2002/820/EC: Commission decision of 11 July 2001 on the State aid scheme implemented by Spain for firms in Álava in the form of a tax credit amounting to 45 % of investments (Text with EEA relevance.) (notified under document number C(2001) 1759)
Date: 2001-07-11
Institutions: European Commission
Subjects: Spain, State aid, aid to undertakings, control of State aid, infringement of EU law, tax system

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II

(Acts whose publication is not obligatory)

COMMISSION

COMMISSION DECISION

of 11 July 2001

on the State aid scheme implemented by Spain for firms in Álava in the form of a tax credit
amounting to 45 % of investments

(notified under document number C(2001) 1759)

(Only the Spanish text is authentic)

(Text with EEA relevance)

(2002/820/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

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

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

Having, in accordance with the abovementioned Articles (1),
called on interested parties to submit their comments, and
having regard to those comments,

Whereas:

I. PROCEDURE

(1)

As a result of the information received in response to
the proceedings initiated following complaints about
State aid granted to Daewoo Electronics Manufacturing
España SA (2), Ramondín SA and Ramondín Cápsulas

SA (3), the Commission learned of the existence of a
scheme of non-notified tax aid for investments in Spain,
in the Province of Álava, in the form of a 45 % tax
credit. The scheme was entered in the register of non-
notified aid on 13 November 1998, under the number
NN 129/98.

By letter dated 17 August 1999, SG(99) D/6873, the
Commission informed the Kingdom of Spain of its
decision to initiate in respect of this aid the procedure
laid down in Article 88(2) of the Treaty.

By letter from the Permanent Representation dated
9 November 1999, registered on 12 November 1999,
the Spanish authorities submitted their comments under
the abovementioned procedure.

The Commission decision to initiate the procedure
was published in the Official
Journal of the European
Communities (4). The Commission invited interested par-
ties to submit their comments on the aid within one
month of the date of publication.

(2)

(3)

(4)

( 1) OJ C 71, 11.3.2000, p. 8.
( 2) Commission Decision 1999/718/EC, OJ L 292, 13.11.1999, p. 1.

p. 36.

(4) See footnote 1.

(3) Commission Decision 2000/795/EC, OJ L 318, 16.12.2000,

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(5)

(6)

(7)

supplementary

Comments were received from: the Autonomous Com-
munity of Castile-Leon, on 31 March 2000; the Basque
Business Confederation (Confederación Empresarial Vas-
ca/Euskal Entrepresarien Konfederakuntza) (hereinafter
Confebask), on 13 April 2000, plus, outside the time
limit,
dated
29 December 2000, registered on 3 January 2001; and
from the Rioja Regional Government, outside the time
limit, by fax on 19 April 2000, registered on 25 April
2000. By letter dated 18 May 2000, D/53023, the
Commission sent these comments to Spain, asking for
observations, but did not receive any.

comments

letter

by

By letter from the Permanent Representation dated
22 June 2000, the Spanish authorities informed the
Commission that, since the seventh additional provision
of Provincial Law No 36/1998 of 17 December 1998,
which formed the legal basis for the 45 % tax credit in
1999, had not been extended, the new tax credits had
ceased to be applicable as from 1 January 2000.

II. DETAILED DESCRIPTION OF THE AID

According to the information at
the Commission’s
disposal, which has not been questioned by the Spanish
authorities or by third parties, the tax aid in question
entered into force on 1 January 1995, pursuant to the
sixth additional provision of Provincial Law (5) No 22/
1994 of 20 December 1994 (6), for a period of one year.
These measures were subsequently extended under the
fifth additional provision of Provincial Law (7) No 33/
1995 of 20 December 1995 until the end of 1996, and
under the seventh additional provision of Provincial
Law (8) No 31/1996 of 18 December 1996 until the
end of 1997. In addition, they were amended under
point 2.11 of the derogating provision in Provincial Law
No 24/1996 of 5 July 1996 on corporation tax (9).
Under the eleventh additional provision of Provincial
Law No 33/1997 of 19 December 1997 (10), the provin-
cial authorities introduced new incentives for 1998,
similar in large part to the above aid. Under the seventh
additional provision of Provincial Law No 36/1998
of 17 December 1998 (11), the provincial authorities

( 5) Norma Foral 22/1994 de 20 de diciembre de 1994 (disposición

adicional sexta).

( 6) Boletín del territorio Histórico de Álava, 13.1.1995.
( 7) Norma Foral 33/1995 de 20 de diciembre de 1995 (disposición

adicional sexta).

( 8) Norma Foral 31/1996 de 18 de diciembre de 1996 (disposición

adicional séptima).

( 9) Norma Foral 24/1996 de 5 de julio 1996 (disposición derogatoria

punto 2.11).

( 10) Norma Foral 33/1997 de 19 de diciembre de 1997 (disposición

adicional undécima).

( 11) Norma Foral 36/1998 de 17 de diciembre de 1998 (disposición

adicional séptima).

introduced further new incentives exclusively for 1999,
which were also largely similar to the tax aid for the
previous year.

(8)

As regards the 45 % tax credit in force from 1 January
to 31 December 1995, the sixth additional provision of
Provincial Law No 22/1994 of 20 December 1994 reads
as follows:

‘Investments in new tangible fixed assets carried out
between 1 January 1995 and 31 December 1995
and exceeding ESP 2 500 million shall, by decision
of the Álava Provincial Council, qualify for a tax
credit equivalent to 45 % of the amount of the
investment, as determined by the Álava Provincial
Council, to be offset against the amount of personal
tax liability.

Any tax credit not used up because it exceeds the
amount of tax liability may be carried forward and
used for up to nine years following that in which the
decision of the Álava Provincial Council is taken.

The decision of the Álava Provincial Council shall
lay down the time limits and restrictions applicable
in each individual case.

Benefits granted under this provision shall be incom-
patible with any other tax concessions for which the
same investments may be eligible.

The Álava Provincial Council shall also decide on
the duration of the investment process, which may
include investments made during the preparatory
phase of the project which generates the invest-
ments.’

(9)

As regards the legal basis for the 45 % tax credit in force
from 1 January 1996 to 31 December 1997,
the
amendment to the above text consisted in deleting the
reference to nine years in the second paragraph. Thus,
non-deduction on account of insufficient liability could
be applied indefinitely.

(10) As regards the legal basis of the tax credit in force from
1 January to 31 December 1998, the eleventh additional
provision of Provincial Law No 33/1997 of 19 Decem-
ber 1997 reads as follows:

‘1.

For 1998 only, investments initiated as from 1 Janu-
ary 1998 which exceed ESP 2 500 million will be
eligible for the tax credit of 45 % of the investment.
The tax credit shall apply to net personal liability.

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2. Any tax credit not used up because it exceeds the
amount of tax liability may be carried forward to
subsequent years.

7. Concessions granted under this provision may not
be combined with any other tax concessions avail-
able in respect of the same investments.’

3. The investment process shall include those invest-
ments made during the preparatory phase of the
project which generates the investments and with a
necessary, direct link to that process.

(12)

4. The application of the tax credit

to which this
general provision refers shall be notified by the
taxpayer to the Álava Provincial Council, using the
form approved for that purpose by the Provincial
Commission for Tax, Finance and Budgets.

5. Concessions granted under this provision may not
be combined with any other tax concessions avail-
able in respect of the same investments.’

(11) As regards the 45 % tax credit in force from 1 January
to 31 December 1999, the eleventh additional provision
of Provincial Law No 36/1998 of 17 December 1998
reads as follows:

‘1.

For 1999 only, investments initiated as from 1 Janu-
ary 1999 which exceed ESP 2 500 million will be
eligible for the tax credit of 45 % of the investment.
The tax credit shall apply to net personal liability.

2. Any grants received by the taxpayer shall not be
included in the figure of ESP 2 500 million referred
to in the previous paragraph.

3. Any grants received by the taxpayer shall not be
included in the base to which the tax credit applies.

4. Any tax credit not used up because it exceeds the
amount of tax liability may be carried forward to
subsequent years.

5. The investment process shall include those invest-
ments made during the preparatory phase of the
project which generates the investments and with a
necessary, direct link to that process.

6. The application of the tax credit

to which this
general provision refers shall be notified by the
taxpayer to the Álava Provincial Council, using the
form approved for that purpose by the Provincial
Commission for Tax, Finance and Budgets.

In short, it is clear from the above provisions that the
aid is granted in respect of, firstly, investments in new
tangible fixed assets made during the period from
1 January 1995 to 31 December 1997, and then the
investment process from 1 January 1998 to 31 Decem-
ber 1999, and secondly the investment expenditure
incurred in the preparatory stage (12) of the project
which generates the investments, provided that they
exceed ESP 2 500 million and were initiated between
1 January 1995 and 31 December 1999.

(13)

In addition, between 1 January and 31 December 1999,
any grants received by the beneficiary are not taken into
account either when establishing whether the investment
exceeds the threshold of ESP 2 500 million or when
determining the taxable income to which the tax credit
of 45 % applies.

(14)

Since the scheme does not require the investment
entitling firms to the aid to be located in Álava, a firm
resident there for tax purposes could obtain a tax credit
equivalent to 45 % of the amount of investments made
outside Álava.

(15) The scheme is furthermore applicable to investments
made in any sector and is not subject to any sectoral
restriction such as those laid down in the Community
sectoral rules applicable to the production, processing
and marketing of the agricultural products in Article I to
the Treaty, fisheries, coalmining, steelmaking, transport,
shipbuilding, synthetic fibres and the motor industry.

