2005/565/: Commission Decision of 9 March 2004 on an aid scheme implemented by Austria for a refund from the energy taxes on natural gas and electricity in 2002 and 2003 (notified under document number C(2004) 325) Text with EEA relevance
Date: 2004-03-09
Institutions: European Commission
Subjects: Austria, State aid, control of State aid, electrical energy, environmental tax, natural gas, redemption

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Official Journal of the European Union

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COMMISSION DECISION

of 9 March 2004

on an aid scheme implemented by Austria for a refund from the energy taxes on natural gas and
electricity in 2002 and 2003

(notified under document number C(2004) 325)

(Only the German version is authentic)

(Text with EEA relevance)

(2005/565/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

(5)

By letter dated 4 July 2003, registered as received by the
same day (A/34759), Austria
Commission on the
commented on the initiation of the procedure.

Having regard to the Treaty
Community, and in particular Article 88(2) thereof,

establishing the European

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

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

Whereas:

(1)

(2)

(3)

(4)

I. PROCEDURE

On 8 October 2002, Law No 158/2002 was published
in the Austrian Official Journal. Its Article 6 modifies the
Energy Tax Rebate Act 1996.

By letter dated 30 April 2003, the Commission informed
Austria that it had decided to initiate the procedure laid
down in Article 88(2) of the EC Treaty in respect of the
aid involved in the abovementioned legislation.

On 20 August 2003, Law No 71/2003 was published in
Its Article 54 point 6
the Austrian Official
extends the duration of
the Energy Tax Rebate Act
1996 in the
form of Law 158/2002 until 31
December 2003.

Journal.

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

(1) OJ C 164, 15.7.2003, p. 2.
(2) See footnote 1.

(6)

(7)

(8)

(9)

The Commission received comments from the Austrian
Industry Association (Vereinigung der österreichischen
Industrie) on 12 August 2003,
from Stahl- und
Walzwerk Marienhütte GmbH on 18 August 2003 and
from Jungbunzlauer GmbH on 14 August 2003.
Comments
from the Austrian Chamber of Labour
(Bundesarbeitskammer) were withdrawn by letter dated
21 November 2003.

All comments were received in time (3). The Commission
forwarded them to Austria, which made no comments
on these submissions.

By letter dated 5 December 2003, registered as received
by the Commission on 8 December 2003 (A/38575),
Austria submitted further information on the implemen-
tation of the energy tax rebate for the years 2002 and
2003.

II. DETAILED DESCRIPTION OF THE AID

Pursuant to the Electricity Tax Act (Elektrizitätsabgabe-
gesetz) and the Natural Gas Tax Act
(Erdgasabgabe-
gesetz), both introduced on 1 June 1996, the tax on
electricity and natural gas is payable on the supply of
electric power and natural gas, except where supplied to
electricity or natural gas undertakings or to other dealers
for onward supply, on the consumption of electric power
and natural gas by electricity or natural gas undertakings,
and on the consumption of electric power or natural gas
self-generated in or imported into the tax district.

(3) In accordance with Regulation (EEC, Euratom) No 1182/71 of the
Council of 3 June 1971 determining the rules applicable to periods,
dates and time limits (OJ L 124, 8.6.1971, p. 1), and in particular
Article 3 thereof, the period for submission of comments ended on
18 August 2003.

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(10)

The person liable to tax will usually be the supplier of
the electric power or natural gas. The supplier passes on
the tax to the customer, who has to reimburse the tax to
the person liable. At least in the customer’s annual bill
the supplier must clearly show the customer the amount
that that customer has to pay in energy taxes.

(11)

The rate of tax on electric power for the period under
examination is EUR 0,015/kWh. The rate of
tax on
natural gas is EUR 0,0436 per m3.

