2002/937/EC: Commission Decision of 10 July 2002 on the aid scheme implemented by Finland for Åland Islands captive insurance companies (notified under document number C(2002) 2410) (Text with EEA relevance)
Date: 2002-07-10
Institutions: European Commission
Subjects: Finland, State aid, aid system, control of State aid, insurance company, tax system, Åland

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COMMISSION DECISION

of 10 July 2002

on the ais scheme implemented by Finland for ¯land Islands captive insurance companies

(notified under document number C(2002) 2410)

(Only the Finnish and Swedish texts are authentic)

(Text with EEA relevance)

(2002/937/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

were received by letter EUEC206-94 dated 9 August
2001.

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

(3)

The Commission’s decision to initiate the procedure was
published in the Official
the European
Communities (2). The Commission invited interested
parties to submit their comments on the measure.

Journal

of

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

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

Whereas:

I. PROCEDURE

(1)

By letter EUEC020-284 dated 15 July 1998 (registered
the Finnish authorities
under number SG A/38452),
notified to the Commission an aid scheme for so-called
captive insurance companies in the County of ¯land.
Since the measure had already entered into force in
1993, Finland’s notification was late and could not be
deemed valid under Article 88(3) of the EC Treaty. By
letters dated 15 October 1998, 5 February 1999 and 2
June 1999, Finland provided the Commission with
the
additional
to the
Commission sent a further
Finnish authorities asking for confirmation that the State
aid measure in question had never been applied. The
Finnish authorities replied by letter EUEC096-217 of 25
August 2000 (A/37109), confirming that the measure
had indeed not been applied since its entry into force.

July
(D/53912)

information. On

13
letter

2000

(4)

The Commission received no comments from interested
parties.

II. DETAILED DESCRIPTION OF THE AID

1. Provisions of the scheme

The aid measure in question was introduced in Finland
by the County of ¯land for implementation on the
to the ¯land Local
latter’s territory. An amendment
Government Taxation Law entered into force on 9
December 1993 (¯FS 109/93). Under that amendment,
captive insurance companies meeting certain criteria
could benefit from lower taxation that would normally
apply to companies and collective advantages. At the
time the amendment was adopted, the tax advantage
was equal to 10 percentage points. Captive insurance
companies paid a lower overall rate of corporation tax
than the standard rate of 25 % applicable at that time.

advantage

enjoyed by captive

The net
insurance
companies in ¯land Islands changed in 1996 and 1998
as a result of the decision by the relevant authorities to
amend the standard rate of corporation tax.

(5)

(6)

(2)

By letter dated 11 July 2001 (SG 2001 D/289763), the
Commission informed Finland that it had decided to
initiate the procedure laid down in Article 88(2) of the
EC Treaty in respect of the aid. Comments from Finland

(7)

These changes and their subsequent adjustments are the
subject of the present decision.

(1) OJ L 309, 1.11.2001, p. 4.

(2) See footnote 1.

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2. Conditions

(8)

Originally,
in accordance with the amendment of 9
December 1993, captive insurance companies in the
¯land Islands qualified for the tax advantage only if the
following conditions were met:

(13)

(a) all of the company’s shares or participatory rights
had to be owned by one and the same foreign
owner;

constitute non-notified state aid. Its doubts arose mainly
from the fact that the amendments made after Finland’s
accession to the European Union were notifiable under
Article 88(3) of the EC Treaty.

Since the measure appeared to constitute operating aid,
the Commission had doubts as to its compatibility with
the common market. According to the Commission’s
such aid cannot be regarded as
standard practice,
certain economic
facilitating
activities or of certain economic areas.

development of

the

(b) only the company’s owner or subsidiary could be

(14) Accordingly,

the Commission initiated the procedure

insured by the company; and

under Article 88(2) of the EC Treaty.