(16)

Furthermore, any firm may qualify for the 45 % tax
credit
its economic and
financial position, even if it is a firm in difficulty.

in question irrespective of

(17) Although the 45 % tax credit may not be combined with
any other tax concessions that may be granted in respect
of the same investment, combination with other, non-
tax aid, including grants, subsidised loans, guarantees,
equity purchases, etc., relating to the same investments
is not ruled out.

(12) No precise definition has been supplied of what the Spanish
authorities understand by ‘investments made during the prepara-
tory phase’ for the purposes of applying the tax aid in question.

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(18)

that as far as the application of

In its decision initiating the procedure, the Commission
pointed out
the
Community State aid rules is concerned, the tax nature
of the measures in question is irrelevant, since Article 87
of the Treaty applies to aid measures ‘in any form’. The
Commission also emphasised, however,
to be
regarded as aid, the measures must meet all four of the
criteria set out in Article 87 and explained below.

that,

(19)

Firstly, the Commission pointed out that the tax credit
confers on the recipients an advantage amounting to
45 % of the amount of the investments and relieves
them of charges that are normally borne from their
budgets through a partial reduction in their net tax
liability.

(20)

Secondly, the Commission considered provisionally that
the said tax credit involves a loss of tax revenue and is
therefore equivalent
to the consumption of public
resources in the form of fiscal expenditure.

(21) Thirdly, the Commission considered that the tax credit
affects competition and trade between Member States.
Since the recipients conduct business which may be the
subject of intra-Community trade, the aid strengthens
their position vis-à-vis competitors who are also
involved in intra-Community trade and therefore affects
such trade. Furthermore, the recipient firms’ profitability
is improved by the increase in their net profit (profit
after tax). In this way they are more able to compete
with firms which are not eligible for the aid.

(22)

(23)

Lastly, the Commission considered that the 45 % tax
credit is specific or selective in that it favours certain
since only firms which make investments
firms,
exceeding the ESP 2 500 million (ECU 15 025 303)
threshold are eligible. All other firms whose investments
do not exceed that threshold are ineligible.

Furthermore, the Commission considered that the selec-
tive nature of the concession is also due to a discretionary
power of the tax authorities: the Álava Provincial Council
has a discretionary power to determine, in particular,
the investments that are eligible for the 45 % tax credit
and the duration of the investment process and of the
preparatory phase of the investments qualifying for the
aid.

(24)

In short, the Commission considered that the 45 % tax
credit is State aid within the meaning of Article 87(1) of
the Treaty and Article 61(1) of the Agreement on the

European Economic Area, since it meets the cumulative
criteria of constituting an advantage, being granted by
the State from State resources, affecting trade between
Member States and distorting competition in favour of
certain firms.

(25)

Since the tax incentive in question is not subject, among
other requirements, to the condition that it does not
exceed EUR 100 000 over a period of three years, the
Commission considered, at that stage, that it cannot be
regarded as subject to the de minimis rule (13).

(26) The Commission stated that State aid which is not
to the
governed by the de minimis rule is subject
obligation of prior notification laid down in Article 88(3)
of the Treaty and Article 62(3) of the EEA Agreement.
However, the Spanish authorities have not
fulfilled
this obligation. The Commission therefore considered
provisionally that the aid could be regarded as unlawful.

(27) The Commission also found that the 45 % tax credit is
aid conditional on investment (14). However,
in the
absence of a precise definition of the eligible expenditure,
the Commission could not rule out at that stage the
possibility that some of the investment expenditure
qualifying for the 45 % tax credit might fall within the
scope of the Community definition of initial
invest-
ment (15).

(28) As regards the investment expenditure falling within the
scope of the Community definition, the Commission
took the view at that stage that the 45 % tax credit
wholly or partly constitutes investment aid. It must
therefore be examined in the light of the Community
rules on investment aid. On the other hand, any aid to
defray investment expenditure which does not
fall
within the Community definition cannot be regarded as
investment aid and has to be considered as aid for other
purposes, for example operating aid.

(29) The 45 % tax credit, which is not restricted to a particular
sector, may be granted to firms that are subject to
Community sectoral rules. The Commission therefore
questioned at that stage whether the aid was compatible
where the recipient belongs to a sector subject to special
Community rules.

(13) See point 3.2 of the Community guidelines on State aid for small
and medium-sized enterprises (OJ C 213, 19.8.1992, p. 2) and
the Commission notice on the de minimis rule for State aid (OJ
C 68, 6.3.1996, p. 9).

(14) See the Annex to the Commission communication on regional

aid systems (OJ C 31, 3.2.1979, p. 9).

(15) See point 18 of the Annex to the Commission communication
on regional aid systems (OJ C 31, 3.2.1979, p. 9) or point 4.4 of
the guidelines on national regional aid (98/C 74/06).

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(30) The same applies where the 45 % tax credit is granted to
firms in difficulty within the meaning of the Community
guidelines on State aid for rescuing and restructuring
firms in difficulty. However, the grant of the tax aid in
question is not subject to the conditions laid down in
those guidelines. Since it does not meet the said con-
ditions, the aid gave rise at that stage to doubts as to its
is
compatibility with the common market where it
intended for firms in difficulty.

(31) As

regards

the application of

the derogation in
Article 87(3)(c) of the Treaty to the aid for investment
in Álava, the Commission pointed out that, during the
period 1995 to 1999, two successive regional aid maps
were in force. Firstly, the map approved in 1998 by
Commission Decision 88/C 351/04 provided that only
certain areas of Álava (subject to 20 % and 30 % ceilings)
could apply for aid and that the rest of the territory was
not eligible for the derogation in Article 87(3)(c) of the
Treaty. Secondly, the map approved by the Commission
Decision of 26 July 1995 provided that from that date
the whole of Álava could qualify for aid (subject to a
ceiling of 25 % nge).

(32) The Commission also pointed out provisionally that
the ceilings in question apply only to certain eligible
expenditure included in the standard base and complying
with the Community definition of initial
investment,
which excludes inter alia replacement investments. It
stressed that aid granted between 1 January and
31 December 1999 is subject to the above regional aid
guidelines, so that investment aid not exceeding the
ceilings is also subject to certain additional conditions
laid down in those guidelines.

possibility that the aid could rank as operating aid, since
it was intended to reduce the recipient firms’ current
expenditure. It therefore took the view that there were
doubts about the compatibility of the tax incentives with
the rules on regional aid.

(34) As regards the period after 1 September 1998, the
Commission considered that the possibility that invest-
for which aid was granted was covered by
ment
the multisectoral framework on regional aid for large
investment projects (98/C 107/05) could not be ruled
out. However, the tax aid in question was not subject to
the notification requirement where large projects are
concerned or to a possible reduction in aid intensity that
might result from the Commission’s assessment. The
Commission therefore stated provisionally that there
were doubts as to the compatibility of the tax aid where
large projects were concerned.

(35) To sum up, the Commission questioned the compati-
bility of the tax aid with the common market in the light
of the derogation in Article 87(3)(c), which concerns ‘aid
to facilitate the development (...) of certain economic
areas (...)’. Neither did it appear that the other derogations
in Article 87(2) and (3) of the Treaty could apply. The
tax credit could not be regarded as aid having a social
character under Article 87(2)(a), was not intended to
make good the damage caused by natural disasters or
exceptional occurrences under Article 87(2)(b) and is
not subject to the provisions of Article 87(2)(c) concern-
ing ‘aid to facilitate the development of certain economic
activities (...)’. Furthermore, its object was not to promote
the execution of an important project of common
European interest, nor to remedy a serious disturbance
in the economy of a Member State, as provided for in
Article 87(3)(b). Finally, it was not intended to promote
culture and heritage conservation within the meaning of
Article 87(3)(d).

(33) However, the Commission observed, at this preliminary
stage, that the 45 % tax credit was not limited (in the
period from 1 January to 26 July 1995) to the industrial
zone of the Nervión valley and the areas in the Pyrenees
(which were the only areas eligible for aid under the
regional aid map current at the time) and was not subject
to the 30 %, 25 % and 20 % nge ceilings, depending on
the area and the period in question, in the case of large
firms, nor to the 30 % nge ceiling in the case of SMEs
located in the eligible areas. Outside these areas, the aid
was not limited to 15 % gge in the case of small
enterprises and 7,5 % gge in the case of medium-sized
enterprises. The Commission also found that the eligible
expenditure could not be adapted to that in the said
standard base. Accordingly, it could not rule out the

(36) As well as inviting them to submit their comments
under the Article 88(2) procedure, the Commission
also asked the Spanish authorities to supply all the
information necessary for assessing the 45 % tax credit
in Álava. This information related in particular to: any
tax credit for investments available in any year during
the period 1986 to 1994, copies of all decisions granting
the aid during the period 1995 to 1997 and copies of
the declarations made by the firms concerned to the
Provincial Council in 1998 and 1999, on the official
form, setting out, at least, the nature of the investment
expenditure qualifying for the aid, the amount of the tax
credit granted to each recipient, the aid actually paid to
each recipient and any balance still outstanding, whether
the recipient constituted a firm in difficulty within the
meaning of the Community guidelines on State aid for

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rescuing and restructuring firms in difficulty, the details
of any combination of aid (amount, eligible expenditure,
where appropriate the aid schemes applied, etc.), and
precise and detailed definitions of what constituted
‘investments’ and ‘investments made during the prepara-
tory phase’.

