2001/371/EC: Commission Decision of 21 December 2000 on the exemption from mineral levies under the manure law which the Netherlands intends to grant (notified under document number C(2000) 4404)
Date: 2000-12-21
Institutions: European Commission
Subjects: Netherlands, control of State aid, horticulture, livestock farming, organic fertiliser, tax exemption

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COMMISSION

COMMISSION DECISION

of 21 December 2000

on the exemption from mineral levies under the manure law which the Netherlands intends to
grant

(notified under document number C(2000) 4404)

(Only the Dutch version is authentic)

(2001/371/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European
Community, and in particular the first subparagraph of Article
88(2) thereof,

Having called on interested parties to submit their comments
pursuant to the provision cited above (1),

Whereas:

(1)

(2)

(3)

(4)

(5)

(6)

I. PROCEDURE

By letter dated 7 October 1999, registered on 13
October 1999, the Netherlands notified the Commission
of certain exemptions to the mineral levies which have
been introduced by the manure law. By letters dated 10
January 2000,
it
registered on 12 January 2000,
provided the Commission with further information.

By letter dated 20 March 2000,
the Commission
informed the Netherlands that it had decided to initiate
the procedure laid down in Article 88(2) of the EC
Treaty in respect of the proposed exemptions to the
mineral

levies.

The Commission decision to initiate the procedure was
published in the Official Journal of the European Communi-
ties (2). The Commission invited interested parties to
submit their comments on the aid.

The Commission received no comments from interested
parties.

The Dutch authorities have provided further information
by letter of 17 May 2000.

II. DESCRIPTION

This system in Chapter IV of the manure law provides
for an obligatory bookkeeping system for minerals on
the individual holding and maximum phosphate and

(1) OJ C 190, 8.7.2000, p. 4.
(2) See footnote 1.

nitrogen emissions into the environment per holding. If
emissions go beyond these maximum quantities taxes
will have to be paid for these quantities. The prohibitive
levies are only being levied if the total amount of phos-
phate and nitrogen introduced on a farm minus the total
amount of minerals removed exceeds in a calendar year
the norms for the permissible wastage of phosphate and
nitrogen in the environment (so-called ‘loss norms’). If
an undertaking takes
the
removal of manure which may not be spread on the
land,

it will not have to pay any levies.

effective measures,

e.g.,

(7)

(8)

(9)

Under the proposed measure small undertakings (so-
called ‘hobby-undertakings’) and garden centres are fully
exempted from the mineral levies provided for by the
manure law. Horticultural farms growing crops in glass-
houses or on substrate are partially exempted.

A. EXEMPTION FOR SMALL UNDERTAKINGS

(HOBBY

UNDERTAKINGS)

Article 38 of the manure law already provides for an
exemption for, inter alia, extensive livestock farming, as
the policy aim is to focus on the undertakings with the
biggest environmental risks to which category extensive
livestock farms in principle do not belong.

The reason for introducing a separate exemption for
small, extensive livestock farms (hobby undertakings) is
that some of these may not meet the formal require-
ments provided for by Article 38 of the manure law.
The idea is that the production of animal manure is so
limited on such undertakings that measures for the
the manure can easily be adopted. This
disposal of
exemption applies
to undertakings which have on
average no more than three livestock units (3) and three
hectares of agriculture land during a calendar year, and

(3) For example, sows for slaughter are 0,288 livestock units, which
implies that about 10 such sows can be held; lying hens older than
18 weeks are 0,012 livestock units, which implies that about 250
such hens can be kept.

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which do not introduce any animal or other organic
fertilisers. Hobby undertakings are also exempted from
the levy destined to cover the costs the government has
to bear to execute the manure law.

tax system.
functioning and effectiveness of
However, it is up to the Member State to provide such
justification.

the

B. EXEMPTION FOR HORTICULTURAL UNDERTAKINGS

(17)

The Dutch authorities provided the following justifica-
tion:

‘non-soil

(10) Horticultural undertakings growing crops in glasshouses
(hereafter ‘soil-bound horticulture’) or on substrate (here-
after
partially
exempted. The reason for excluding these categories is
levies does not take into
that the system of mineral
the growing processes for
account
soil-bound and non-soil bound horticulture.

the specificity of

horticulture’)

bound

are

(11)

The amount of fertilisers exempted under this scheme
amounts to maximum 460 kg phosphates per hectare
of growing medium or farm building effectively used for
horticulture. The maximum for nitrogen per hectare is
800 kg.