(c)

the day-to-day running of the company had to be
carried out by a limited company (aktiebolag) which
conducted operations
to notification or
licensing in the County of ¯land.

subject

IV. COMMENTS FROM FINLAND

1. Background

3. Amendments to the original measure which are
relevant to this State aid procedure

(15)

Comments
from Finland were submitted by letter
EUEC206-94 dated 8 August 2001 (registered as
received on 13 August 2001 under number SG (2001)
A/9179).

(9)

(10)

(11)

(12)

The measure was amended for the first time in 1995
(¯FS 82/95) with a view to extending its scope to
include captive insurance companies with domestic
owners, which had previously been excluded from the
scope of the measure.

In 1996 corporation tax in Finland was increased to
28 %. The level of the advantage previously granted to
captive insurance companies was thus increased (second
amendment) from 10 to 11,2 percentage points (¯FS
40/96).

In accordance with the third amendment in 1998 (¯FS
17/98), the level of the advantage was reduced to 10
percentage points. This
thus changed the rate of
corporation tax payable by captive companies in the
¯land Islands to 18 %. There have since been no further
amendments to the measure.

III. GROUNDS FOR INITIATING THE PROCEDURE
UNDER ARTICLE 88(2) OF THE EC TREATY

In considering the information regarding the 1995,
1996 and 1998 amendments and submitted by Finland
in the context of the preliminary assessment provided
for
in Article 6 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 (3),
the Commission took the view that the measure might

(3) OJ C 83, 27.3.1999, p. 1

(16)

the autonomous status of

Finland stressed that
the
¯land Islands is laid down in the constitution and is
recognised under international law, as evidenced by the
fact that the matter is specifically dealt with by Protocol
2 to the Accession Treaty.

for the ¯land Islands,

(17) Under Section 18(5) of Law No 1144/1991 on
the latter are
self-government
concerning their
empowered to legislate
tax,
income
entitlement
and
tax, business
miscellaneous
entertainment
and concerning the bases of
assessment in areas where taxation falls within the remit
of the County and its local authorities.

levy
additional
taxes

in areas
supplementary

income

to

(18)

The tax measure for the ¯land Islands was adopted as
part of local taxation and incorporated in Section 4a of
the ¯land Local Government Taxation Law (¯FS 37/93).

(19) According to the Finnish authorities, the ¯land Islands’
economy is based on a small number of sectors. The
County’s insular nature gives rise to structural problems
affecting the competitiveness of its businesses. Insurance
and financial services are sectors well suited to the
¯land Islands since the disadvantages of being an island
region do not have the same impact in these sectors.

(20)

The Finnish authorities stressed that in 1993, when the
measure entered into force, the ¯land Island’s economy
was depressed and unemployment was high.

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(21) According

include

to the

non-foreign

Finnish authorities,

the 1995
amendment, which broadened the scope of the measure
to
of minor
importance, its consequences were at national level, and
it did not involve any change to the tax measure’s status
as existing aid (assuming that the Commission considers
it to constitute State aid within the meaning of Article
87(1) of the EC Treaty).

owners, was

(22)

Finally, the Finnish authorities described in detail the
adjustments to the original amendment that were made
in 1996, when the tax reduction was increased to 11,2
percentage points, and in 1998, when it was restored to
10 percentage points.

(23) Amendments to general corporation tax introduced after
1998 have indirectly affected the tax payable by captive
insurance companies. On the basis of the tax measure
in question, such a company is liable to corporation tax
of 19,3975 % in the 2001 tax year.