III. COMMENTS OF THE SPANISH AUTHORITIES

(37) The Spanish authorities submitted their comments by
letter from the Permanent Representation dated 9 No-
vember 1999. Essentially, they take the view that the tax
credit does not constitute State aid within the meaning
of Article 87 of the Treaty. In support of their view, they
challenge the Commission’s assumption that trade will
be affected because the companies benefiting from the
incentive carry out economic activities which may
involve trade between Member States. In their opinion,
it cannot be established, pace the Commission, that trade
is affected generally, but only in specific cases, since
there is a possibility that in some cases it will not be
affected. In such cases, therefore, one of the prerequisites
for classifying an official measure as State aid is missing.

(38) They also argue that the measure is not specific or
selective in character. In their opinion, the opening of
the measure to all sectors and to all taxpayers that meet
the appropriate criteria removes any specific character.
Furthermore, since there are five separate tax systems in
Spain, one of which in Álava, the tax rules applicable in
that territory have the status of general measures for the
taxpayers to whom they apply. The measure therefore
has no regional specificity.

(39) As to specificity of scope, this does not exist, since the
measure is open to all sectors and to all taxpayers. The
Spanish authorities maintain that the requirement to
invest ESP 2 500 million is not discriminatory, but an
objective condition deriving from the need to ensure the
effectiveness of
the measure and thus achieve the
proposed objective. However, even if the Commission
were to consider that the measure was specific, it would
be justified by the nature and general scheme of the
system, as provided for in Commission notice 98/C 384/
03 (16). The measure in question is justified by the nature
of the tax system, since it forms part of the single tax
system applicable in the territory of Álava and derives

from the exercise of the Provincial Council’s powers to
adopt measures in the tax field; it is also justified by the
general scheme of the tax system, since its objective is
to promote economic activity. Moreover,
it seems
logical that the incentives should be targeted at large
investments, since, firstly, it is these that will actually
benefit Álava in the long term, enabling the tax auth-
orities to collect tax revenues in excess of the fiscal
expenditure borne at the start of the investment projects,
and, secondly, the minimum investment threshold does
not harm small and medium-sized firms, as they already
benefit from many Community financing programmes.

(40)

In addition, the Spanish authorities dispute that the
relevant measures between 1995 and 1997 are dis-
cretionary, arguing that the aid is granted automatically
once the condition of
investing a minimum of
ESP 2 500 million is satisfied. The Provincial Council
can thus check only that all the conditions are satisfied;
it cannot alter or add any conditions. The Spanish
authorities also stress that Spanish tax law does not
allow arbitrary decisions when it comes to determining
the fundamental characteristics of taxpayers’ obligations.
The rules have been amended since 1997 and all the
features which the Commission regards as discretionary
have been repealed.

(41) The Spanish authorities reject the Commission’s view
that the tax rules do not satisfy the conditions of the
sectoral rules. In their opinion, the Commission ought
to determine what the specific conditions are that are
infringed by the said tax rules. As regards the application
of the tax rules to firms in difficulty, they consider that
the condition of investing at least ESP 2 500 million
makes it extremely difficult for such firms to obtain the
tax credit; it should be regarded more as a guarantee that
firms in difficulty will not qualify for the incentive. The
Spanish authorities consider that the application of the
rules on regional aid is inappropriate, since in this
specific case no State aid is involved.

(42)

In view of the above arguments, the Spanish authorities
consider that the Commission should terminate the
Article 88(2) procedure by a decision finding that the
tax measures in question do not meet the criteria for
being regarded as State aid.

( 16) Commission notice on the application of the State aid rules
to measures relating to direct business taxation (OJ C 384,
10.12.1998, p. 3).

(43)

For the rest, the Spanish authorities do not consider it
necessary to supply the information requested by the
in particular, decisions to
Commission concerning,

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grant the tax credit, since no State aid is involved.
Consequently, they are not providing any of the infor-
mation requested in the decision initiating the procedure.

IV. OTHER COMMENTS RECEIVED
BY THE COMMISSION

(44) The Commission emphasises that the comments set out
below are without prejudice to the question of whether
the parties which submitted them can be considered
interested parties within the meaning of Article 88(2) of
the Treaty.

Comments by the Comunidad Autónoma
de Castilla y León

(45) The Autonomous Community of Castile-Leon points
out first of all that the tax measures in question are part
of a set of tax measures adopted by the Álava Provincial
Council that have been contested both in Spain and at
Community level.

(46)

(47)

It states that the tax measures in question constitute
State aid, since they satisfy all four criteria laid down in
Article 87 of the Treaty. In support of this contention it
basically puts forward the same arguments as those
given in the decision initiating the procedure.

It also considers that the tax aid cannot be regarded as
compatible by virtue of the derogations in Article 87 of
the Treaty. Furthermore, the obligation to notify laid
down in Article 88(3) of
the Treaty has not been
complied with.

(48) The Autonomous Community of Castile-Leon takes the
view, therefore, that the tax measures in question should
be regarded as State aid which is unlawful, since the
notification procedure laid down in Article 88(3) has
not been followed, and which is incompatible with the
common market.

Comments from the Basque Business Confederation
(Confederación Empresarial Vasca/Euskal
Entrepresarien Konfederakuntza (Confebask))

(49) Confebask started by drawing attention to the underlying
historical reasons for the tax autonomy enjoyed by
Álava. As regards substance, Confebask’s views are
essentially as follows:

(a)

(b)

(c)

the presumed reduction of the tax debt: the Com-
mission is wrong to think that there is a tax debt
whose reduction involves a loss of tax revenue. If
this argument were sound, any tax deduction would
always involve a loss of revenue compared with the
amount initially due. Confebask therefore asks
the Commission to reconsider its position, since
otherwise it could be argued that taxes were being
unlawfully harmonised by establishing a normal
amount in relation to which any losses of tax
revenue would have to be determined;

the effect on trade: according to the Commission,
where the recipients participate in intra-Com-
munity trade, the tax measures in question distort
that trade. However, differences between tax sys-
tems always affect trade. To determine the extent
to which trade is affected, the Commission should
therefore analyse the entire tax system and not
specific provisions. Confebask emphasises in this
respect that, according to one study, the tax burden
in the Basque Country is greater than in the rest of
Spain. The Commission should explain why these
specific measures and not other tax differences
affect trade. In any event, even if such an effect did
exist, the way to remove it would be through
harmonisation, not State aid;

the selective character of the aid: in Confebask’s
opinion, the selective nature of the tax measures
should be assessed in one of two ways, either as an
enabling rule conferring power on the tax authority
subsequently to grant a specific relief, or as a rule
directly granting the tax relief without requiring
subsequent specification. The Commission, how-
ever, is using one argument which fits the first
category, and another which fits the second. Given
that the two are mutually exclusive, the Com-
mission should explain in which category the tax
measures in question fall, since otherwise it would
be contradictory to try and use both.

— Confebask questions the approach whereby
the tax measures are regarded as enabling
rules, since the reduction is granted automati-
cally and the authorities, accordingly, had no
discretionary power either before 1997 or
thereafter. The authorities are restricted to
checking that the applicant satisfies the tests
of eligibility. Moreover, if the tax measures are
regarded as enabling rules which subsequently
make it possible to grant the aid, it has to be
concluded that the current procedure, in so

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far as it is the rules that are being questioned
and not specific instances of their application,
is meaningless. Similarly, according to the first
paragraph of the Commission’s letter to the
Member States (17), a general provision confer-
ring relief is regarded as aid only if ‘legislative
machinery enabling it to be granted without
further formality has been set up’. By contrast,
because it is abstract, an enabling rule cannot
be regarded as State aid and, hence, cannot be
assessed for its effect on competition and
trade between Member States.

— As for regarding the tax measures as rules
granting aid directly, Confebask points out
that, according to points 19, 20 and 17 of
notice 98/C 384/03, a tax measure may be
specific and, hence, may be State aid, if it is
aimed solely at public undertakings, certain
types of undertaking or undertakings in a
given region. However, the tax measures in
question have none of these characteristics,
not even territorial specificity, since they apply
to the whole territory for which the regional
authorities that introduced them are com-
petent. As to the specific character of the
threshold of ESP 2 500 million, Confebask
considers that the use of objective thresholds
is normal practice in national and Community
tax rules. Confebask also draws attention to
the basis of various judgments of the Court of
Justice and Commission decisions: hitherto, it
has never been held that thresholds imply
specificity. Moreover, the Commission itself
acknowledges, in point 14 of the above notice,
that the effect of promoting certain sectors
does not necessarily mean that the measures
are specific and, in point 207 of the 1998
Competition Report,
that measures which
have a cross-sectoral impact and are intended
to favour the whole of the economy are
general measures and do not involve State aid.
In short, the tax measures in question are

not specific, since they do not promote a
particular sector or particular undertakings.
On the contrary, they are open to all sectors
and to all undertakings established in the
territory for which the provincial authorities
are competent;

(d)

illegality of the 45 % tax credit: while still disputing
that the tax credit constitutes State aid, something
that has to be proven in order to classify the
measure as illegal, Confebask argues that the Com-
mission’s description of the tax credit as unlawful
aid calls into question the principles of legitimate
expectations, the ban on arbitrary decisions by
legal certainty and proportionality,
institutions,
since the Commission regarded the Basque tax
in its Decision 93/337/
arrangements as lawful
EEC (18).
the Commission could
In any event,
change its position as regards future cases but
not as regards past ones. Confebask furthermore
regards the tax measures in question as existing aid.
In 1983 there were already rules providing for
concessions of the same type (deduction of 65 %
of the tax payable where new investments were
made). In 1984 a threshold of ESP 500 million was
introduced as a qualifying condition for a tax credit
amounting to 50 % of investments. According to
the definition given in Article 1(a) of Council
Regulation (EC) No 659/1999 of 22 March 1999
laying down detailed rules for the application of
Article 93 of the EC Treaty (19), ‘existing aid’ means
‘all aid which existed prior to the entry into force
of the Treaty in the respective Member States, that
is to say, aid schemes and individual aid which
were put into effect before, and are still applicable
after, the entry into force of the Treaty’. The aid
under examination here is therefore legal for the
purposes of Article 88(3) of the Treaty;

(e)

incompatibility with the common market: if the
tax measures in question are regarded as enabling
rules, Confebask considers that their compatibility
cannot be assessed while the aid is not granted
through an administrative decision. The procedure
is meaningless and incapable by definition of
yielding any results as to the compatibility of the
aid. On the other hand, if the tax measures in
question are regarded as rules granting aid directly,
Confebask takes the view that the practice of the
Commission and the Court requires that measures
have to have sectoral specificity before the compati-
bility of the aid can be assessed. Furthermore, it
would be necessary to establish the overall tax
burden on firms and the reference tax burden.