(16)

(12)

taxes

together

Following the preliminary ruling of the Court of Justice
of the European Communities in Case C-143/99 (here-
inafter called the Adria-Wien ruling) (4), Austria modified
the Energy Tax Rebate Act 1996 (Energieabgabenvergü-
tungsgesetz) by Law No 158/2002, Article 6 of which
entitles all businesses from 1 January 2002 to a refund of
the energy taxes on natural gas and electric power if
their net
those
production value. Net production value is defined as
the difference between turnover within the meaning of
paragraph 1 subparagraph 1 numbers 1 and 2 of the
Turnover Tax Act 1994 and turnover according to the
same definition supplied to the company. The Turnover
Tax Act 1994 defines turnover as supplies and other
services undertaken against payment by an entrepreneur
in Austria. It includes own use. Imports are excluded. The
first EUR 363 is not refunded.

exceed 0,35 % of

(13)

The rebate is applicable for the period 1 January 2002
until 31 December 2003.

(14)

The rebates paid by the State amount to about EUR 330
million per year.

(15)

The Commission initiated the procedure because of its
doubts with regard to the nature of the measure as State
aid and to the compatibility of
the alleged aid. The
Commission considered that
the tax refund system
favoured de facto energy-intensive companies and was

(4) Case C-143/99 Adria-Wien Pipeline GmbH and Wietersdorfer &
Peggauer Zementwerke GmbH v Finanzlandesdirektion für Kärnten
[2001] ECR I-8365.
The Austrian Constitutional Court referred two questions to the
Court of Justice for a preliminary ruling:
1. Are legislative measures of a Member State which provide for a
rebate of energy taxes on natural gas and electricity but grant
that rebate only to undertakings whose activity is shown to
consist primarily in the manufacture of goods, to be regarded
as State aid within the meaning of Article 92 of the EC Treaty?
If the answer to Question 1 is in the affirmative,
is such a
legislative measure to be regarded as State aid within the
meaning of Article 92 of the EC Treaty even if it applies to all
undertakings, regardless of whether their activity is shown to
consist primarily in the manufacture of goods?

2.

compatibility

therefore selective. The Commission had doubts about
the
the
the
Community guidelines on State aid for environmental
protection (5).

aid with

alleged

of

III. COMMENTS BY INTERESTED PARTIES

Comments by the Austrian Industry Association

The Austrian Industry Association considers the measure
not to be selective and therefore not to be State aid.
Austria has implemented the Adria-Wien ruling of the
European Court of Justice, whereby national measures
which provide for a rebate of energy taxes on natural
gas and electricity do not constitute State aid ‘where they
apply to all undertakings in national territory, regardless
of their activity’. The Austrian Constitutional Court had
reasoned in its second question to the Court of Justice
that Austria might be in a position to extend the energy
tax rebates to all companies. Thus, the Court of Justice
was well aware of the function of the rebate and certainly
considered potential
legal effects in Austria. The only
material question is therefore ‘whether a distinction is
made with regard to the advantage’.

The Austrian Industry Association considers the measure
also not to be de facto selective. The measure benefits
about 2 500 to 3 000 undertakings in all sectors of the
economy regardless of the size of the undertaking.

tax

rebate

undertakings.

the measure is applicable not only to
Furthermore,
energy-intensive
is
The
calculated on the basis of net production value. This
value depends on the
the
company. Losses or heavy investments lead to a low
net production value.
In these cases also companies
with a low energy consumption benefit from the tax
rebate. Viewed over
scheme
benefits not always the same group of beneficiaries.

longer period,

situation of

economic

the

a

contests

The Austrian
the
Industry Association
comparison the Commission made with other cases
where, despite a legal non-selectivity, the measure was
de facto selective. The aid objective in these cases was
always support for large industrial undertakings, and in
some cases even for an individual company. By contrast,
the Austrian measure does not limit the circle of bene-
ficiaries, either by size of company, or by sector, activity
or investment sum.

(17)

(18)

(19)

(20) On the question of compatibility, the Austrian Industry
Association notes that compliance with the minimum
rates laid down by Council Directive 2003/96/EC of 27
October 2003 restructuring the Community framework
for the taxation of energy products and electricity (6)
(hereinafter called the energy taxation Directive) should
be regarded as a significant amount of the tax.