(24)

(25)

(26)

2. Appraisal by the Finnish authorities of the
measure’s status as aid

Finland stresses that the ¯land Islands must be regarded
as a separate jurisdiction for the relevant areas since
legislative powers
exclusively with the ¯land
Parliament.

lie

insurance

Firstly, Finland argues that the lower rate of tax for
captive
companies does not distort or
threaten to distort competition by favouring certain
undertakings or certain sectors and does not affect trade
between Member States. The measure does not affect
competition
since
companies that receive the tax advantage can insure
only their owners or their subsidiaries. According to the
insurance
Finnish authorities,
market
insurance
company will normally re-insure itself on that market.

competition on the
captive

affected since

companies

insurance

between

is not

a

The Finnish authorities claim that any natural or legal
person, irrespective of the sector of activity concerned,
can qualify for the tax reduction through ownership of
a captive insurance company through which they insure
their own risks. The reduced rate of tax applies only if a
regulations
captive
company, under
insurance
applicable to companies,
its
subsidiaries. The measure applicable to such companies
thus merely constitutes a business taxation measure.

its owners or

insures

the

that,

its owners and that they must therefore be considered a
since the financial
single unit. Finland argues
benefit of the tax measure accrues to the owners of a
captive insurance company and since they may operate
in any sector whatsoever,
the tax measure must be
considered a general measure and not a measure
affecting trade between Member States.

(28) According to Finland, the measure applied in the ¯land
Islands cannot be considered selective since it does not
impose any requirements as to the sector in which the
owners operate.

(29)

It also claims that the measure is not selective from a
regional standpoint either since the ¯land Islands are
autonomous and constitute a separate jurisdiction in
relation to the rest of Finland.

3. Appraisal by the Finnish authorities of the
compatibility issue

(30) As far as compatibility is concerned, if the Commission
were to regard the measure as aid, Finland takes the
view that
in Article
the derogations provided for
87(3)(c) of the EC Treaty preclude the measure from
being deemed to be incompatible State aid, at least in
the case of captive insurance companies with their
registered office outside Mariehamn, which since 1
January 1998 have not been eligible for the derogation
for
in Article 87(3)(c).
According to Finland,
the Commission must bear in
mind that the ¯land Islands are a group of islands and
need to diversify their economy.

regional aid provided for

(31)

Finland further claims that account should be taken of
Article 158 of the EC Treaty, which underlines the need
for the Community to reduce disparities between the
levels of development of the various regions and the
backwardness of the least-favoured regions or islands.
The same applies to the Declaration on island regions
appended to the Amsterdam Treaty. Account should
also be taken of point G of the Council Resolution of 1
December 1997 on a code of conduct
for business
taxation (4), which states that particular attention will be
paid to special features and constraints in the case of
islands. The ¯land
the outermost regions and small
Islands
islands with
countless
ill-balanced business activities that are restricted by the
fact that the region forms an archipelago. The lower
rate of tax for captive insurance companies in the ¯land
Islands promotes business development there.

consist

small

of

(32) On the basis of the arguments set out above, Finland
considers
the tax measure applied to captive
insurance companies in the ¯land Islands does not

that

(27)

Eligibility for the tax advantage requires that there be a
close link between the captive insurance company and

(4) OJ C 2, 6.1.1998, p. 2.

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constitute State aid and,
if it were to be regarded as
constituting State aid, would not be incompatible with
the common market.

through a reduction in the firm’s tax burden in various
ways, including a reduction in the amount of tax.

(38)

(39)

(33)

Finally, Finland points out that, since the tax measure
has not yet been applied to any actual case, the question
of recovery will not arise if the Commission decides that
the measure constitutes incompatible State aid.

V. ASSESSMENT OF THE AID

1. Applicability of Article 87(1) of the EC Treaty

(34) Under Article 87(1) of the EC Treaty, 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
in so far as it affects
production of certain goods is,
trade between Member States,
incompatible with the
common market.

threatens

The exemption from the obligation to pay the full
amount of
to captive
corporation tax applicable
insurance companies in the ¯land Islands fulfils this
criterion,
companies
captive
themselves and for the groups of companies to which
they belong.

insurance

both

for

Secondly, as regard the criterion of a measure being
(cid:145)granted by a Member State or through state resources
in any form whatsoever(cid:146), the granting of a tax reduction
involves a loss of tax revenue which, according to point
10 of
to
consumption of State resources in the form of fiscal
(tax) expenditure (6). As the Court of Justice has ruled,
this principle also applies to aid granted by regional and
local bodies in the Member States (7).

the Commission Notice,

equivalent

is

(35)

To be termed as prohibited aid under Article 87(1) of
the EC Treaty, a measure must fulfil the following four
criteria:

(40)

In the present case,
is granted by the
the tax relief
¯land Islands authorities. The state resources criterion
can therefore be regarded as fulfilled.