( 17) Commission letter to Member States, SG(89) D/5521, of 27 April

1989.

(18) OJ L 134, 3.6.1993, p. 25.
(19) OJ L 83, 27.3.1999, p. 1.

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Lastly, this approach would lead to the absurd
conclusion that any tax burden lower than the
highest tax burden in all the Member States would
constitute State aid. Confebask also rejects the
Commission’s argument that the said tax measures
are incompatible since they do not contain specific
provisions on sectoral or regional aid, or aid for
large investment projects, etc.: tax measures may
not and should not contain this type of provision.
According to the Court of Justice (20), the Com-
mission should specify in its decisions what the
adverse effects on competition are, determining the
real effect of the measures examined. Incompati-
bility cannot be determined, therefore, in abstract
situations specific to a tax system, since in that
case any differences between tax systems would
necessarily become aid. This leads Confebask to
repeat that there is no normal tax debt which has
been reduced by the tax measures in question;

(f)

Confebask therefore asks the Commission to adopt
a final decision terminating the procedure and
finding that the tax measures in question comply
with Community law.

(50) Confebask’s additional comments, communicated by
letter dated 29 December 2000, registered on 3 January
2001, were not taken into account, as they reached
the Commission after the deadline had expired (21).
Furthermore, Confebask did not apply for an extension
of the time limit pursuant to Article 6(1) of Council
Regulation (EC) No 659/1999.

Comments from the Rioja Regional Government

(51) The Rioja Government’s comments, sent by fax dated
19 April 2000, registered on 25 April 2000, were not
taken into account, as they reached the Commission
after the deadline had expired. Furthermore, the Rioja
Regional Government did not apply for an extension of
to Article 6(1) of Council
the time limit pursuant
Regulation (EC) No 659/1999.

V. COMMUNICATION OF THE THIRD PARTIES’
COMMENTS TO SPAIN

the Commission sent, pursuant

(52) By letter to the Spanish Permanent Representation, dated
18 May 2000,
to
Article 6(2) of the aforesaid Regulation (EC) No 659/
1999, the third parties’ comments to Spain, inviting it
to submit its observations within one month of the date
of the letter, but it received only a request for a 20-day
extension of the deadline for replying. Spain has not
submitted any such observations, therefore.

VI. ASSESSMENT OF THE AID

VII. CLASSIFICATION AS STATE AID

(53) The Commission would point out that, for the purpose
of applying the Community rules on State aid, the tax
nature of the measures in question does not matter,
since Article 87 of the Treaty applies to aid measures ‘in
any form’. Nevertheless, the Commission emphasises
that, to be regarded as aid, the measures in question
should together satisfy all four of the criteria set out in
Article 87 and explained below.

(54)

(55)

Firstly, the measure must confer on recipients an advan-
tage which relieves them of charges that are normally
borne from their budgets. The advantage may be pro-
vided through different types of reduction in the firm’s
tax burden and, in particular, through an exemption
from or reduction in tax liability. The 45 % tax credit
meets this criterion, since it reduces the recipient firms’
tax burden by an amount equivalent to 45 % of the
eligible investment. In the absence of the tax credit, the
recipient firm would have to pay its full final tax liability.
The tax credit thus implies an exception to the common
tax system applicable.

Secondly, the Commission considers that the said 45 %
tax credit involves a loss of tax revenue and is therefore
equivalent to the consumption of public resources in the
form of fiscal expenditure. This criterion is also applied
to aid granted by regional and local bodies in the
Member States (22). Furthermore, the intervention of the
State can be effected both through tax provisions of a
statutory, regulatory or administrative kind and through
In this specific
the practices of the tax authorities.
case, State intervention is effected through the Álava
Provincial Council on the basis of a statutory provision.

( 20) See Joined Cases C-278/92, C-279/92 and C-280/92 Spain v

Commission [1994] ECR I-4103.

( 21) The deadline for submitting comments was one month from the
date of publication of the notice in the Official Journal of the
European Communities, i.e. 26 February 2000.

(22) See Case 248/84 Germany v Commission [1987] ECR 4013.

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(56) The argument put forward in certain comments by third
parties, to the effect that it would be wrong to regard
the 45 % tax credit as involving a loss of tax revenue
compared to the normal amount (determined by the
Commission) of the tax due, is a fallacious one. It has to
be pointed out that the normal level of tax derives from
the tax system in question and not from any Commission
decision allegedly pursuing a hidden agenda of tax
harmonisation. Furthermore, according to the second
indent in point 9 of notice 98/C 384/03, to qualify as
State aid, ‘firstly, the measure must confer on recipients
an advantage which relieves them of charges that are
normally borne from their budgets. The advantage may
be provided through a reduction in the firm’s tax burden
in various ways, including: (...) a total or partial reduction
in the amount of tax (such as exemption or a tax credit)’.
This is the case with the relief in the form of the 45 %
tax credit. The comment is therefore without foundation.

(57) Thirdly, the measure must affect competition and trade
between Member States. It should be pointed out in this
respect that, according to a report on the external
dependency of
the Basque economy in the period
1990 to 1995 (23), exports abroad went up (24), not only
in absolute terms but, in particular, in relative terms as
well, to the detriment of exports to the rest of Spain.
The foreign market thus partly replaced the market
which is the rest of Spain. Furthermore, according to
another statistical report on the foreign trade of the
Basque Country (25), at 28,9 % the Basque economy’s
‘propensity to export’ (ratio of exports to GDP) is greater
than that of Germany and the other Member States,
where it is about 20 %. According to this report, the
Basque trade balance was clearly in surplus during the
period 1993 to 1998. In particular, in 1998, for each
ESP 100 of imports there were ESP 144 of exports. In
short, the Basque economy is very open to the outside,
and its production is very much geared to exporting.
Given these characteristics of the Basque economy, it
may be deduced that recipient firms are engaged in
economic activities which are likely to include intra-
Community trade. Consequently, aid strengthens their
position vis-à-vis their competitors in intra-Community
trade, thereby affecting such trade. Furthermore, the
recipient firms’ profitability is improved by the increase
in their net profit (profit after tax). This enables them to

( 23) Patxi Garrido Espinosa and Victoria García Olea, ‘La dependencia
exterior vasca en el periodo 1990–1995’, Euskal Estatistika-
Erakundea/Instituto Vasco de Estadística (Eustat), the statistical
office of the Basque Government.

( 24) Exports abroad accounted for 28,5 % of total exports (including
sales to the rest of Spain) in 1990, and for 40,8 % five years later
in 1995.
‘Estadística de Comercio Exterior para la Comunidad Autónoma
de Euskadi en el año 1998’, prepared by Eustat.

( 25)

compete with firms which are not eligible for the tax
credit, either because they have not invested, or because
their investments have not reached the threshold of
ESP 2 500 million following the introduction of the tax
credit.

(58)

Since, in this case, the tax rules under examination are
general and abstract in character, the Commission would
point out that the analysis of their impact on trade can
only be carried out at a general, abstract level; it is not
possible to specify to what extent they affect a market,
sector or specific product, as is stated in the abovemen-
tioned comments by third parties. This position has
been confirmed on a number of occasions by Court of
Justice case-law (26).

(59) As regards certain comments from third parties which
maintain that the effect on trade should be assessed by
the Commission on the basis of a comparison of all tax
systems, the Commission would point out that the
distortions of competition which are the subject of this
procedure under Articles 87 and 88 of the Treaty are
due to a derogating rule which favours certain firms vis-
à-vis the other firms of the Member State; they are not
possible distortions of competition which are due to
differences between the tax systems of the Member
States, which might, as appropriate, be caught by the
provisions of Articles 93 to 97.

(60) As regards the specific character which State aid must
have, the Commission takes the view that the 45 % tax
credit is specific or selective in that it favours certain
firms, since only firms which, after 1 January 1995,
make investments exceeding the ESP 2 500 million
(EUR 15 025 303) threshold are eligible. All other firms
whose investments do not exceed that threshold are
ineligible. The objective character of the threshold cited
does not prevent it, as the Spanish authorities and some

(26) See Case C-75/97 (Maribel) Belgium v Commission, para-
graphs 48 and 51; Case T-298/97 Alzetta Mauro and others v
Commission, paragraphs 80 to 82; the Opinion of Advocate
General Ruiz-Jarabo in Case C-310/99 Italy v Commission,
paragraphs 54 and 55; and the Opinion of Advocate General
Saggio in Case C-156/98 Germany v Commission, paragraph 31,
which ran thus: ‘It should be pointed out in this respect that,
with regard to a general aid scheme, to be able to determine the
effect of that scheme on trade, it is sufficient if, from an ex ante
assessment, it can reasonably be considered that the said effect
may come about. If the position of a firm (or, as in the present
case, an indefinite number of firms) is reinforced by an aid
scheme,
this privilege may in principle affect competition
between Member States.’