(12) Article 54 of the manure law provides for a temporary
exemption for artificial manure for determining the
amount of phosphates. Therefore, a similar exemption
will apply to horticulture.

C. EXEMPTION FOR GARDEN CENTRES

(13) Garden centres introduce fertilisers in order to sell them
to private persons. The garden centres are exempted
from the mineral levies. Furthermore, the garden centre
as seller and the private person as buyer are exempted
from the administrative requirement
to prepare a
delivery receipt for the delivery of animal or organic
manure.

(14) Garden centres may also perform horticultural activities
in which case the partial exemption applicable to horti-
cultural undertakings mentioned above also applies.

D. REASONS FOR THE COMMISSION TO OPEN THE

PROCEDURE

(15) Although the Dutch authorities are of the view that the
tax exemptions are justified ‘by the nature or general
scheme of the system’ (see Commission notice on the
application of the State aid rules to measures relating to
direct business taxation (4), hereafter ‘Notice on direct
business taxation’) and therefore, does not constitute
State aid within the meaning of Article 87(1) of the EC
Treaty, they have notified the regulation for examination
by the Commission.

(16)

Item 23 of the notice on direct business taxation indeed
provides that the differential nature of some fiscal meas-
ures does not necessarily mean that
they must be
considered to be State aid. This is the case with measures
whose economic rationale makes them necessary to the

(18) With regard to hobby undertakings: The Minas system
contained in the manure law aims at reducing the loss of
phosphates and nitrogen into the environment at
company level. Minas does not want to bring private
individuals who keep a few animals in the scope of the
law, since there is no farming business and hardly any
environmental risks. If one keeps a few animals but has
only very limited land,
it is possible that that person
does not meet the requirement of 2,5 livestock units per
hectare as laid down in Article 38 of the law and can
thus not benefit from the exemption from the mineral
levies. To avoid that individuals who keep animals for
non-commercial purposes have to pay levies,
the
proposed measure contains an exemption for so-called
hobby undertakings. Animals are deemed to be kept for
non-commercial purposes when there are no more than
three livestock units, irrespective of the amount of farm-
land available.

(19) With regard to horticulture

and garden centres
performing horticultural activities: the input norms of
460 kg of phosphates and 800 kg of nitrogen for horti-
culture undertakings and garden centres with horticul-
tural activities are based on research data from the
Research Station for Floriculture and Vegetables under
glass on the uptake of phosphates and nitrogen by crops
grown in glasshouses. These data show that the uptake
of crops grown in glasshouses amounts on average to
460 kg phosphates and 800 kg nitrogen per year. The
uptake is thus considerably higher than for outdoor
crops. This is logical as production for crops cultivated
under glass is eight times as high as for outdoor crops.
By putting the norms for phosphate and nitrogen at the
level of the uptake of phosphates and nitrogen, it can be
avoided that
these undertakings have to pay levies
unduly. This is the reason that these norms are higher
than the norms for agricultural undertakings and the
norms contained in the Council Directive 91/676/EEC of
12 December 1991 concerning the protection of waters
against pollution caused by nitrates from agricultural
sources (5), hereafter ‘Nitrates Directive’.

(20) With regard to garden centres introducing fertilisers to
introduced

sell
manure and manure sold is in the end identical.

to private persons:

the amount of

(21)

The Commission considered that this explanation did
not permit it to conclude that the various exemptions
are justified by the nature and economy of the system.

(4) OJ C 384, 10.12.1998, p. 3.

(5) OJ L 375, 31.12.1991, p. 1.

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(22) Article 38 of the manure law provides for an exemption
for extensive livestock farming. Notwithstanding their
limited size, some of the hobby undertakings may be
economic actors. It should be emphasised that there is
no de minimis threshold in agriculture (6). Providing for
an additional exemption for such hobby undertakings
not meeting the formal exemption requirements would
not seem to be justified by the nature or general scheme
of the system. Furthermore, it would not seem obvious
to now apply a criterion of three livestock units (irrele-
vant of the amount of land, but in any event less than
three hectare), whereas the general exemption of Article
38 is based on a criterion of 2,5 livestock units (per
hectare).