(a)

the measure must confer on the beneficiaries an
advantage
they
charges
normally incur in the course of their business;

them of

relieves

that

(b) the advantage must be granted from state resources;

(c)

the measure must affect competition and trade
between Member States;

(d) dthe measure must be specific or selective in that it
favours (cid:145)certain undertakings or the production of
certain goods(cid:146).

The Commission has accordingly examined the measure
in the light of the conditions laid down in Article 87(1).

(36)

Firstly, as regards the criterion that (cid:145)the measure must
afford the beneficiaries an advantage(cid:146), a lower rate of
taxation confers an advantage on a company by
enabling it to retain a greater proportion of its profits
either for distribution to its members or shareholders or
for reinvestment and therefore confers an advantage on
eligible companies.

(37) According to point 9 of the Commission notice on the
application of the State aid rules to measures relating to
business taxation (5), the tax advantage may be provided

(41)

(42)

of

Justice

Thirdly, as regards the criterion to the effect that (cid:145)the
the
aid distorts or threatens to distort competition(cid:146),
Court
that
has
intra-Community trade is to be deemed to be affected
from the moment the beneficiary firm carries out an
economic activity which is the subject of trade between
Member States.

repeatedly

ruled

The Finnish authorities claim that the lower rate of tax
applicable to captive insurance companies in the ¯land
Islands does not distort competition since beneficiaries
insure their owners or their subsidiaries and therefore
are not
in competition with each other. Moreover,
Finland argues that, since captive insurance companies
are active on the reinsurance market, no distortion of
trade exists.

(43)

In this context, the Commission takes the view that the
effect of the aid on trade between Member States is
independent of any purpose for which the aid is
granted (8).

(6) With regard to the

concept of

(cid:145)tax expenditure(cid:146),

(cid:145)Tax
expenditures. Recent experiences(cid:146), OECD, Paris, 1996; see also
Stanley S. Surrey,
(cid:145)Tax incentives as a device for implementing
government
government policy: A comparison with direct
expenditures(cid:146), Harvard Law Review, Volume 83, No 4, pages 705
to 738.

see

(7) See Case 248/84 Germany v Commission [1987] ECR 4013.
(8) See Case 173/73 Italy v Commission [1976] ECR, 709 at

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

paragraph 13.

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(44) According to the Finnish authorities, competition on the
captive
insurance market
is not
insurance company normally reinsures itself on that
market. The Commission considers
insurance
market to be an open market, and insurance is therefore
subject to intra-Community trade.

affected since

the

a

through internal reinsurance.

The Commission takes the view that captive insurance
companies are offsetting the risks on the insurance
market
In that respect,
reinsurance of subsidiaries does not constitute a separate
insurance market since subsidiaries can normally be
insured by other companies operating on the open
market. The fact that the insurer is a captive insurance
company is thus irrelevant.

favours

Competition between Member States is affected because
the measure
captive
insurance companies in the County of ¯land and of the
groups to which they belong, which operate within
sectors in which there is trade between Member States.

establishment of

the

as captive insurance companies. It lays down conditions
that can hardly be met by other companies whose
activity is to insure non-affiliated related companies.