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of the third-party comments claim, from being selective
and excluding firms which do not satisfy the conditions
in question.

(63)

(61) The Commission is of the opinion, in the alternative,
that the 45 % tax credit is specific on the grounds of the
discretionary power of the tax authorities. In this case,
the Commission finds that Álava Provincial Council had
more of a discretionary power to alter the aid than to
grant it. In 1995, 1996 and 1997, the Álava Provincial
Council had to decide whether to grant the 45 % tax
credit, since it was not automatic, determine the size of
the investments to which the tax credit would apply, set
the time limits and limitations that would apply in each
case and, lastly, decide on the duration of the investment
process, which could include investments made during
the preparatory phase of the project generating the
investments. All these powers of the Álava Provincial
Council give it discretion to determine the size or the
characteristics of the 45 % tax credit in the light of the
particular circumstances of each applicant. A further
discretionary feature is the scope for determining the
investments made in the preparatory stage of the project
which generates the investments. It should be noted that,
in the decision initiating the procedure, the Commission
pointed out that there was no precise, objective defi-
nition of this type of investment. No information on
this point has been supplied, either in the comments
submitted by the Spanish authorities or in those of third
parties. However, the fact that there is no precise and
generally accepted definition would seem to give the
regional authorities scope to determine the amount of
this type of investment.

Instead, a new concept,

(62) The Commission notes, furthermore, that from 1 Janu-
ary 1998 some of the conditions were altered or even
abolished.
the ‘investment
process’, was introduced, replacing ‘investments in new
tangible fixed assets’, which had applied from 1 January
1995 to 31 December 1997. It should be noted that the
provincial laws introducing the concept of ‘investment
process’ do not define it. Unlike the concept of ‘invest-
ments in tangible fixed assets’, which is defined in
accounting rules (27) and other provisions (28), there is
the
no precise and generally accepted definition of
‘investment process’. In the absence of a precise defi-
nition, therefore, the regional authorities have some
leeway in determining exactly what is meant by the
‘investment process’ in the case of each recipient.

( 27) For example, the ‘Plan General de Contabilidad’.
( 28) For example, the ‘Ley de Sociedades Anónimas’.

It should also be stressed that, while in Decision 93/
337/EEC the Commission used only the criterion of
territorial or sectoral specificity in order to demonstrate
the specific or selective nature of the aid under the
scheme in question, this does not mean that the aid
could not have displayed other types of specificity in
relation to other criteria. For an official measure to be
classed as selective or specific, in relation to State aid, it
is enough to identify a single feature. There is therefore
no need for each Commission decision to examine
exhaustively every specific feature that may be displayed
by the official measures under consideration in order to
demonstrate that they are selective. Consequently, the
argument put forward in some third-party comments,
to the effect that because the Commission did not
mention the selective nature of the minimum investment
threshold as a condition of eligibility for the aid, it did
not deem it to be selective, cannot be accepted.

(64) As regards the existence of tax measures in the form of
tax credits for investments above a given threshold in
other Member States, which the Commission did not
consider selective in scope because of the threshold;
according to certain comments by third parties, this
leads to a legitimate expectation concerning all similar
tax credits. The Commission would point out that the
schemes mentioned by some of the parties are very
different from the 45 % tax credit. Furthermore, even
supposing that certain schemes were similar and that
the Commission had not reacted,
it would not be
justified in taking this misguided approach in the present
case. It should be pointed out that, according to the
case-law of the Court of Justice, ‘any breach by a Member
State of an obligation under the Treaty in connection
with the prohibition laid down in Article 92 cannot be
justified by the fact that other Member States are also
failing to fulfil this obligation. The effects of more than
one distortion of competition on trade between Member
States do not cancel one another out but accumulate
and the damaging consequences to the common market
are increased’ (29).

(65) Concerning the question raised in some of the third-
party comments about whether the Provincial Law in
question has the character of an enabling rule or a rule
granting aid directly, the Commission would point out
that, in this case, the rules which introduced the 45 %
tax credit have the character of an aid scheme. In support
of this assessment, it is sufficient to point out that under
Article 1(d) of Regulation (EC) No 659/1999 an aid

(29) See Case C-78/76 Steinike & Weinlig v Federal Republic of
Germany, paragraph 24. On the other hand, Case C-313/90
Comité International de la rayonne et des fibres synthétiques and
others v Commission, paragraph 45, states that, ‘neither the
the protection of
treatment nor that of
principle of equal
legitimate expectations may be relied upon in order to justify the
repetition of an incorrect interpretation of a measure’.

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scheme is defined as ‘a system on the basis of which,
without further implementing measures being required,
individual aid awards may be made to undertakings
defined within the act in a general and abstract manner
(...)’. However, this character of an aid scheme does not
predetermine, as certain third-party comments claim,
whether
in the
there is any discretionary power
execution of the scheme or not. Discretionary power in
regard to the granting of the aid will depend on the
specific characteristics of the scheme.

(66) As regards invoking the nature or general scheme of the
tax system as justification for the 45 % tax credit, as
the Spanish authorities seek to do, the Commission
emphasises that what matters is determining whether
the tax measures involved meet the objectives inherent
in the tax system itself, or whether, on the contrary, they
pursue other, possibly legitimate, objectives outside the
tax system. In the case at issue, the 45 % tax credit does
not fulfil the internal objectives of the Spanish tax
system, which, apart
from the principal objective
inherent in any tax system of collecting revenue for
financing public expenditure, is founded on the prin-
ciples of equality and progressiveness. (30) In this regard
it has to be pointed out that the 45 % tax credit
involves (31) a discrimination in favour of large economic
units at the expense of other smaller and less powerful
units, without such discrimination being justified by the
internal logic of the tax system. In short, because it does
not comply with the internal principles inherent in the
tax system, the 45 % tax credit cannot be justified by the
nature or general scheme of that system. Neither does
that the tax credit was introduced by the
the fact
provincial authorities with powers in the tax field
demonstrate, contrary to what the Spanish authorities
claim in their comments, that it is consistent with the
nature of the tax system.

(67) Moreover, the Spanish authorities state in their com-
ments that the 45 % tax credit satisfies the objective of
promoting economic activity. It thus helps to achieve
the industrial policy objectives pursued by the Basque
Government. According to the Basque Government
document entitled Industrial Policy: General Framework
of Activities 1996-1999 (Política Industrial. Marco Gen-
eral de Actividades 1996-1999), ‘tax policies are essential
for boosting economic development and, similarly, for
promoting industrial projects based on the industrial
development of the Basque Country’ (page 131), and in
the chapter ‘Tax policy instruments’ one reads: ‘the tax
autonomy which we have (in the Basque Country)
enables us to search for imaginative made-to-measure

tax solutions, e.g.
for priority projects or even tax
incentives for large firms’ (page 133). The 45 % tax
credit in question, therefore, is part of an industrial
policy whose objectives are not inherent in the tax
system.

(68)

In short, the Commission finds that, as the Spanish
authorities have pointed out, the 45 % tax credit pursues
an economic policy objective which is not inherent in
the tax system. It is therefore not justified by the nature
or general scheme of the system.

(69) As to the argument put forward in certain third-party
comments concerning the existence of a higher overall
tax burden in the Basque Country, the Commission
repeats that this is not relevant in the case at issue, since
the procedure was initiated in respect of a specific
measure and not the whole the tax system of each of the
three Basque provinces.

(70) To sum up, the Commission finds that the 45 % tax
credit in question is State aid under Article 87(1) of the
Treaty and Article 61(1) of the EEA Agreement, since it
involves aid granted by a State, from State resources,
which favours certain undertakings, distorts competition
and affects trade between Member States.

VIII.

ILLEGALITY OF THE 45 % TAX CREDIT

(71)

Since the scheme does not require a commitment from
the Spanish authorities to grant the aid in accordance
with the conditions for de minimis aid (32), the Com-
mission considers that the aid cannot be regarded as
subject to those rules. It should be stressed in this respect
that the Spanish authorities never maintained, in the
procedure, that the aid in question should be classed as
de minimis aid, either in full or in part. Moreover, it could
not comply with the de minimis rules, since in particular
there
of
EUR 100 000 would not be exceeded. The incentive
does not qualify as existing aid either, since it does not
the conditions laid down in Article 1(b) of
meet
Regulation (EC) No 659/1999.

guarantee

ceiling

that

the

no

is

( 30) Article 31 of the Spanish Constitution.
( 31) See the sixth paragraph of Judgment 411/99 of 17 May 1999 of
the High Court of the Basque Country (Tribunal Superior de
Justicia del País Vasco) in Case 907/98 Administración del Estado
v Juntas Generales de Álava.

(32) The result of the assessment of the aid is the same, whether that
assessment is based on the Commission notice on the de minimis
rule for State aid (OJ C 68, 6.3.1996) or on Regulation
(EC) No 69/2001 of 12 January 2001 on the application of
Articles 87 and 88 of the Treaty to de minimis aid (OJ L 10,
13.1.2001, p. 30).