(23) As regards the exemption for horticulture, it would seem
within ‘the nature or general scheme of the system’ to
equate the land or growing medium inside the farm
building with farm land and then apply the same input
norms. A normal application of the input/output regime
would thus assure equal
treatment and would not
constitute a State aid. However, in the case at hand, it
would seem that the amounts which can be introduced
are much higher (460 kg phosphate per hectare and
800 kg nitrogen per hectare). Therefore, also in this
respect, there would not seem to be an inherent reason
for granting the proposed exemption to horticulture.

the amount of

(24) As regards garden centres selling fertilisers to sell to
private persons, such exemption could be viewed as an
exemption ‘within the nature or general scheme of the
system’ as
introduced manure and
manure sold should in the end be identical — the
garden centre itself does not have any losses into the
environment. In this respect, it would seem that there is
no aid. However, as regards the exemption for garden
centres performing themselves horticultural activities, to
the extent the same system applies as for soil-bound and
non-soil bound horticulture, again there would not seem
to be an inherent reason for granting the proposed
exemption.

(25)

Finally, the Commission had already expressed doubts
about the compatibility of the Dutch manure law and
system of mineral levies with the Nitrates Directive. It
has issued a letter of formal notice to which the Nether-
lands has replied and which is currently further investi-
gated by the Commission. The system of mineral levies,
which allows undertakings to continue exceeding the
norms laid down in the Nitrates Directive if they pay the
compatible with the Nitrates
levies, may not be
Directive. The fact that the norms may be exceeded by
the farmers on payment of a levy may not give sufficient
guarantee that the norms will be met. Also, the so-called
loss norms are higher than what is allowed under the
triggering the payment of
Nitrates Directive without
levies. Article 38 of the manure law already allows for
an exemption for extensive livestock farming, submitting

(26)

(27)

those farms to a maximum quantity of manure that can
be spread each year which is stated in terms of phos-
phate instead of nitrate, as is required by the Nitrates
Directive and which exceeds the maximum permitted by
the Directive. Granting further exemptions may aggra-
vate this situation.

Furthermore,
if the exemption were to be granted to
hobby undertakings, there would seem to be no rule
assuring compliance with the limit provided by the
Nitrates Directive (170 kg N/ha/year). The Nitrates
Directive does not provide for a de minimis exception for
small undertakings. The Dutch authorities have not
demonstrated that such hobby undertakings would per se
meet the norms imposed by the Nitrates Directive.

It should also be noted that the amount of nitrogen
permitted for garden centres and horticulture vastly
the
exceeds the amounts permitted on the basis of
Nitrates Directive (170 kg of nitrate per hectare; deroga-
tion permitted for four years up to 210 kg). In the
absence of data on the loss of nitrate in the water and
input of
taking into account
nitrogen permitted (vastly exceeding the norms laid
down in the Nitrates Directive) the Commission has
doubts about the environmental effects of the proposed
exemptions.

the high amount of

(28)

Consequently, the Commission has initiated the proce-
dure in accordance with Article 88(2) of the Treaty.

III. COMMENTS FROM DUTCH AUTHORITIES

(29)

By letter of 17 May 2000, the Dutch Minister of Agricul-
ture, Nature Conservation and Fisheries has written to
Commissioner Fischler bringing forward arguments to
reconsider the opinion set forward by the Commission
in the opening of the procedure. By letter of 3 July
2000, the Dutch authorities have confirmed that this
letter is to be viewed as the official submission of
comments from the Netherlands in reaction to the
opening of the proceedings in the sense of Article 6(1)
of Council Regulation (EC) No 659/1999 (7).

(30)

The information provided by the Dutch authorities is
summarised hereafter.

(31)

The Dutch authorities argue that
the Commission
wrongly assimilates the proposed measures to a tax
exemption and thus a loss of tax income, which consti-
tutes a State aid. The Commission thus neglects the
prohibitive character of the levies. Minas does not aim to
generate income for the State, but to regulate the use of
fertilisers. It can thus be compared to fines imposed for
violation of criminally sanctioned provisions. In view of
it cannot be
the content and aims of
qualified as a tax measure, an exemption of which
constitutes State aid in the sense of Article 87 of the
Treaty.

the measure,

(6) Commission notice on the de minimis rule for State aid, OJ C 68,

6.3.1996.