(5) OJ C 37, 3.2.2001, p. 3.
(6) OJ L 283, 31.10.2003, p. 51.

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(21)

(22)

(23)

(24)

(25)

Comments by Stahl- und Walzwerk Marienhütte
GmbH

(26)

and claims

Stahl- und Walzwerk Marienhütte GmbH describes the
economic context of energy taxation,
in particular for
the normal
steel,
Austrian energy tax rates to energy-intensive under-
takings would lead immediately to closure of production
in Austria.

application of

that

legislator is free to set a maximum tax
The national
burden. The upper limit established by the criterion of
0,35 % of net production value is irrelevant from a State
aid point of view, but establishes the energy tax burden,
where energy is used for business purposes, at 0,35 % of
net production value. This also applies to the minimum
tax burden of EUR 363 set by the measure.

The correction mechanism for energy-intensive under-
takings has no negative impact on the steering effect of
the energy tax system. Energy costs themselves are a
sufficient
incentive to take any possible substitution
measures and an energy tax has no additional steering
effect. This will have to be taken into account when
assessing whether the measure is justified by the nature
of the tax system.

Justice of

The Court of
the European Communities
apparently wanted to rule in Case C-143/99 also on
the distinction between energy-intensive and other under-
takings. Otherwise it would not have answered the
second question referred by the Austrian Constitutional
Court, this question being irrelevant to the settlement of
the case pending before the Austrian court.

(27)

The European Court of Justice decided in its Adria-Wien
ruling on the Austrian measure in its entirety. If this had
not been the intention, the Court would have first asked
whether the energy tax rebate was per se selective and
only then would it have dealt with the question whether
the exclusion of the service sector made the measure
selective. In addition, paragraph 36 of the ruling makes
clear that the Austrian measure, with which the European
Court was fully acquainted, does not constitute State aid.

(28)

The measure is not selective but is a general economic
measure. This view was also shared by the Advocate
General in Case C-143/99.

(29)

The measure does not distort competition and does not
affect trade.

is

the undertakings

classified as State aid,

Even if a measure
the
Commission has to respect the legitimate expectations
concerned. These undertakings
of
could rely on a law which was explicitly adopted in
Austria in order to implement the Adria-Wien ruling. It
cannot be asked of an undertaking that
it examine
questions of European law in greater depth than a
bona fide legislator. Furthermore, the Court of Justice
itself, as an EU institution, raised legitimate expectations
by answering the second question referred by the
Austrian Constitutional Court.

(30)

(31)

Comments by Jungbunzlauer GmbH

that

the energy tax
Jungbunzlauer GmbH points out
rebate is not aid in the sense of a direct monetary
payment by the State. The economic burden of
the
to be on the end-user of
energy taxation is meant
energy.
the legislator chose
In order to achieve this,
to
between several administrative options.
facilitate the administration of the tax, the tax is levied
at the level of the energy supplier. Undertakings pay the
tax together with the price for energy to the energy
supplier and are repaid afterwards by the State the
amounts exceeding their tax obligation. It is due to this
structure that the energy tax rebate law is designed in the
form of a rebate. The legislator could also have chosen to
levy the tax directly at the level of the end user. In that
event, a rebate would not have been necessary.

In order

exist

Similar measures
States.
Furthermore, the energy taxation Directive provides for
tax reductions and rebates for businesses in order to
protect investments and employment.

in other Member

IV. COMMENTS BY AUSTRIA

Austria considers the energy tax rebate to be a
general measure

if

the Austrian Constitutional Court

By letter dated 4 July 2003, received by the Commission
on 4 July 2003, Austria confirms its view that the energy
tax rebate is a general measure. By asking its second
question,
also
the original
explained its motive, namely that,
measure constituted State aid, the Constitutional Court
might abolish the restriction to those companies whose
activity consists primarily in the manufacturing of goods.
The Austrian court needed to know whether, by
it would create or extend an
removing the restriction,
illegal State aid. The European Court was aware of this
motive, as
report by the
Rapporteur, Mr Wathelet, who notes: ‘The Constitutional
Court assumes that, in case of removing the restriction
…, an extension to all undertakings is only allowed if
this does not constitute a new aid which has to be
notified beforehand.’ Without
the second
question would have been theoretical and would have
had to be rejected by the European Court.

