2003/230/EC: Commission Decision of 11 December 2002 on the existing aid scheme that Italy was authorised to implement for the Trieste Financial Services and Insurance Centre (notified under document number C(2002) 4829) (Text with EEA relevance)
Date: 2002-12-11
Institutions: European Commission
Subjects: Italy, State aid, aid system, control of State aid, financial market, insurance company, tax relief, tax system

8.4.2003

EN

Official Journal of the European Union

L 91/47

COMMISSION DECISION

of 11 December 2002

on the existing aid scheme that Italy was authorised to implement for the Trieste Financial
Services and Insurance Centre

(notified under document number C(2002) 4829)

(Only the Italian version is authentic)

(Text with EEA relevance)

(2003/230/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

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

21 March 2000 (D/51237) and 27 July 2000 (D/54024)
in order to determine whether the arrangements for
implementing the tax scheme were in conformity with
the conditional Commission decision that authorised
it (4). The Italian authorities did not
reply to the
requests for information.

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

(4)

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

Whereas:

I. PROCEDURE

By letter of 27 July 2000 (D/54024), the Commission
informed the Italian authorities of its doubts concerning
the compatibility of
the scheme with the common
market and invited them to submit comments within
one month of the date of the letter, as provided for in
Article
(EC) No
659/1999 (5). The Italian authorities did not submit any
set. By letter of 22
comments by the deadline
September 2000, they confirmed that the Centre was
not operational and that the Government was deciding
on the appropriate steps to take.

Regulation

Council

17(2)

of

(1)

(2)

(3)

In 1998 the Commission adopted a notice on the
application of the State aid rules to measures relating to
direct business taxation (2) (hereinafter (cid:145)the notice(cid:146)).

(5)

By letter of 11 July 2001, the Commission proposed
appropriate measures to the Italian authorities aimed at:

the notice,

In accordance with paragraph 37 of
the
Commission undertook a review of existing tax aid
systems in the Member States. As part of the review
procedure,
it requested information by letter of 12
February 1999 (D/50716) on the tax scheme applicable
to the Trieste Financial Services and Insurance Centre.
The scheme had already been approved, subject
to
certain conditions, in 1995 (3).

(cid:151) abolishing the scheme applicable to the Trieste

Centre by 1 January 2002,

(cid:151) publishing a statement by 31 October 2001 on the
adoption of the necessary measures to abolish the
scheme.

Italian
By letter of 2 July 1999 (A/35043),
authorities
the aid
informed the Commission that
scheme had never entered into force owing to the
implementing
failure
legislation.
further
for
information by letters of 1 December 1999 (D/64991),

the necessary
asked

all
Commission

to adopt

The

the

(1) OJ C 115, 16.5.2002, p. 9.
(2) Commission notice on the application of the State aid rules to
taxation (OJ C 384,

relating to direct business

measures
10.12.1998, p. 3).

(3) Decision 95/452/EC, 12.4.1995 (OJ L 264, 7.11.1995).

(6)

As neither of the two requests had been complied with
by 1 January 2002 and as no official reply had been
received, the Commission took note of the rejection by
the Italian authorities of
the appropriate measures
proposed. By letter of 27 February 2002, it informed
Italy that it had decided to initiate proceedings under

(4) See footnote 3.
(5) OJ L 83, 27.3.1999, p. 1.

(7)

(8)

(9)

L 91/48

EN

Official Journal of the European Union

8.4.2003

Article 88(2) of the EC Treaty in respect of the Trieste
Financial Services and Insurance Centre. Italy replied to
that letter on 13 May 2002.

The Commission’s decision to initiate proceedings was
the European
published in the Official
Communities (6).
other
interested parties to submit comments on the measures
in question. No comments were received.

Journal
Commission

invited

The

of

the

conduct

code of

framework of
for business
taxation (7),
the then Finance Minister had already
confirmed by letter of 27 February 2001 that Italy did
not
intend to proceed with the Centre. The Italian
authorities also referred to the meeting of 19 March
the Code of Conduct Group, at which the
2002 of
Italian representative stated that
the scheme for the
Centre would be dismantled within a period of time
compatible with the programme of work on the code of
conduct.