(7) OJ L 83, 27.3.1999, p. 1.

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(32)

Furthermore, the Dutch authorities indicate that they do
not dispute the right of the Commission to object to the
norms of the Dutch manure policy on the basis of the
Nitrates Directive. However,
the
Commission should be dealt within the context of the
Nitrates Directive and not via a State aid procedure.

the objections of

(33)

Finally, the Dutch authorities claim, without bringing
forward any further arguments,
the proposed
exemptions are fully justified in view of the nature and
aims of Minas.

that

undertaking and which, without therefore being subsi-
dies in the strict sense, are similar in character and have
the same effect (8). As other undertakings are submitted
to the levies (or ‘fines’),
the exempted undertakings
clearly improve their competitive position. Contrary to
what the Dutch authorities maintain, the nature and
aims of the scheme do thus not permit to avoid a
qualification as State aid. The Court and the Tribunal
have also on various occasions confirmed that ‘Article
87(1) makes no distinction according to the causes or
aims of the aid in question, but defines it in relation to
its effects’ (9). The effect of the measure is to confer an
advantage on certain undertakings who are exempted
from certain taxes.

(37)

(38)

(39)

The arguments raised by the Dutch authorities before
the opening of
the procedure regarding the non-
commercial nature and the absence of farming business
in what they call ‘hobby undertakings’ (10) (see recital 18)
must also be rejected. The absence of commercial
purposes is a pure presumption. As indicated in foot-
note 3, three livestock units is for instance the equiva-
lent of approximately 250 laying hens. The proposed
criteria indicate only that the beneficiary has a very
small amount of land in comparison with the amount of
animals held, and does not meet the general exemption
foreseen in Article 38 of the manure law (no more than
2,5 livestock units per hectare).
the
proposed exemption may benefit specific undertakings
involved in the commercial production of products
listed in Annex I of the Treaty which are or may be
involved in trans-border trade. Therefore, the measure
does not seem justified by the nature or general scheme
of the system.

follows that

It

The Dutch authorities have not brought forward any
additional information with regard to garden centres and
horticultural undertakings.

Therefore, the Commission maintains the objections it
has raised against the proposed partial exemption for
horticulture undertakings and garden centres performing
horticulture activities. As regards the exemption for
horticulture, it is within ‘the nature or general scheme of
the system’ to equate the land or growing medium inside
the farm building with farm land and then apply the
same input norms. However, in the case at hand, the
amounts which can be introduced are much higher
(460 kg phosphate per hectare and 800 kg nitrogen
per hectare (11)). Levies must only be paid once these
higher norms are exceeded. Therefore,
there is no
inherent reason for granting the proposed exemption to
horticulture and the Dutch authorities have not provided
such justification. As regards the partial exemption for
garden centres performing themselves horticultural

(8) Case C-295/97, 17 June 1999, Piaggio v Ifitalia e.a., ECR 1999 page

I-3735.

(9) Case C-75/97, 17 June 1999, Belgium v Commission (‘Maribel bis/ter’,
ECR 1999 page I-3671; Case T-14/96, 28 January 1999, BAI v
Commission, ECR 1999 page II-139.

(10) It should also be noted that the draft law and the explanatory note
just use the term ‘small undertakings’. It would seem that commer-
cial undertakings are in no way excluded from the proposed exem-
ption.

(11) By way of comparison,

the manure law foresees a maximum
permissible loss per hectare of agriculture land of 35 kg phos-
phates in 2000 and 2001, which will be further reduced in future
to 25 kg as of 2005;
the maximum amount
for nitrogen,
permitted for grassland is 275 kg in 2000 and 2001, to be further
reduced in future (200 kg as of 2005).

IV. ASSESSMENT

(34)

In the absence of any further information, the doubt
which lead the Commission to open the procedure
against the proposed exemptions persists.