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(72) The claim made by some third parties that the 45 % tax
credit constitutes existing aid must be rejected.
In
support of that argument, some third-party comments
mention the existence of two tax credits prior to the
introduction of the 45 % tax credit. However, scrutiny of
those two schemes reveals that they differed substantially
from the 45 % tax credit under examination. The first
scheme did not specify any threshold and the second
one established a threshold of ESP 500 million, which is
much lower than the ESP 2 500 million threshold in the
case at issue. In Article 1(c) of Regulation (EC) No 659/
1999, new aid is defined as ‘all aid, that is to say, aid
schemes and individual aid, which is not existing aid,
including alterations to existing aid’. The tax credit in
question, which involves substantial changes with
respect to those schemes, is therefore to be classed as
new aid and, in accordance with Article 2(1) of the
Regulation, should be notified, save as otherwise pro-
vided in regulations adopted pursuant to Article 89 of
the Treaty (33). In any case, even the two earlier schemes
did not qualify as existing aid since they were apparently
not in force on 1 January 1986, when Spain acceded to
the European Union. They therefore did not meet
the aforesaid criterion laid down in Article 1(b)(i) of
Regulation (EC) No 659/1999 of having been put into
effect before, and being still applicable after, the date of
accession.

(73) The Commission would point out that State aid which
is not covered by the de minimis rule and is not existing
aid is subject to the obligation of prior notification laid
down in Article 88(3) of the Treaty and Article 62(3) of
the EEA Agreement. However, the Spanish authorities
have not
fulfilled this obligation. The Commission
therefore considers that the aid should be regarded as
unlawful. The Commission regrets this failure by the
Spanish authorities to fulfil their obligation to notify the
aid in advance.

tax concessions for investment.

the Basque tax system was already deemed compatible
by Commission Decision 93/337/EEC concerning a
In that
scheme of
Decision, the Commission in fact found that the tax
measures concerned were to be classed as State aid and,
as such, were subject to the Community rules on State
aid (rules on regional aid or aid for SMEs, rules on
combination of aid and sectoral rules). Therefore, if as
claimed in some third-party comments the 45 % tax
credit was a measure similar to the scheme examined in
the 1993 Decision, it should, in the first place, have
been notified as it is new State aid and, secondly, comply
in particular with the rules on regional aid or aid for
SMEs, the rules on combination of aid and the sectoral
rules. In these circumstances, the recipients cannot rely
on any legitimate expectations or legal certainty as
regards the State aid nature of the 45 % tax credit.

(75)

In short, as regards the principles of legitimate expec-
tations and legal certainty invoked in the third-party
comments, the Commission gave no specific assurances
either to the Spanish authorities or to third parties, who
could not therefore harbour any legitimate expectations
with regard to the legality or compatibility of the aid in
question. It should be pointed out in this connection
that ‘it is settled case-law that the right to protection of
legitimate expectations may be claimed by any individual
who finds himself in a position in which it is shown that
the Community administration gave rise to justified
hopes on his part (...). However, no one may plead
infringement of
the protection of
the principle of
legitimate expectations in the absence of specific assur-
ances given to him by the administration’ (34). This is
why the argument that legitimate expectations or legal
certainty have been violated is without foundation in
this case. The Commission would also point out in this
respect that in its Decision 93/337/EEC it had already
deemed certain tax credits introduced in 1988 by the
Provinces of Álava, Guipúzcoa and Vizcaya to be State
aid.

(74) As regards the argument in some of the third-party
comments that basically there is a violation of legitimate
expectations and legal certainty, the Commission feels
bound to reject this, since firstly the 45 % tax credit is
not existing aid and, secondly, as it was not notified
under Article 88(3) of the Treaty, the Commission was
not able to determine whether it is compatible with the
common market. Neither can it be accepted that there is
a legitimate expectation of the 45 % tax credit being
compatible with the common market on the grounds
that, as claimed in some of the third-party comments,

IX. ASSESSMENT OF COMPATIBILITY
WITH THE COMMON MARKET

(76) As a preliminary, the Commission would repeat that the
45 % tax credit has to be classed as an aid scheme. Given
the general, abstract nature of an aid scheme, the
Commission does not know the circumstances of exist-
ing or possible future recipient firms and is not, there-
fore, able to examine the exact repercussions on compe-
tition for specific firms. In this context it is sufficient to

( 33) At no time during the period of validity of the scheme in question

was any such exemption regulation in force.

(34) Joined Cases T-132/96 and T-143/96 Freistaat Sachsen and
others v Commission [1999] ECR II-3663, paragraph 300.

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ascertain that potential recipients could benefit from aid
that is not consistent with the Community directives,
guidelines and frameworks applicable on this subject.
Moreover, the Commission would emphasise that, in its
decision initiating the procedure, it asked for all relevant
information relating to the aid and the particular circum-
stances of each recipient. However, the Spanish auth-
orities have not provided any such information. This is
why it is contradictory to criticise the Commission, as
certain third-party comments do, for providing only a
general assessment while at the same time refusing to
supply the detailed data requested.

of the Community average. According to the rules on
regional aid (37), (38), the conditions of eligibility for the
derogation in Article 87(3)(a) of the Treaty are met only
if the region, at NUTS level 2, has a per capita GDP of
not more than 75 % of the Community average.

(79) As

for

the

regards

admissibility

derogation in
Article 87(3)(c), during the period 1995 to 1999 two
successive regional aid maps were in force. The first was
adopted in 1988 under Commission Decision (88/
C 351/04). This provided that
investment aid for
regional development could be regarded as compatible
with the common market under the derogation in
Article 87(3)(c), provided that it did not exceed the
ceiling of 30 % nge in the case of large firms in the
industrial zone of the Nervión valley and 20 % nge in
the case of
large firms in the Pyrenees. However,
investment aid in the rest of Álava could not be regarded
as compatible with the common market under the
derogation in Article 87(3)(c) of the Treaty.

(80) The Commission would also point out

that,

in its
Decision of 26 July 1995 (39) amending Spain’s regional
aid map, it proposed, under the procedure laid down in
Article 88(1) of the Treaty, that the Spanish authorities
should revise the map and consider in future that the
whole of Álava was a region in which aid for regional
development could be regarded as compatible with the
common market
in
Article 87(3)(c), provided that it did not exceed the
ceiling of 25 % nge in the case of large firms. By letter
from the Permanent Representation dated 26 September
1995, the Spanish authorities accepted this proposal.
The new map thus came into force from that date.

derogation

under

the

(77) The State aid in the form of a 45 % tax credit has the
effect of encouraging large investments costing more
than ESP 2 500 million. According to Annex I to the
guidelines on national regional aid (98/C 74/06), ‘tax aid
may be considered to be aid connected with an invest-
ment where it is based on an amount invested in the
region. In addition, any tax aid may be connected with
an investment if one sets a ceiling expressed as a
percentage of the amount invested in the region’. In the
case in point, the 45 % tax credit fulfils these conditions,
at least partly, since it is based on investment expenditure
and its amount does not exceed 45 % of the investment.
The Commission accordingly takes the view that the
45 % tax credit should be classed as investment aid to
It must
the extent that it fulfils the above criteria.
therefore be examined in the light of the Community
rules on investment aid.

(78)

If State aid for investment is to qualify for one of the
regional derogations in Article 87(3)(a) or (c) of the
Treaty, the region in which the scheme is applied must
those
have been recognised as eligible for one of
derogations on the regional aid map. As regards the
admissibility of Álava, the Commission would point
out that the territory has never been eligible for the
Article 87(3)(a) derogation, since the per capita GDP (35)
of the NUTS (36) II region of the Basque Country, of
which it forms part, has always been higher than 75 %

( 35) Per capita gross domestic product (GDP) measured in purchasing

power standards (PPS).

(37) The references to the regional rules are, in some of the subsequent
recitals, to the guidelines on national regional aid (98/C 74/06)
or to the earlier rules. In any event, the result of the assessment
is the same in all cases.

(38) See point 1 of the Commission communication to the Member
States on the method for the application of Article 92(3)(a) and
(c) to regional aid (OJ C 212, 12.8.1988, p. 2) and point 3.5 of
the guidelines on national regional aid (98/C 74/06).

( 36) Nomenclature of Territorial Units for Statistics.

(39) OJ C 25, 31.1.1996, p. 3.

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(81) The Commission would also point out that, in the case
of SMEs (40), the intensity of investment aid may, in
accordance with the SME guidelines (41), be 10 percent-
age points higher than the regional ceiling for large
firms, provided that the total does not exceed 30 % nge.

other items of expenditure lying outside the standard
base. The Commission consequently takes the view that
the aid may be applied to initial investment but also to
other items of expenditure that cannot be deemed
compatible with the relevant Community rules, such as
replacement investments.

(82)

to be eligible for
It should also be stressed that,
investment aid,
investments in tangible assets must
correspond, in particular, to the Community definitions
investment and the standard base (42). Con-
of initial
versely, all other investment expenditure that does not
correspond to those definitions, such as replacement
investments or expenditure on items other than land,
buildings or plant/machinery, is not deemed eligible.
Although there is no doubt that the 45 % tax credit is
aid granted subject to the carrying-out of a tangible
investment (43) in new tangible fixed assets, it does not
investments (44) or expenditure
exclude replacement
related to the ‘investment process’ and ‘investments
made during the preparatory phase’. In the absence of a
precise definition of those terms, the possibility cannot
be ruled out that the 45 % tax credit could be applied
not only to expenditure included in the standard base but
also to expenditure linked to replacement investments or

( 40) For the purposes of the Community guidelines on State aid for
small and medium-sized enterprises (OJ C 213, 19.8.1992, p. 2)
or the Commission recommendation of 3 April 1996 concerning
the definition of small and medium-sized enterprises (96/C 213/
04).