(52)

It

The selectivity criterion is further met by the fact the
conditions under which the measure applies implicitly
require a certain economic strength and therefore could
thus
apply only to sufficiently large companies.
excludes other (owner) insurance companies operating
in different sectors from qualifying for the tax relief.
Indeed, the formation of a captive company implies that
the group with which insurance contracts will be
concluded is large enough to generate a turnover that
will allow it to cover the fixed costs and obtain a profit.
For example, one can hardly imagine that a group in
the textile sector comprising three companies with ten
employees each could afford to set up a captive
insurance company. There can hardly be any doubt that
the fixed costs in question would not be offset by the
volume of premiums paid by the group’s
three
companies. For these reasons, the measure is designed
mainly for groups of companies which are large enough
to afford to set up a captive insurance company.

The fact that the insurer is a captive insurance company
does not prevent trade between Member States from
being affected, irrespective of whether one is talking of
the company itself or the group to which it belongs.

(53)

Fourthly, as regards the criterion that the aid should
favour (cid:145)certain undertakings or the production of certain
the Finnish authorities claim that, since the
goods(cid:146),
financial benefit of
the tax measure accrues to the
owners of a captive insurance company and since there
are no requirements as to the sector where the owners
operate, the tax measure must be regarded as a general
measure.

the tax measure in
In considering the benefits of
is
question, a measure may be selective because it
tax
granted
arrangements
or
administrative practice or at the discretion of the tax
administration.

an exception to general
regulation
law,

established

either

by

as

In the present case, the Commission considers that the
measure is specific or selective in that it favours only
captive insurance companies as the prime beneficiaries
of the tax relief in cases where the necessary conditions
are met.

The measure
companies which
normally insure non-affiliated companies from operating
on exactly the same market and on the same conditions

insurance

debars

(54)

(55)

that

Commission

The
the measure
considers
implemented by the County of ¯land constitutes
operating aid within the meaning of Article 87(1) of the
EC Treaty. It therefore has to determine if such an aid
can be deemed compatible with the common market on
the basis of
the derogations provided for in Article
87(2) and (3) of the EC Treaty.

2. Assessment of whether the measure constitutes
illegal aid

The measure was put into effect for the first time in
1993, when Finland was not yet a member of
the
European Union. According to Article 1(b)(i) of Council
Regulation (EC) No 659/99, such a scheme may be
regarded as existing aid. However, as indicated above,
two amendments were made to it in 1995 and 1996.

The first one in 1995 involved widening the scope of
recipients
registered
to cover companies with their
office in the ¯land Islands, which were originally
excluded from the scheme. As it extended the existing
scheme, it should, under Article 88(3) of the EC Treaty,
have been notified to the Commission. However,
it
could not affect the situation of companies not having
their registered office in the County of ¯land, which
amendment
remained unchanged. Thus,

first

this

(45)

(46)

(47)

(48)

(49)

(50)

(51)

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that did not alter

constituted a separate event
the
original existing scheme, which was applicable solely to
companies which did not have their registered office in
the County of ¯land. In 1995, only the application of
the scheme to companies with their registered office in
the County of ¯land was to be regarded as illegal aid.

fact that the amendments to the original 1993 scheme
should have been notified twice, in 1995 and 1996.

3. Compatibility of the aid measure with the EC
Treaty

(56)

that

second amendment was made

The
in 1996 and
involved increasing the reduction on corporation tax for
companies with or without a registered office in the
¯land Islands from 10 to 11.2 percentage points. There
amendment
is no doubt
increased the
this
advantage granted under
the scheme and therefore
constituted an event which should, under Article 88(3)
of the EC Treaty, have been notified to the Commission.
As with the 1995 amendment, the issue of whether it
constitutes a separate act has to addressed. Unlike the
1995 amendment, the 1996 amendment did not apply
to only some of the recipients as previously and did not
constitute an exemption from another type of tax than
the one with which the scheme was concerned,
i.e.
corporation tax. The Commission takes the view that
such an amendment cannot be deemed to be separate
from the original
insurance
scheme
the
companies applicable from 1993. The result of
1996 amendment was to increase the advantage enjoyed
by recipients
impossible to
to an extent which is
determine. Increasing a tax reduction, even by only one
percentage point, may have a indeterminable multiplier
effect. This is because the increased tax reduction leads
to increased competitiveness on the part of the recipient
company.
be
quantified, and it is therefore not possible to view this
amendment separately from the rest of the scheme.