(35) Article 87(1) of the Treaty provides as follow: ‘Save as
otherwise provided in this Treaty, any aid granted by a
Member State or through State resources in any form
whatsoever which distorts or
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
common market.’

threatens

(36)

In the case at hand, support is granted by a Member
State in favour of certain undertakings as they are
relieved from certain levies. The fact that this scheme is
analogous in working to fines imposed for certain crim-
inal provisions does not alter the fact that the Minas
system is construed as a levy system. Derogations there-
from may constitute State aid. This support may affect
trade between Member States. There is an important
trans-border trade of live animals and horticultural prod-
ucts. Furthermore, if a Member State would have estab-
lished a fine system, it can be argued that exemptions
from such a generally applicable fine system could still
constitute State aid in the sense of Article 87(1) of the
EC Treaty. Indeed, the Court of Justice of the European
Communities has confirmed that the concept of aid is
wider than that of a subsidy because it embraces not
only positive benefits, such as subsidies themselves, but
also measures which,
in various forms, mitigate the
charges which are normally included in the budget of an

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activities, to the extent the same system applies as for
soil-bound and non-soil bound horticulture (i.e. with
higher permissible amounts of phosphates and nitrogen
per hectare, whereby levies must only be paid beyond
these amounts), again there is no inherent reason for
the
granting
measure is not justified by the nature or general scheme
of the system.

the proposed exemption. Therefore,

respect of the Nitrates Directive (14) where the Commis-
sion took the view that at that stage, the Dutch manure
legislation would not seem to comply with the Nitrates
Directive. In any event, as explained above, the Commis-
sion has confirmed the objections against the proposed
tax relief independent of its compliance with the Nitrates
Directive as it must be considered as a pure operating
aid.

conditions

(referred to by way of

(40) On the contrary, the exemptions would seem to meet all
analogy)
the
mentioned in paragraphs 9 to 12 of the notice on direct
business taxation: (a) the measure confers on recipients
an advantage which relieves them of charges that are
normally borne from their budgets, (b) the advantage is
granted by the State (loss of revenue), (c) the measure
may affect competition and trade between Member
States, which is the case if the beneficiary carries on
economic activity involving trade between Member
the measure must be specific or
States,
selective.

lastly,

(d)

(41)

This kind of aid must be considered as operating aid.
Such aids which simply relieve economic operators of
their normal operating costs confer only a short-term
economic advantage for the beneficiary which ceases as
soon as the payment of aid stops and are particularly
liable to distort competition. Such aids therefore cannot
be considered either to promote the economic develop-
ment of areas where the standard of living is abnormally
low (Article 87(3)(a)) nor to facilitate the development of
certain economic activities or of certain economic areas
(Article 87(3)(c)).

(42) Operating aid is not normally allowed (see item 5.5.1 of
the Community Guidelines on State aid in the agricul-
ture sector (12)). Such aids can only be allowed if they are
temporary and degressive, which is not the case here.

(43)

The Commission explicitly rejects the argument as if the
State aid procedure would be (ab)used to enforce the
Nitrates Directive. The examination under Articles 87 to
89 of the EC Treaty encompasses an investigation of
compatibility with other Community legislation.
It is
clear that the outcome of a State aid procedure may
never produce a result which is contrary to the specific
provisions of the Treaty (13). (See Article 174 (ex 130 R)
of the Treaty and Community legislation adopted on
that basis (see Article 87(1) of the EC Treaty)). It can also
be pointed out that a specific infringement procedure
has been introduced against the Netherlands for non-

V. CONCLUSION

(44)

For the reasons given above, the Commission must draw
the conclusion that the proposed tax exemptions for
small undertakings (hobby undertakings), for horticul-
tural undertakings and for garden centres performing
horticultural activities cannot be considered to be in the
common interest, and thereby qualify for exemption
under Article 87(3)(c) of the Treaty.

The Commission therefore takes the view that the aid
measure in question is incompatible with the common
market,

HAS ADOPTED THIS DECISION:

Article 1

The tax exemptions under the Minas system which the Nether-
lands intends to grant to small undertakings (hobby undertak-
ings), horticultural undertakings and garden centres performing
horticultural activities
incompatible with the common
market. The aid scheme must therefore not be implemented.

is

Article 2

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

This Decision is addressed to the Kingdom of the Netherlands.

Article 3

Done at Brussels, 21 December 2000.

For the Commission

Franz FISCHLER

Member of the Commission

(12) OJ C 28, 1.2.2000, p. 2.
(13) Case C-225/91, 15 June 1993, Matra v Commission, ECR 1993

page I-3203.

(14) See Commission Press Release IP/00/204 of 1 March 2000.