seen from the

this motive,

can be

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(32) As a consequence,

the Austrian Constitutional Court
abolished only the restriction to the original group of
beneficiaries and did not abolish the entire Energy Tax
Rebate Act.

more than the 120 % under the current rules. However,
those companies for which the 120 % provision leads to
an increase in the tax burden will pay on average about
50 % more than before, while for some companies the
financial impact will even be far greater.

(33)

Knowing this background it cannot be argued that the
European Court did not know or erred about the design
of the Austrian measure. On the contrary, the Court itself
described in paragraph 7 of
the ruling the Austrian
system correctly and replied in paragraph 36 to the
second question that ‘national measures such as those
at
issue in the main proceedings do not constitute
State aid.’

(37) Austria informed the Commission that all payments
under the current provisions had been stopped imme-
diately after the initiation of
investigation
procedure. However, Austria could not provide infor-
mation on the number of companies which will have
to repay a part of the rebate already paid to them, or
the amounts involved. Austria confirmed that
about
every repayment will bear
interest according to the
applicable EU reference rate.

the formal

Austria commits itself to retroactively modifying the
energy tax rebate

(34)

By letter dated 5 December 2003, Austria informed the
the Ministry of Finance would be
Commission that
proposing to the Austrian Parliament
it modify
retroactively the rebate of the energy taxes on electricity
and natural gas for the two groups of beneficiary.

that

(35) Undertakings to which the Energy Tax Rebate Act was
not applicable until 31 December 2001 will be entitled
to a 100 % tax rebate for the tax exceeding 0,35 % of
their net production value in 2002.
these
companies will pay 20 % of the national tax rates on
natural gas and electricity. This minimum tax burden
will
the energy
the minimum tax rates of
taxation Directive, which entered into force on 1
January 2004. The ratio between the minimum tax
under the Directive and the national tax is about 3,3 %
for electricity and about 14 % for natural gas.

In 2003,

respect

(36) Undertakings to which the Energy Tax Rebate Act was
applicable before 31 December 2001 will pay in 2002
and 2003 120 % of the minimum tax rates on natural
gas and electricity as established by Annex I, table C, of
the energy taxation Directive (the 120 % provision).

The tax burden of 120 % of the minimum tax rates on
natural gas and electricity corresponds statistically to the
average tax burden on companies under the energy
taxation Directive,
including taxation on electricity, gas
and coal. The 120 % provision will lead to an additional
tax burden of about 10 to 15 % of current net
tax
revenue. The additional burden is not so high as most
the companies concerned already pay significantly
of

V. ASSESSMENT OF THE AID

Assessment for the years 2002 and 2003

investigation procedure

(38) Although the Commission initiated the procedure in
respect of the provisions of Law No 158/2002 applicable
in 2002, it considers it justified to assess also the year
2003 without taking a separate decision extending the
formal
to this period. The
Commission notes that Law No 71/2003 leaves the
provisions laid down by Law No 158/2002 completely
unchanged. Thus, the provisions applicable in 2002 and
2003 are identical. The Commission considers, therefore,
that interested parties had the opportunity to comment
on all
the
provisions.

assessment of

relevant

to the

aspects

(39)

(40)

The extension in time was put into effect by Austria after
the Commission decided to initiate the formal
investi-
gation procedure. This situation is comparable to a
situation where a Member State modifies
legislation
which is the subject of an infringement procedure, but
by this modification does not remove all of the alleged
infringement, or where facts as described in the reasoned
opinion occur after the submission of that opinion. In
such cases, the Court allows the Commission to continue
to the
the procedure and to adapt
changed circumstances (7).

its conclusions

letter of 5 December 2003, Austria referred
to the period 1 January 2002 to 31
rights of defence

In its
explicitly
December 2003.
therefore with regard to the whole period.