II. DETAILED DESCRIPTION OF THE AID

IV. ASSESSMENT OF THE AID

The Trieste Financial Services and Insurance Centre was
set under Article 3 of Law No 19 of 9 January 1991.

The scheme provides for the setting-up of a financial
services and insurance centre in the area of Trieste (the
Centre) and introduces
the financial,
for
(resident or not)
insurance
operating at the Centre with an appropriate operational
structure (branch, subsidiary or agency). The tax relief
comprises:

tax relief
companies

and credit

(cid:151) exemption from the tax on incomes of legal persons
(IRPEG), limited to profits made at the Centre and
arising from transactions in the countries of central
and eastern Europe and of the former Soviet Union
or from trading in financial securities connected
with such transactions,

(cid:151) a fixed-rate reduction in indirect business

taxes

(registration tax, mortgage tax and cadastral duty).

(10)

The tax concessions are valid for five years from the
opening of the Centre and are subject to two limits:
total aid may not exceed ITL 65 billion (about EUR 34
million), and total
loans and investments in eastern
Europe may not exceed EUR 3,5 billion. The companies
operating in the Centre are not subject to withholding
taxes on their transactions (obblighi di sostituto d’imposta).

III. COMMENTS FROM ITALY

(11)

(12)

they had already provided all

By letter of 13 May 2002, the Italian authorities stated
relevant
that
information
the
Commission.

correspondence with

their

the

in

They claimed in particular that the Centre had never
become
necessary
and
implementing rules had not been adopted. Within the

operational

that

the

(6) See footnote 1.

(13)

(14)

(15)

(16)

(17)

(18)

scheme

in question was

The
the
Commission in 1995 (8). It contains the four elements
described in Article 87(1) of the EC Treaty.

approved by

First,
the
it confers an advantage in the form of
exemption from the tax on incomes of legal persons
and from certain indirect taxes as described above in
recital 9.

Second, the measure is financed through State resources,
in that the abovementioned tax incentives are financed
from central
public
through
government or
in any event,
constitute a loss of resources for those authorities.

obtained
local authorities and,

resources

The measure is selective inasmuch as it is limited to
activities involving the supply of financial services in
central and eastern European countries and those of the
former Soviet Union.

Lastly, the measure might affect trade and competition
as it concerns firms operating in the financial and
insurance sectors. The two sectors are currently the
subject of intense intra-Community trade. The fact that
all the activities of the firms operating at the Centre
in itself
take place outside the Community is not
sufficient
of
out
to
intra-Community trade (9).

distortions

possible

rule

In its 1995 decision the Commission specifically
classified the scheme in question as operating aid,
stating that it was compatible with the common market
(now Article
under the exemption in Article 92(3)(c)
87(3)(c)) of the Treaty. As already stated in its decision
the
formally
Commission had, in assessing the compatibility of the
tax scheme in 1995, taken particular account of the
following:

investigation (10),

initiating

the

(cid:151) the value to the Community of encouraging the
development of the financial markets in central and

(7) OJ C 2, 6.1.1998, p. 1.
(8) See footnote 3.
(9) Case 142/87 [1990] ECR-I-959, paragraph 35.
(10) See footnote 1.

8.4.2003

EN

Official Journal of the European Union

L 91/49

eastern European countries by mobilising private
to justify the granting of
capital was
operating aid, despite the distortions of competition
it caused,

such as

(cid:151) the distortions of competition would be limited and
trading conditions to an extent

would not affect
contrary to the common interest.

firms

establishment, notably the reciprocal right of insurance
in the EU and the signatory
and financial
countries to take up and pursue all economic activities
through the setting-up and management of subsidiaries,
branches and agencies (11). Consequently, the measures
provided for by the scheme for the Centre would now
have more serious distortive effects on competition as
there are no longer the barriers to the development of
capital markets in the countries in question.

