation to begin before the asset starts being used, Article 115(11) TRLIS confers an economic advantage.

(133) This possibility is an exception to the general rule set out in Article 115(6) and is subject to discretionary authorisation by the Spanish authorities; this measure is therefore at first sight selective. Contrary to what Spain and some third parties allege, the criteria for granting the authorisation are not clear and objective, and even if they were clear and objective this would not be sufficient to rule out their selective nature (75). The Commission notes that the criteria set out in Article 115(11) TRLIS are vague and require interpretation from the tax administration which has not published any administrative rules or explanations in this respect. The discretionary application of early depreciation on the basis of vague criteria introduces selectivity into the STL system, even if the discretionary powers are not exercised in an arbitrary manner (76). In addition, the Commission notes that Spain did not convincingly explain why all the conditions imposed by Article 48(4) TRLIS and Article 49 RIS are necessary to avoid abuses. For example, the specific characteristics of the economic use of the asset (77) must be demonstrated, as well as the absence of effect on the taxable amount arising from the use of the asset or transfer of ownership (78). No justification was presented for these limitations, which introduce further elements of selectivity. Nor did Spain demonstrate why a prior authorisation is necessary. Ensuring the reality of a leasing operation, for instance, appears as important for allowing the normal deduction of the leasing/depreciation costs of an asset or for applying accelerated depreciation as it is for the early application of this depreciation. However, the first measures are not subject to prior authorisation and, as is the case for those measures, an ex-post verification of the clear and objective criteria applicable to the early depreciation of leased assets would appear to suffice.

(134) In Decision C(2011) 4494 final, according to the Commission the Spanish authorities had confirmed at a meeting that, based on the authorisations issued, the conditions of Article 115(11) TRLIS were only deemed to be met in the case of acquisitions of vessels that had switched from the normal corporate taxation regime to the TT system (79) and the subsequent transfer of ownership of the vessel to the shipping company through the exercise of an option in the context of a bareboat charter. Spain has denied (80) having made such a statement but acknowledged that there were difficulties of interpretation (81). The Commission notes that no evidence was provided establishing that authorisations for applying early depreciation have been granted in other circumstances (82).

(135) On the basis of the examples provided by the Spanish authorities, it appears that the requests for early depreciation filed by EIGs with the tax administration describe in detail the whole STL organisation and provide all the relevant contracts (in particular, shipbuilding contract, leasing contract, bareboat charter, option contracts, debt assumption and release agreement). According to Spain, these elements are necessary to check compliance with the conditions imposed by Articles 115(11) and Article 48(4) TRLIS and Article 49 RIS.

(136) However, the Commission notes that the procedure set out in the implementing regulations (83) confers important discretionary powers on the tax administration to interpret the legal requirements and possibly impose additional conditions. In particular, the administration is allowed to require any additional information they may deem relevant for the assessment (84). In this respect, the Commission also notes that in some of the examples provided, the requests filed by the applicants also featured additional annexes which are not necessary to demonstrate compliance with the conditions imposed by Articles 115(11) and 48(4) TRLIS and Article 49 RIS: (1) a detailed calculation of the overall tax advantages and how they will be shared between the shipping company, on the one hand, and the EIG or its investors on the other hand, and (2) a statement by the shipyard, detailing the economic and social benefits expected from the shipbuilding contract. According to some complainants, these documents are required by the tax administration in the context of the authorisation process. According to Spain, these elements were provided by the applicants (EIGs) on their own initiative. These documents indicate, in particular, that the importance of a shipbuilding contract for the Spanish economy is taken into account, as well as the overall tax advantage generated by the STL operation.

(137) The Commission concludes that the compulsory prior authorisation procedure, the necessary interpretation of the vague conditions of Articles 115(11) and 48(4) TRLIS and Article 49 RIS, and the possibility for the tax administration to request any additional document or information are clear evidence that the tax administration enjoys wide discretionary powers in the exercise of its task of authorising STL operations.