additional

distortion

captive

cannot

This

for

(57)

For these reasons,
the 1996 amendment cannot be
deemed to constitute a separate act since it altered the
effects of the scheme, turning it into a new scheme
which should, under Article 88(3) of the EC Treaty,
have been notified to the Commission.

(58)

the scheme for captive insurance
From that date,
companies became illegal aid. The fact that the scheme
was amended again in 1998 and restored to the form it
had taken in 1993 (with the advantage limited to 10
percentage points) does not mean that
its status as
existing aid can be deemed to have been restored.
Failure to notify the second amendment clearly rendered
the measure illegal, and amending a scheme, even to
make it more like a previous aid scheme, cannot restore
its status as existing aid. The fact that no company has
hitherto benefited from the scheme does not alter the

(59) Measures caught by Article 87(1) of the EC Treaty are
generally incompatible with the common market unless
they qualify for one of the derogations in Article 87(2)
it can be
or (3). Derogations are applicable only if
shown that, without the aid, market forces would not
have been enough to induce the recipients to act in
such a way that one of the aims of the derogation could
be achieved.

(60)

In this case, the derogations in Article 87(2) of the EC
Treaty are not applicable because the aid is not designed
to achieve any of
listed in the relevant
provisions.

the aims

(61) Under Article 87(3)(a), aid is deemed compatible with
the common market where it is designed to promote
the economic development of areas where the standard
of living is abnormally low or where there is serious
underemployment. Since the Commission does not
consider the County of ¯land to constitute such an area,
this provision does not apply.

(62) As

regards

in Article
the derogations provided for
87(3)(b) and (d), the aid in question is not intended to
promote the execution of an important project of
common European interest or to remedy a serious
disturbance in the economy of Finland, nor
it
is
intended to promote culture or heritage conservation.

(63)

it

the aid
is necessary to examine whether
Lastly,
qualifies for the derogation in Article 87(3)(c), which
states that aid may be considered compatible with the
common market where it facilitates the development of
certain economic activities or of certain economic areas
and does not adversely affect trading conditions to an
extent contrary to the common interest.

(64)

In the case of captive insurance companies with their
registered office outside Mariehamn, which since 1
January 1998 have not been eligible to benefit from the
derogation for
in Article
87(3)(c), Finland claims that the derogations contained

regional aid provided for

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in that Article prevent
constituting incompatible State aid.

the

tax measure

from

which those companies would normally have to bear in
course of pursuing their day-to-day business
the
activities.

(65)

Finland also claims that Article 158 of the EC Treaty
and the Declaration on island regions appended to the
Amsterdam Treaty must be taken into account.

(71) Accordingly, the Commission takes the view that the aid

measure in question constitutes operating aid.

(66) As

regards Article 158 of

the
Commission takes the view that the Community should
develop and pursue its actions aimed at strengthening
economic and social cohesion in order to promote
harmonious development at all levels.

the EC Treaty,

(67)

(68)

(69)

(70)

the Commission finds that

In the present case,
the
measure is restricted to captive insurance companies
and, by its very nature, is not covered by the derogation
provided for in Article 87(3)(c) of the EC Treaty, under
which aid may be found compatible with the common
market
the development of certain
economic activities or of certain economic areas, where
such aid does not adversely affect trading conditions to
an extent contrary to the common interest(cid:146).