It exercised its

(7) See Judgment of the Court of Justice in Case C-105/91 Commission v
Greece [1992] ECR I-5871; Judgment in Case C 11/95 Commission v
Belgium [1996] ECR I-4115; Judgment in Case C-365/97 Commission
v Italy [1999] ECR I-7773; and Judgment
in Case C-113/86
Commission v Italy [1998] ECR 607.

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(41)

In practice, third parties were also able to comment on
the application of the scheme both for 2002 and for
2003.
In particular, the Austrian Industry Association
presented its written comments on the energy tax
rebate for 2002 on 12 August, i.e. before the publication
of Law 71/2003 extending the duration of the energy tax
rebate. Subsequently, the Association was represented at
several meetings between the Commission and the
on
Austrian Government
these
and
Its right to submit
occasions also on the year 2003.
observations has therefore been respected.

commented

(42)

The comments made by Jungbunzlauer GmbH on 14
August 2003 described the situation of the company,
noting that the described facts were valid ‘in particular
(also) for the year 2002’. The company commented on
the existence of aid, submitting arguments which are in
substance independent of the year of application. Its right
to submit observations has therefore been respected.

(43) Marienhütte GmbH commented on the initiation of the
procedure on 18 August 2003, hence also before the
publication of Law 71/2003. Its comments are also in
substance independent of the year of application of the
energy tax rebate provisions. Its right to submit obser-
vations has therefore been respected.

(44)

The Commission did not receive any late submissions or
any requests to submit comments after the expiry of the
deadline laid down in the decision to initiate the
procedure.

Existence of aid

(48)

(49)

(45) After

examination,

in-depth
that

the Commission
an
concludes
examination
constitutes State aid within the meaning of Article
87(1) of the EC Treaty.

the measure

under

(46)

(47)

The Commission considers that the tax rebate, even if it
is, in theory, applicable to all undertakings reaching the
threshold of 0,35 % of net production value, de facto
benefits undertakings which have
a high energy
consumption in relation to their net production value
and is therefore selective.

Justice did not rule on all aspects of

The Commission considers that in Case C-143/99 the
Court of
the
original tax rebate measure, but only on the restriction
to undertakings whose activity consisted mainly in the
production of goods.
the two
In order
questions referred by the Austrian Constitutional Court,
it was not necessary for the Court to assess any other
aspects of the measure. The questions did not refer to the
Austrian system as a whole, but concentrated on its
limited scope.
simply
because more extensive information was presented to
it implicitly took a position on a question
the Court,

cannot be assumed that,

to answer

It

which had not been asked. The Court explicitly ruled
on ‘national measures which provide for a rebate of
it had been the Court’s
energy taxes’
If
intention to rule on all
the Austrian
aspects of
it can be assumed that it would have made
measure,
this more explicit.

in general.

if

The Commission does not share the view that the Court
would not have answered the second question referred
by the Austrian Constitutional Court
it had not
intended to rule on all aspects of the energy tax rebate.
The Court
first of all answered the second question
referred by the Austrian Constitutional Court. This
question did not refer to the case under examination
therefore clearly placed its
by the Court. The Court
reply to the first question on the case in point in a
more general context and replied, repeating established
case law, that a State measure which benefits all under-
takings in national territory, without distinction, cannot
constitute State aid.