(138) As mentioned in the Commission Notice on the application of the State aid rules to measures relating to direct business taxation (hereinafter ‘the Notice on fiscal aid’) (85), the Court of Justice acknowledges that treating economic agents on a discretionary basis may mean that the individual application of a general measure takes on the features of a selective measure, in particular where exercise of the discretionary power goes beyond the simple management of tax revenue by reference to objective criteria (86) (87).

(139) The Commission therefore considers that the discretionary application of early depreciation of leased assets by application of Articles 115(11) and Article 48(4) TRLIS and Article 49 RIS confers a selective advantage on the EIGs involved in STL operations and on their investors.

5.3.2.3. The tax transparency of economic interest groupings (Article 48 TRLIS) — Measure 3

(140) The Commission considers that the tax transparent status of EIGs enshrined in Articles 48 and 49 TRLIS merely enables different operators to join and finance any investment or carry out any economic activity. As a consequence, that measure does not confer any selective advantage on the EIGs or their members.

5.3.2.4. The tonnage tax system (Articles 124 to 128 TRLIS) — Measure 4

(141) As explained in Section 2.2.4 above, the TT system constitutes an existing State aid scheme, approved by Commission Decision C(2002)582 final of 27 February 2002. It includes the rules under Article 125(2) TRLIS concerning the treatment of hidden tax liabilities and capital gains in the context of a transfer to the TT system of used or second-hand assets previously subject to the general tax system.

(142) Indeed, as explained in recital 17 above, under normal circumstances — i.e. when a company stays within the general corporate tax system rather than switching to the TT system — the tax advantage resulting from early or accelerated depreciation of assets in the first years (increasing hidden tax liabilities) is offset to a large extent in the subsequent years (decreasing hidden tax liabilities) or upon sale or dismantling of the asset (taxation of capital gain). Over the whole period, this process results in the deferral of the payment of certain amounts of tax. Because the tax paid under the TT system does not depend on the difference between revenue and expenditure, a switch to the TT system in the middle of the period implies that hidden tax liabilities are not settled.

(143) Compared with what would happen in the context of the general tax system, the deferral under the TT system of the settlement of hidden tax liabilities as permitted by Article 125(2) TRLIS confers an additional selective economic advantage on the companies that switch to the TT system, as against those that stay within the general tax system.

(144) As explained below, in Section 5.4., the TT system as approved by the Commission does not extend to the tax treatment of revenues obtained from bareboat chartering, which therefore constitutes not existing, but new aid.

5.3.2.5. Article 50(3) RIS — Measure 5

(145) Compared with what was authorised as part of the notified TT scheme, Article 50(3) RIS provides a further advantage: by establishing an exception to the normal application of Article 125(2) TRLIS, certain sea-going vessels that would normally be regarded as used or second-hand are deemed to be new on transfer to the TT system. Consequently, the settlement of hidden tax liabilities — normally deferred until sale or dismantling of the asset pursuant to Article 125(2) TRLIS — is definitely cancelled. This cancellation constitutes an economic advantage.

(146) The economic advantage conferred by Article 50(3) RIS is selective because it is not available to all assets. It is not even available to all vessels subject to the TT scheme and to Article 125(2) TRLIS. In fact, this advantage is only available on condition that the vessel is acquired through a financial leasing contract previously authorised by the tax administration. As already mentioned, the Spanish authorities have confirmed that the tax administration only considered this condition actually to be fulfilled if a financial leasing contract had been authorised in the context of an application for early depreciation pursuant to Article 115(11) TRLIS. Neither Spain nor any third party has referred to other circumstances that would allow a leasing contract to be previously authorised by the tax administration. As mentioned in Section 5.3.2.2 above, these authorisations were granted in the context of substantial discretionary powers exercised by the tax administration and in practice only in relation to newly built sea-going vessels.

(147) Contrary to the argument put forward by Spain and certain third parties, Article 50(3) RIS does not merely provide a clarification to the special procedure notified, or to the concept of ‘used vessel’. By considering that a leased vessel is still new on the date that the call option is exercised by the lessee, provided that the leasing contract was previously approved by the tax administration, it departs from the special procedure (88) enshrined in Article 125(2) TRLIS. This selectively introduces an additional advantage by preventing the taxation of the subsequent capital gain.