( 41) Community guidelines on State aid for small and medium-sized
enterprises (92/C 213/02)
(OJ C 213, 19.8.1992, p. 2) or
Community guidelines on State aid for small and medium-sized
enterprises (96/C 213/04).

( 42) See the Annex to the Council resolution of 20 October 1971 (OJ
C 111, 4.11.1971, p. 1), point 5(c); the Annex to the Commission
communication on regional aid systems (OJ C 31, 3.2.1979,
p. 9), point 18; the Community guidelines on State aid for small
and medium-sized enterprises, point 4.2.1; or the guidelines on
national regional aid (98/C 74/06) (OJ C 74, 10.3.1998, p. 9),
point 4.4 (initial investment means an investment in fixed capital
relating to the setting-up of a new establishment, the extension
of an existing establishment, or the starting-up of an activity
involving a fundamental change in the product or production
process of an existing establishment (through rationalisation,
diversification or modernisation)), point 4.5 (aid for initial
investment is calculated as a percentage of the investment’s value.
This value is established on the basis of a uniform set of items of
expenditure (standard base) corresponding to the following
elements of the investment: land, buildings and plant/machinery)
and footnote 23 (in the transport sector, expenditure on the
purchase of transport equipment (movable assets) cannot be
included in the uniform set of items of expenditure (standard
base). Such expenditure, therefore, is not eligible for aid for initial
investment).

( 43) See the Annex to the Commission communication on regional

aid systems (OJ C 31, 3.2.1979, p. 9).

( 44) Footnote 21 in the guidelines on national regional aid (98/C 74/
06) states that ‘replacement investment is thus excluded from the
concept. Aid for this type of investment falls within the category
of operating aid, to which the rules described at points 4.15 to
4.17 apply’.

(83) The Commission notes that, since the entry into force of
the guidelines on national regional aid (98/C 74/06), aid
that may qualify for the derogation in Article 87(3)(c) of
the Treaty in Álava must not only comply with the
abovementioned Community definitions of initial invest-
ment and the standard base and observe the applicable
ceilings; it must also satisfy other requirements. In the
to certain
case in point,
conditions: the recipient’s contribution to the investment
must be at least 25 % (point 4.2); the application for aid
must be submitted before the investment projects begin
to be implemented (point 4.2); the investment must
be maintained for a minimum period of five years
(point 4.10); and the respective aid intensity ceilings
must be complied with where different types of aid are
combined (points 4.18 to 4.21).

the aid must be subject

(84)

In this particular case, the Commission would observe
that the 45 % tax credit was not limited (in the period
culminating in the entry into force of its Decision of
26 September 1995) to the industrial zone of the
Nervión valley and the areas in the Pyrenees (which were
the only areas eligible for aid under the regional aid map
current at the time) and were not subject to the 30 %,
25 % and 20 % nge ceilings, depending on the area and
the period in question, in the case of large firms, nor to
the 30 % nge ceiling in the case of SMEs. Furthermore,
the costs that may be accepted for aid may not fully
correspond to those included in the standard base since
replacement investments are not excluded and other
items of expenditure may be accepted. In these circum-
stances, the Commission finds that a tax credit amount-
ing to 45 % of investments which does not comply with
the Community rules on regional aid cannot be deemed
compatible with the common market under the regional
derogation in Article 87(3)(c) of the Treaty.

(85) Aid for investment expenditure (45) that does not corre-
spond to the Community definition cannot be regarded
as investment aid. In accordance with Annex I to the
regional aid guidelines (98/C 74/06), any tax aid may be
classed as investment aid where its amount is subject to
a ceiling expressed as a percentage of
investment
expenditure in accordance with the Community rules.
However, in the case in point, the amount of the aid

(45) It should be pointed out that neither the Spanish authorities nor
others have questioned the existence of this type of investment
expenditure.

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represents a percentage of investment expenditure that
does not comply with the Community rules. That is
why, under those rules, the aid cannot be regarded as
investment aid. On the contrary, the aid may finance
expenditure of a periodic and necessary nature such as
that linked to replacement investments. Such current or
periodic expenditure is the type of expenditure that has
to be incurred by a firm as part of its day-to-day
operations or its normal activities. Aid for this type of
investment therefore has to be classed as operating aid
and as such is subject to specific rules.

(86)

In this respect, the Commission would point out that, in
accordance with the 1988 communication (46) and the
regional aid guidelines (98/C 74/06), regional aid which
is classed as operating aid is normally prohibited.
Exceptionally, however, such aid may be granted in
regions eligible under the derogation in Article 87(3)(a)
of the Treaty, provided that it meets certain conditions
laid down in point 6 of
the communication and
points 4.15 to 4.17 of the guidelines, in the outermost
regions or in regions of low population density if it is
intended to offset additional transport costs. However,
the NUTS III territory of Álava is not eligible for the
derogation in Article 87(3)(a) of the Treaty, and the
grant of the said operating aid does not meet the
conditions described. The NUTS III territory of Álava is
not an outermost region (47) nor a region of
low
population density (48). This is the reason why the
operating aid elements in the 45 % tax credit are
prohibited, in particular because they are not granted in
a
the derogation in
Article 87(3)(a) of the Treaty, in an outermost region or
a region of low population density. The aid is therefore
incompatible in this case.

region that

eligible

for

is

is

an SME,

(88) With regard to investments made by SMEs outside the
assisted areas of Álava in the period from 1 January to
26 July 1995, and outside Álava in the period from
1 January 1995 to 31 December 1999, the Commission
would point out that the related aid cannot be considered
regional aid and therefore does not qualify for the
regional derogation in Article 87(3)(c) of the Treaty. The
same applies where such investments are made by large
firms. On the other hand,
in accordance with the
Community guidelines on State aid for small and
medium-sized enterprises (96/C 213/04), where the
the other derogation in
recipient
Article 87(3)(c), for aid to facilitate the development of
certain economic activities, may apply.
In addition
to requiring compliance with the definition of initial
investment and the rules on eligible expenditure forming
part of the standard base, the above guidelines state that
the exception will apply to aid for tangible investments
up to a ceiling of 15 % gross grant equivalent (gge) in
the case of small enterprises and 7,5 % gge in the case
of medium-sized enterprises. The Commission notes,
however, that the 45 % tax credit is not limited to 15 %
gge in the case of small enterprises and 7,5 % gge in the
case of medium-sized enterprises. Neither are the eligible
investments fully in line with the definition of initial
investment given in point 4.2.1 of the guidelines, nor
are the costs that may be accepted compatible with
those forming part of the standard base also laid down
in point 4.2.1, since the scheme does not rule out
replacement investments or expenditure items other
than those covered by the standard base. The Com-
mission accordingly finds that the tax aid under examin-
ation cannot be deemed compatible with the common
market under the derogation in Article 87(3)(c) of the
Treaty for aid to facilitate the development of certain
economic activities.

(87) The Commission therefore considers that the tax incen-
tive scheme in question cannot be regarded as compat-
ible with the common market under the regional
derogations in Article 87(3)(a) and (c) of the Treaty,
since it does not comply with the rules on regional aid.

(89)

Furthermore, the scope of the regional aid guidelines
(98/C 74/06) excludes the production, processing and
marketing of the agricultural products listed in Annex I
to the Treaty, fisheries and the coal industry. Transport,
steelmaking, shipbuilding, synthetic fibres and the motor
industry are subject to special rules over and above those
set out in the abovementioned guidelines, while specific
rules apply to investments covered by the multisectoral
framework on regional aid for large investment projects
(98/C 107/05). Those rules must therefore be taken into
account in assessing the compatibility of the aid in
question where the recipient company belongs to one
of those sectors or where the investment falls within the
scope of the multisectoral framework.

( 46) Commission communication to the Member States on the
method for the application of Article 92(3)(a) and (c) to regional
aid (OJ C 212, 12.8.1988, p. 2).
It is not in the list of outermost regions in Article 299 of the
Treaty.

( 47)

( 48) According to point 3.10.4 of the guidelines on national regional

aid (98/C 74/06).

(90) The derogation in Article 87(3)(c) of the Treaty has to
be examined to see whether it might not apply, in
the above cases, for other purposes as well as the
development of certain economic activities. It should be

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noted in this respect that the aim of the 45 % tax credit
is not
to develop an economic activity within the
meaning of Article 87(3)(c) of the Treaty, such as the
development of measures to assist small and medium-
sized enterprises, research and development, environ-
mental protection, job creation or training in accordance
with the appropriate Community rules. Consequently,
the tax incentive in question cannot qualify for the
derogation in Article 87(3)(c) of the Treaty in respect of
the said purposes.

accordance with Article 88(3) of the Treaty, to enable
the Commission to determine the maximum aid inten-
is compatible with the common market.
sity that
However, the tax aid in question is not subject either to
prior notification in the case of the abovementioned
large projects or to possible reduction in intensity
following the Commission’s assessment. The Com-
mission therefore finds that the tax aid under examin-
ation is not compatible with the common market under
the derogation in Article 87(3)(c) of the Treaty, since the
derogation in Article 87(3)(a) does not apply in Álava.