(cid:145)facilitates

it

if

In any case, an assessment in the light of Article 158 of
the EC Treaty does not rule out an assessment under
Article 87(3)(c) since the latter is aimed at safeguarding
an overall harmonious development in line with Article
158 of the EC Treaty.

further argue that account
The Finnish authorities
should also be taken of point G of
the Council
Resolution of 1 December 1997 on a code of conduct
for business taxation (9), which states that particular
attention will be paid to special features and constraints
in the case of the outermost regions and small islands.
In this respect,
it should be borne in mind that the
criteria applied in the context of the code of conduct for
business taxation in assessing the harmful character of a
measure are not relevant as regards the compatibility of
the measure with the common market.

that,

in order

The Commission considers
to assess
whether the aid measure in question is compatible with
the common market, a distinction must be made
between investment aid and operating aid. The rules
applicable to capital insurance companies in the ¯land
Islands are not related to investment or the creation of
employment and constitute an exemption from costs

(9) See footnote 4.

(72) Operating aid is in principle prohibited. At present, the
Commission authorises it only in exceptional cases and
subject to certain conditions, for example in respect of
certain types of environmental aid (10) and in regions,
including outermost regions, covered by the derogation
in Article 87(3)(a), provided that the aid is duly justified
and its level
is
intended to offset (11).

to the handicaps it

is proportional

(73) Where a derogation is granted on the basis of regional
criteria, the Commission must ensure in particular that
in question are targeted at genuine
the measures
regional handicaps.
there are no
It considers
genuine regional handicaps since their additional costs
e.g.
the transport costs for insurance activities, have
little impact.

that

(74)

The measure constitutes operating aid and does not lead
to any significant improvement in regional development
terms since its positive effects will cease as soon as it is
withdrawn and are therefore limited in time. As the
measure is
specifically aimed at captive insurance
companies, the Commission does not consider that it
offsets any genuine regional handicaps in the ¯land
Islands in the form of additional costs. Moreover,
in
view of the nature of the economic activity in question,
the scheme does not promote economic development in
the region to any significant extent.

(75)

The Commission takes the view that, since the operating
aid in the present case is not covered by any of the
derogations set out in Article 87(3)(a), (b) or (c) of the
EC Treaty,
it must be deemed incompatible with the
common market within the meaning of Article 87(1) of
the EC Treaty.

4. Recovery of aid

(76)

In connection with the
formal
procedure, the Finnish authorities and interested parties
were invited to give their comments on possible
legitimate expectations of such a nature that would pose

initiation of

the

(10) Community guidelines on State aid for environmental protection

(OJ C 72, 10.3.1994, p. 3).

(11) Guidelines on national regional aid (OJ C 74, 10.3.1998, p. 9).

5.12.2002

EN

Official Journal of the European Communities

L 329/29

an obstacle to the recovery of the aid in the event of the
aid being regarded as illegal and incompatible with the
common market. As no aid has been granted to
companies since the scheme entered into force, the issue
of recovery does not arise.

109/93 with subsequent amendments) is incompatible with the
common market.

Article 2

VI. CONCLUSION

Finland shall withdraw the scheme referred to in Article 1.

(77) As regards the information provided to the Commission
by Finland and the measures covered by the decision to
initiate the procedure under Article 88(2) of the Treaty,
the Commission finds that:

(78)

(79)

Finland has unlawfully implemented the County of
¯land’s captive insurance companies tax scheme, as
amended in 1995 and 1996, in breach of Article 88(3)
of the EC Treaty.

The Commission also finds that the measure in favour
of captive insurance companies in the County of ¯land
does not satisfy any of the criteria laid down in Article
(b) or (c) of the EC Treaty. The measure is
87(3)(a),
therefore
common market
pursuant to those provisions,

incompatible with the

Article 3

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

Article 4

This Decision is addressed to the Republic of Finland.

HAS ADOPTED THIS DECISION:

Done at Brussels, 10 July 2002.

Article 1

The State aid which Finland has implemented for so-called
captive insurance companies in the County of ¯land (¯FS

For the Commission

Mario MONTI

Member of the Commission