(148) The Commission considers that the award of this additional selective advantage — be it by reference to the general tax scheme or even by reference to the normal application of the alternative TT system and Article 125(2) TRLIS as authorised by the Commission — cannot be justified by the nature and general scheme of the Spanish tax system.

(149) Indeed, the Commission has authorised Article 125(2) TRLIS as a special procedure that was supposed to prevent abuse of Article 125(1), i.e. to prevent operators from transferring used and over-depreciated vessels to the TT system for the sole purpose of selling them with a substantial capital gain that would be exempted under the TT scheme. The Commission notes in that respect that the STL operations feature EIGs which lease — then briefly own — one single vessel which they do not operate themselves and switch to the TT scheme for the very limited period of time necessary to exercise the option of the leasing contract and transfer the ownership of their only vessel to the shipping company. These operations do not appear to be in line with the objectives of the TT system as envisaged in the Maritime Guidelines.

(150) As a consequence, the Commission does not agree that it is logical to consider a vessel to be ‘new’ on the date on which the option is exercised because no one has used it before the leaseholder, or because the exercise of the option had already been agreed when the leasing contract was signed.

(151) As for the first part of this argument, the Commission notes that the special procedure also applies to vessels transferred by one operator from the normal tax system to the TT system, i.e. without any change in ownership and without any third party using it.

(152) As for the second part, the fact that the option is already agreed has nothing to do with determining whether the vessel is new. The Commission did not receive any explanation as to why such a vessel should be regarded as new — irrespective of who is the owner — on the day the option is exercised. Nor did it receive any convincing explanation as to why this hypothesis would only be reasonable if the leasing contract was previously approved by the tax administration.

(153) In that respect, the Commission notes that the capital gain would not be tax exempt if Article 50(3) RIS only clarified that leased vessels are considered to be new on the day the leasing contract is signed, without taking into consideration the date on which the option is exercised. In that case, the EIG should be regarded as the owner of the vessel prior to its transfer to the TT system, the vessel would be regarded as used or second-hand on entry to the TT system and Article 125(2) TRLIS would apply, leading to the deferred settlement of the hidden tax liabilities or the taxation of the capital gain when the vessel is sold or dismantled.

(154) The Commission therefore considers that Article 50(3) RIS confers a selective advantage on undertakings that acquire vessels through financial leasing contracts previously authorised by the tax administration and, in particular, on the EIGs or their investors involved in STL operations.

5.3.2.6. Selective advantage resulting from the STL as a whole. Recipients of the advantage

(155) The amount of the economic advantage resulting from the STL as a whole corresponds to the advantage that the EIG would not have achieved in the same financing operation by the sole application of general measures. In practice, this advantage corresponds to the sum of the advantages reaped by the EIG by applying the above-mentioned selective measures, namely: — the interest saved on the amounts of tax payment deferred by virtue of early depreciation (Articles 115(11) and 48(4) TRLIS and Article 49 RIS), — the amount of tax avoided or interest saved on tax deferred by virtue of the TT scheme (Article 128 TRLIS), given that the EIG was not eligible for the TT scheme, — the amount of tax avoided on the capital gain made on the sale of the vessel by virtue of Article 50(3) RIS.

(156) Looking at the STL as a whole, the advantage is selective because it was subject to the discretionary powers conferred on the tax administration by the compulsory prior authorisation procedure and by the imprecise wording of the conditions applicable to early depreciation. Since other measures applicable only to maritime transport activities eligible under the Maritime Guidelines — in particular Article 50(3) TRLIS — are dependent on that prior authorisation, the whole STL system is selective. As a result, the tax administration would only authorise STL operations to finance sea-going vessels (sectoral selectivity). As confirmed by the statistics provided by Spain, all the 273 STL operations organised until June 2010 concern sea-going vessels.