is

formal

restrict

also confirmed by

examination does not

Several precedents demonstrate that a measure can be
selective in its effect even if by law it is applicable to
all sectors of the economy. These are only examples of
how de facto selectivity can occur. It is true that the
the
measure under
support
sector,
according to size of undertaking,
activity or investment sum. However, the threshold has
the effect that the measure is de facto tailored to energy-
intensive users. Although the Austrian Industry Asso-
ciation claimed that companies with a low energy
consumption can also benefit
from the tax rebate if
they make large investments or incur heavy losses, it in
no way substantiated this argument. On the contrary,
during the
investigation procedure, demon-
strations of the effects of different solutions were based
on examples of companies in energy-intensive sectors.
This
comments made by
Marienhütte, which explicitly refers to the measure as a
correction mechanism for energy-intensive undertakings.
that Austria did not
The Commission also notes
comment on the argument
raised by the Austrian
Industry Association.
In particular, Austria did not
beneficiaries,
any
provide
including information on whether the actual beneficiaries
have significantly changed following the amendment of
the law. The Commission therefore has no information
in its possession allowing it to conclude that the effects
of the measure are substantially different from the effects
of the measure in place before 1 January 2002, which
was restricted to companies active in the production of
goods. In addition, the Commission notes that Austria
calculated the 120 % provision also on the basis of a
sample of
companies,
about 240 energy-intensive
claiming that information on all companies receiving a
rebate was not available. All these elements together are a
strong indication that the measure indeed targets energy-
intensive users.

information

actual

on

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(50)

(51)

(52)

(53)

The Commission furthermore does not share the view of
Jungbunzlauer GmbH that the criterion of 0,35 % of net
production value corresponds to a maximum tax burden
and that such a cap is not relevant from a state aid point
of view. Without it being necessary to examine the latter
argument in general terms, in this case the criterion does
not establish a general maximum tax burden for all
undertakings without distinction. Undertakings normally
have to pay the full tax rates, with the exception of those
achieving a threshold that is de facto tailored to apply
only to energy-intensive users. The measure gives rise to
a different treatment, by establishing objective criteria, in
the form of a tax cap only for certain businesses, which
in the present case is the specific group of energy-
intensive users. This is different from the minimum tax
burden of EUR 363,
to which Jungbunzlauer GmbH
refers, and which indeed applies to all undertakings
without distinction.

(54)

In the decision to initiate the procedure, the Commission
expressed doubts about whether the widening of
the
scope would in reality alter the effects of the measure.
The Commission notes that neither Austria nor any of
submitted information which
the intervening parties
would have
In particular,
alleviated these doubts.
Austria did not submit figures demonstrating that signif-
icantly more companies in all sectors of the economy
benefited from the widened scope.
the
large number of beneficiaries of a measure is not on
its own, according to the case law of
the Court of
Justice, proof that the measure can be classified as a
general measure.

In any case,

The Commission also takes into account that in several
Member States measures having the same effect are
applied,
sought State aid
approval or which the Commission examined ex
officio (8).

for which Member States

the selectivity of

the
The Commission considers that
measure is not justified by the nature and logic of the
system because it is not consistent with the internal logic
of the tax. On the contrary, the rebate represents a clear
deviation from the overall structure and functioning of
the tax system. The Commission further notes that the
objective of an energy tax is twofold. First, it is intended
to induce undertakings to take energy-saving measures.
Even if the undertakings concerned take energy-reduction
measures already to a large extent in order to reduce
the energy
their energy costs,
steering effect. Energy
taxation has no additional
consumption is in general
technology-dependent and
hence only fixed in the short term. In the long term,
inter alia, through technological progress and innovation,
it is to be expected that it is possible to achieve further
furthermore,
efficiency gains. The Commission notes,

it cannot be said that

(8) E.g. N 449/2001 — Germany, N 123/2000 — United Kingdom,

C 42/2003 — Sweden.

term,

that Marienhütte GmbH did not substantiate the alleged
lack of a steering effect in any way. Second, even where
energy consumption cannot be reduced further in the
short
the tax is levied in order to raise State
funding for general purposes and also to take account
of the fact that the consumption of energy causes costs
for society for which the State has to take remedial
action. In this respect, any exemption from an energy
tax for energy-intensive users, which by definition are
also polluters, cannot be in the nature and logic of the
system.