(19)

In view of its notice on tax relief as well as the new
situation in the countries of central and eastern Europe,
the Commission has reconsidered its assessment of the
scheme’s compatibility as the scheme authorised in
1995 has not yet become operational.

(25)

(20) On the basis of its notice, the Commission takes the
view, first, that the aid scheme in question constitutes
operating aid, which is, in principle, incompatible with
the single market and is therefore prohibited. Operating
linked to the
aid in the form of measures not
introduction of specific projects but which reduce a
firm’s current expenses is, in principle, prohibited as it
distorts competition without otherwise contributing to
this
the achievement of Community objectives. For
reason, as stated in paragraph 32 of the notice, the
Commission currently authorises operating aid only in
exceptional cases and subject to certain conditions, e.g.
in regions qualifying for exemption under Article
87(3)(a) of the EC Treaty and in specific sectors such as
shipbuilding, environmental protection,
transport and
maritime transport. The scheme applicable to the Centre
does not
involve a region qualifying for exemption
under Article 87(3)(a) or a sector or field regarded as
eligible for exceptional treatment.

Berlin

European Council (12)

In addition, since 1995 new financial instruments have
been adopted to facilitate the accession of the applicant
countries. The introduction of special
initiatives and
programmes under Agenda 2000 and the conclusions of
provided
the
additional
instruments for encouraging investors and
underpinning the economic transition of the central and
eastern European countries (13). There is, accordingly,
no need for a general scheme that is applicable to the
financial services of all
the countries of central and
eastern Europe and of the former Soviet Union without
distinguishing
and
economic situations.

between

specific

social

have

their

(26)

The Commission notes that neither Italy nor any other
interested parties have submitted any comments on this
matter.

V. CONCLUSION

(27)

The Commission finds that the State aid for the Trieste
Financial Services and Insurance Centre is incompatible
with the common market. As no aid has yet been
granted under the scheme, it concludes that the scheme
should be abolished within a short period of time,

Second, the Commission considers that the application
of the scheme would now, unlike five years ago, lead to
significant distortions of competition on the market for
financial services.

HAS ADOPTED THIS DECISION:

(21)

(22)

In 1995 the Commission considered that
the aid
measure proposed by Italy would be needed to facilitate
the development of capital markets
in central and
something which was
eastern European countries,
unquestionably
the European
Community.

interests of

in the

(23) However, from 1994/1995, with the entry into force of
most of the Europe Agreements with the countries of
eastern Europe, the development of those markets was
gradually stepped up.

(24)

The Europe Agreements contain specific clauses on the
liberalisation of markets and trade and on the right of

Article 1

The State aid which Italy was authorised to grant to the Trieste
Financial Services and Insurance Centre, set up under Article 3
of Law No 19 of 9 January 1991, is incompatible with the
common market.

(11) See, for instance, Article 45 of the Europe Agreement between the
European Communities and their Member States and the Czech
Republic (OJ L 360, 31.12.1994), which entered into force on
1 February 1995.

(12) European Council meeting on 24 and 25 March 1999.
(13) Council Regulation (EC) No 1266/1999 of 21 June 1999 on
coordinating aid to the applicant countries in the framework of
the pre-accession strategy (OJ L 161, 26.6.1999) and Council
Regulation (EC) No 1267/1999 of 21 June 1999 establishing an
instrument
for structural policies for pre-accession (OJ L 161,
26.6.1999).

L 91/50

EN

Official Journal of the European Union

8.4.2003

Article 2

Article 4

As from the date of notification of this Decision, Italy shall not
adopt any measure designed to bring into operation the Trieste
Financial Services and Insurance Centre and shall repeal Article
this
3 of Law No 19 within six months of
Decision.

the date of

Article 3

Italy shall inform the Commission within six months of the
date of notification of this Decision of the measures it has
taken to comply with it.

This Decision is addressed to the Italian Republic.

Done at Brussels, 11 December 2002.

For the Commission

Mario MONTI

Member of the Commission