(157) In that respect, the fact that all shipping companies, including companies established in other Member States, potentially have access to STL financing operations does not alter the conclusion that the scheme favours certain activities, namely the acquisition of sea-going vessels through leasing contracts, in particular with a view to their bareboat chartering and subsequent resale.

(158) European shipyards complained on several occasions that they did not have access to Spanish banks’ financing for STL.

(159) In its Decision to open the formal investigation procedure the Commission observed that all but one of the vessels admitted to STL were built in Spanish shipyards. The Commission expressed doubts (89) that such an outcome could reasonably be explained in the context of operations resulting only from the free choice of economic operators in a free and competitive market.

(160) However, in the absence of any evidence that applications related to the acquisition of non-Spanish vessels were rejected, the Commission cannot establish that STL was de facto limited to the acquisition of Spanish vessels. In addition, the Commission notes that by a binding notice in response to a question by a prospective investor, dated 1 December 2008, the Spanish tax administration expressly confirmed that STL applies to ships built in other Member States of the EU (90). Under these circumstances, the Commission concludes that the STL entails no further element of selectivity to the benefit of Spanish shipyards and no discrimination based on the place of establishment of the shipyard.

(161) The Commission considers that the advantage accrues to the EIG and, by transparency, to its investors. Indeed, the EIG is the legal entity that applies all the tax measures and, where applicable, files requests for authorisations with the tax administration. For instance, it is not disputed that requests for the application of early depreciation or TT were filed on behalf of the EIG. From a tax perspective, the EIG is a tax-transparent entity and its taxable revenues or deductible expenses are automatically transferred to the investors.

(162) In an STL operation, in economic terms, a substantial part of the tax advantage collected by the EIG is transferred to the shipping company through a price rebate. The annexes attached to certain files when EIGs request prior authorisation for early depreciation (see recital 168 below) confirm that the operators involved in STL operations consider that the tax benefits resulting from the operation are shared between EIGs or their investors and the shipping companies. However, the question of the imputability to the State of this advantage will be discussed in the next section.

(163) Whereas other participants in STL transactions such as shipyards, leasing companies and other intermediaries benefit from an indirect effect of that advantage, the Commission considers that the advantage initially collected by the EIG and its investors is not transferred to them.

5.3.3. Transfer of state resources and imputability to the State

State resources

(164) The selective advantages for the EIGs and their members identified in measures 2, 4 and 5 above (see Sections 5.3.2.2, 5.3.2.4 and 5.3.2.5) result from the application of tax law provisions.

(165) For each of the STL transactions, the use of state resources results in interest foregone on the tax deferral resulting from the early depreciation of leased assets, tax foregone in the absence of settlement of the hidden tax liabilities when the EIG switches from the normal corporate tax system to the TT schemes, and tax foregone in the absence of taxation of the capital gain made when the ownership of the vessel is transferred to the shipping company. The STL system as a whole involves the definitive loss of tax revenue equivalent to the consumption of state resources in the form of fiscal expenditures and interest foregone.

(166) In the context of STL operations, the State initially transfers its resources to the EIG by financing the selective advantages. By way of tax transparency, the EIG then transfers the state resources to its investors.

Imputability

(167) The measures at issue derive from the application of Spanish tax law and from tax authorisations granted by the Spanish tax administration for the application of both the early depreciation and the TT scheme. These authorisations were granted for the application of individual measures such as the early (accelerated) depreciation of the vessel leased by each EIG or the switch of the EIG to the TT. Moreover, based on the examples provided by the Spanish authorities, the authorisation process was indispensable for the financing operation to go through.

(168) According to the complainants, the tax administration would review and intervene in the share-out of the tax gain between the shipping company, on the one hand, and the EIG and its investors, on the other. Based on the examples provided by the Spanish authorities, it appears that, indeed, requests submitted to the tax administration for the authorisation of early depreciation generally include a calculation of the overall tax advantage generated by the STL structure and how this tax advantage is shared between the shipping company and the investors in the EIG, or, in any event, contain the necessary elements for doing this calculation.