(91)

Similarly, the 45 % tax credit, which is not subject to
limitation, may be granted without any
any sectoral
restriction to undertakings in sensitive sectors subject to
specific Community rules, such as those applicable
to the production, processing and marketing of the
agricultural products in Annex I to the Treaty, fisheries,
coalmining, steelmaking, shipbuilding, synthetic fibres
and the motor industry (49). In the circumstances, the
Commission considers that the tax incentive in the form
of a 45 % tax credit cannot comply with the said sectoral
rules. In this particular case, the 45 % tax credit does not
meet the condition that it should not promote new
production capacity so as not to exacerbate the overca-
pacity problems from which these sectors traditionally
suffer. Therefore, where the recipient belongs to one of
the abovementioned sectors, the Commission considers
that, since it is not subject to the sectoral rules men-
tioned, the aid is incompatible with the common market
and the derogation in Article 87(3)(c) of the Treaty on
the promotion of certain activities does not apply.

(92) As far as the period after 1 September 1998 is concerned,
the Commission further takes the view that the aided
investment may possibly fall within the scope of the
multisectoral framework on regional aid for large invest-
ment projects (98/C 107/05) (50). All investment projects
costing at least EUR 50 million (EUR 15 million in the
case of the textile and clothing sector), with an aid
intensity of at least 50 % of the regional aid ceiling
and involving aid per job of at least EUR 40 000
(EUR 30 000 in the case of the textile and clothing
sector), as well as investment projects for which the total
aid is at
to the
conditions laid down in that framework. Each such
in
investment project must be notified in advance,

least EUR 50 million, are subject

(93)

Since the tax aid in question is granted irrespective of
the economic and financial position of the recipient
firms, the Commission considers that there is no way of
ruling out the possibility that the recipient may be a firm
in difficulty within the meaning of the Community
guidelines on State aid for rescuing and restructuring
firms in difficulty (1999/C 288/02) (51), despite the
Spanish authorities’ claim that the tax credit, as it has
been designed,
is unlikely to be applied to firms in
difficulty. The Commission would point out that the
grant of the tax aid in question is not subject to the
conditions (52) laid down in those guidelines. As stated
in point 20 of the abovementioned rescue and restructur-
ing aid guidelines (1999/C 288/02), ‘the Commission
considers that aid for rescue and restructuring may
contribute to the development of economic activities
without adversely affecting trade to an extent contrary
to the Community interest if the conditions set out in
these guidelines are met’. If those conditions are not
met, the aid is incompatible with the common market
where it is intended for firms in difficulty. The Com-
mission therefore finds that the tax aid in question,
where granted to firms in difficulty, is not compatible
with the common market under the derogation in
Article 87(3)(c) of the Treaty on the promotion of
certain activities.

Application of the other exceptions

(94) The aid in question, which cannot qualify for the
derogations in Article 87(3)(a) and (c) of the Treaty,
cannot qualify
in
Article 87(2) and (3). It cannot be regarded as aid of a
social nature under Article 87(2)(a); it is not intended to
make good the damage caused by natural disasters or

derogations

for other

either

( 49) For the sectoral rules currently in force see, in addition to the
Official Journal of the European Communities, the website of the
Directorate-General for Competition http://europa.eu.int/comm/
competition/state–aid/legislation/.

( 50) Multisectoral framework on regional aid for large investment

projects (OJ C 107, 7.4.1998, p. 7).

(51) OJ C 288, 9.10.1999, p. 2. These guidelines have since 1999
replaced a previous version (94/C 368/05) of the same guidelines
(OJ C 368, 23.12.1994, p. 12).

(52) Among other things, that the aid is conditional on implemen-
tation of a restructuring plan which enables the long-term
viability of the firm to be restored.

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exceptional occurrences within the meaning of
Article 87(2)(b). Furthermore, its object is not to pro-
mote the execution of an important project of common
European interest, nor to remedy a serious disturbance
in the economy of a Member State, as provided for in
Article 87(3)(b). Finally, it is not intended to promote
culture and heritage conservation within the meaning of
Article 87(3)(d).

Summary

for

it qualify

(95) The Commission finds that the State aid in question in
the form of a 45 % tax credit does not qualify for the
derogation in Article 87(3)(a) of the Treaty, since Álava
is not eligible for assistance under that provision, or for
the derogation in Article 87(3)(c) for ‘aid to facilitate the
development (...) of certain economic areas’, since it does
not comply with the Community rules on regional aid.
Neither does
the derogation in
Article 87(3)(c) for ‘aid to facilitate the development of
certain economic activities’, since, on the one hand, it
does not comply with the Community rules applicable
to SMEs in this context and, on the other hand, as far as
large firms are concerned, it does not relate to certain
activities. It cannot be regarded as aid of a social nature
under Article 87(2)(a); it is not intended to make good
the damage caused by natural disasters or exceptional
occurrences within the meaning of Article 87(2)(b).
Furthermore, its object is not to promote the execution
of an important project of common European interest,
nor to remedy a serious disturbance in the economy of
a Member State, as provided for in Article 87(3)(b). Nor
does it qualify for the derogation in Article 87(3)(d) as
to promote culture or heritage
its purpose is not
conservation. The aid is therefore incompatible with the
common market.

aid left to pay. However, this aid is unlawful and
incompatible. The Spanish authorities should therefore
cancel the payment of any balance from the 45 % tax
credit which could still be due to certain recipients.

(97) As regards incompatible aid already paid, it should be
pointed out that, in accordance with the above argu-
ments, the recipients may not rely on general principles
of Community law such as legitimate expectations or
legal certainty. Consequently, there is nothing to prevent
the
application of Article 14(1) of Regulation
(EC) No 659/1999, according to which ‘where negative
decisions are taken in cases of unlawful aid, the Com-
mission shall decide that the Member State concerned
shall take all necessary measures to recover the aid from
the beneficiary’.
In this case, therefore, the Spanish
authorities should take all necessary measures to recover
the aid already paid in order to restore the economic
situation which the recipient firms would be in without
the unlawful grant of the aid. The aid should be recovered
in accordance with the procedures and provisions of
Spanish law and should include all interest due, calcu-
lated from the date the aid was granted until the date of
actual repayment on the basis of the reference rate used
at that date to calculate the net grant equivalent of
regional aid in Spain (54).

(98) This decision relates to the scheme and should be
implemented immediately,
including the recovery of
any individual aid granted under that scheme. The
Commission would also point out that, as usual, this
Decision is without prejudice to whether individual aid
may be regarded, in full or in part, as compatible with
the common market on its own merits, either in a
subsequent Commission decision or under exempting
regulations.

(99)

Since the compatibility of the State aid in the form of
tax credits granted to Daewoo Electronics Manufacturing
España SA, Ramondín SA and Ramondín Cápsulas
SA has already been assessed in various Commission
decisions, this Decision does not refer to that aid.

(96)

Since any tax credit that is not used because it exceeds
the final amount of tax payable may be carried over and
used for several years following adoption of the decision
granting the tax credit (53), there could still be some tax

X. CONCLUSIONS

(100) In view of the above, the Commission concludes that:

( 53)

In the case of tax credits granted under Provincial Law No 22/
1994 of 20 December 1994, the period in which they may be
used is limited to 9 years. Tax credits granted under subsequent
provincial laws are no longer subject to any such limitation.

(54) Commission letter to Member States, SG(91)D/4577, of 4 March
1991. See also Case 142/87 Belgium v Commission [1990]
ECR I-950.

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— Spain has unlawfully put into effect, in Álava, the
45 % tax credit for investments, thereby infringing
Article 88(3) of the Treaty,

— the 45 % tax credit for investments is incompatible

with the common market,

— the Spanish authorities must cancel the payment of
any balance of the tax credit which could still be
due to certain recipients. As regards the incompat-
ible aid already paid, the Spanish authorities must
take all necessary measures to recover it, so as to
restore the economic situation which the recipient
firms would be in without the unlawful grant of
the aid,

— this Decision does not cover the tax credits granted
to Daewoo Electronics Manufacturing España SA,
Ramondín SA and Ramondín Cápsulas SA,

Article 3

Spain shall take all necessary measures to recover from
1.
the recipients the aid referred to in Article 1 which has been
unlawfully made available to them.

Spain shall cancel all payment of outstanding aid.

2.
Recovery shall be effected without delay in accordance
with the procedures of national law, provided these allow the
immediate and effective execution of this Decision. The sums
to be recovered shall bear interest from the date on which they
were available to the recipients until their actual recovery.
Interest shall be calculated on the basis of the reference rate
used for calculating the grant equivalent of regional aid.

HAS ADOPTED THIS DECISION:

Article 4

Article 1

The State aid in the form of a 45 % tax credit for investments,
which, in violation of Article 88(3) of the Treaty, has been
unlawfully put into effect by Spain in Álava pursuant to
Provincial Law No 22/1994 of 20 December 1994,
the
fifth additional provision of Provincial Law No 33/1995 of
20 December 1995, the sixth additional provision of Provincial
Law No 31/1996 of 18 December 1996, as amended by
point 2.11 of the derogating provision in Provincial Law
No 24/1996 of 5 July 1996 on corporation tax, the eleventh
additional provision of Provincial Law No 33/1997 of
19 December 1997 and the seventh additional provision
is
of Provincial Law No 36/1998 of 17 December 1998,
incompatible with the common market.

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

Article 5

This Decision does not cover the tax credits granted under the
scheme in question to Daewoo Electronics Manufacturing
España SA, Ramondín SA and Ramondín Cápsulas SA.

Article 6

This Decision is addressed to the Kingdom of Spain.

Done at Brussels, 11 July 2001.

Article 2

Spain shall abolish the aid scheme referred to in Article 1,
since it is continuing to produce effects.

For the Commission

Mario MONTI

Member of the Commission