(169) However, all the economic consequences of granting the tax advantage to the EIGs result from a combination of legal transactions between private entities. The applicable rules do not oblige the EIGs to transfer part of the tax advantage to the shipping companies and, even less so, to the shipyards or to the intermediaries. It is true that the tax administration enjoys wide discretion and, in that context, it assesses the economic impact of the overall transaction, but this is not enough to establish that it is the Spanish authorities that decide on the transfer of part of the advantage to the shipping companies or the amount of this transfer. This situation is different from that examined in the Air Caraïbes or in the French GIE Fiscaux decisions, where there was a legal obligation for the investors to transfer at least 60 % or two thirds of the advantage to the users and the French authorities verified that each transaction complied with that requirement.

(170) Hence the selective advantages were granted through state resources. They are clearly imputable to the Spanish State since they are of benefit to the EIGs and their investors. However, this is not the case with the advantages enjoyed by the shipping companies and a fortiori the indirect advantages flowing to the shipyards and the intermediaries.

5.3.4. Distortion of competition and effect on trade

(171) Finally, this advantage threatens to distort competition and to affect trade between Member States. When aid granted by a Member State strengthens the position of an undertaking compared with other undertakings competing in intra-EU trade, the latter must be regarded as affected by that aid (91). It is sufficient that the recipient of the aid competes with other undertakings on markets open to competition (92) and to trade between Member States.

(172) In the case at hand, the investors, i.e. the members of the EIGs, are active in different sectors of the economy, in particular in sectors open to intra-EU trade. In addition, via the operations benefiting from STL they are active through the EIGs in the markets for bareboat chartering and the acquisition and sale of sea-going-vessels, which are open to intra-EU trade. The advantages flowing from the STL strengthen their position in their respective markets, thereby distorting or threatening to distort competition.

(173) The economic advantage received by the EIGs and their investors benefiting from the measures under scrutiny is therefore liable to affect trade between the Member States and distort competition in the internal market.

5.4. EXISTING OR UNLAWFUL AID

(174) Article 1(b) of Regulation (EC) No 659/1999 (93) sets out different situations where aid is regarded as existing aid. According to submissions received in the case at issue, existing aid would be (i) aid which existed prior to the entry into force of the Treaty in Spain or (ii) aid previously approved by the Commission.

The tonnage tax constitutes existing aid, but its application to revenues obtained from bareboat chartering constitutes new aid

(175) Among the measures qualifying as State aid (94), the Commission considers that only the legal provisions of the TT system (Articles 124 to 128 TRLIS, Measure 4) constitute an existing State aid scheme because it was approved by the Commission in 2002.

(176) However, the Commission considers that the EIGs involved in tax lease operations do not meet all the conditions to be eligible for the Spanish TT.

(177) The Commission authorised the Spanish TT as compatible aid on the basis of the Maritime Guidelines, which apply only to undertakings carrying on genuine maritime transport activities (95) either with their own vessels or with chartered vessels. By way of exception, the TT can apply to activities that the Guidelines regard as ancillary or assimilated to maritime transport. For instance, under certain conditions, ship management, dredging or towing activities may qualify for aid (96). By contrast, the mere ownership of a vessel, its acquisition through financial leasing or its renting or chartering out to third parties, without assuming full responsibility for the vessel’s operation, cannot be regarded as a qualifying activity. Obviously, the beneficiary of the TT system should be the one carrying on the qualifying transport activity with the qualifying vessel.

(178) It is true that, by way of exception, bareboat chartering activities have previously been allowed by the Commission as part of certain notified TT schemes, but only on a temporary basis and under specific circumstances related to overcapacity (97). Under those conditions, the core activity of the concerned undertakings remains maritime transport and the revenues from bareboat chartering-out activities can be regarded as ancillary to that core activity. This tolerance is fully in line with objectives of the Maritime Guidelines: ‘maintaining and improving maritime know-how and protecting and promoting employment for European seafarers’ and ‘contributing to the consolidation of the maritime cluster established in the Member States while maintaining an overall competitive fleet on world markets’ (98).

(179) In line with the Maritime Guide