The Commission does not share the opinion expressed
by Jungbunzlauer GmbH that the measure would not
constitute State aid if the legislator had levied the tax
at the level of the end user. The administrative design
of the measure in this case is without influence on its
State aid nature. Even if the legislator had levied the tax
directly at the level of the end user, and presumably
types of
introduced distinct
user,
this differentiation would also have constituted
State aid.

for different

treatments

(55) All the other criteria of a State aid measure within the
meaning of Article 87(1) of the EC Treaty are fulfilled.
The measure relieves undertakings of costs they would
otherwise have to bear and by doing so confers an
advantage on those undertakings. The measure
is
imputable to the State and financed by State resources
as the State accepts a loss of tax revenue. By granting a
tax rebate only to certain undertakings,
the measure
favours them in comparison with other undertakings,
which has the potential to distort competition. At least
some beneficiaries are engaged in sectors where trade
the
between Member States
measure is liable to affect trade. By way of conclusion,
the measure constitutes a State aid scheme and must be
considered new aid because it was established after
Austria’s accession to the European Union and was
never approved by the Commission.

takes place. Therefore

Compatibility of the aid

(56)

The Commission assessed the compatibility of the aid
under the Community guidelines on State aid for envir-
onmental protection (hereinafter called the guidelines). In
the decision to initiate the procedure, the Commission at
that
stage considered that no other derogations as
provided for in Article 87(2) or (3) of the EC Treaty
investigation
seemed applicable. During the
procedure, no new elements were put forward which
might have removed the doubts that the Commission
expressed in its decision to initiate the formal
investi-
gation procedure. The Commission therefore comes to
the following conclusion:

formal

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a

a

result of

significant

(57) As regards undertakings to which the Energy Tax Rebate
Act was not applicable until 31 December 2001, the
modifications made by Law No 158/2002 introduced a
new derogation from an existing tax. Point 51.2 of the
the provisions in
guidelines allows the application of
point 51.1 in such a case where the tax has an appre-
in terms of
ciable positive
environmental
impact
the derogation has become
protection and where
necessary as
in
economic conditions that placed the firms in a parti-
cularly difficult competitive situation. Austria has not
submitted any information as to whether this was the
case. Austria has also not significantly increased the tax,
and therefore point 52 of the guidelines is not applicable.
Under these circumstances, a Member State can grant tax
exemptions only in accordance with point 53, second
paragraph, which refers to points 45 and 46 of
the
guidelines. These provisions allow operating aid for up
to five years if the aid is limited to 50 % of the extra
costs or if it is reduced degressively over a period of five
years. The Austrian law neither limits the tax refund to
50 % of the extra costs nor does it require any reduction
on a progressively sliding scale.

change

therefore under point 51.2 of

(58) As regards undertakings to which the Energy Tax Rebate
Act was applicable before 31 December 2001, the tax
refund system remains unchanged. The measure in this
respect establishes a derogation from an existing tax
which was decided on when the tax was adopted.
It
the guidelines,
falls
which refer to the compatibility criteria of point 51.1.
Of this latter provision, only point 51.1.b second indent
beneficiary
is
provision
companies
the
national tax. Austria did not submit any data for the
period under
it
possible to assess the actual proportion of the tax that
the
The
Commission therefore cannot conclude that undertakings
pay a significant proportion of the national tax.

to pay a significant proportion of

examination which would make

undertakings

applicable.

concerned

requires

have

This

pay.

to

(59)

In the light of the above considerations, the Commission
concludes that
the Energy Tax Rebate Act 1996, as
modified by Article 6 of Law No 158/2002 and
extended without
31
December 2003, does not comply with the requirements
of the guidelines and is incompatible with the common
market.

further modification

until

measure in the modified form promised by Austria is
compatible with points 53 and 45 of the guidelines.
The aid amounts to 100 % of the extra costs in the
first year and will be reduced to 80 % in the second
year. It will thus fall in a linear fashion over the period
under
the Commission
considers that the tax reduction in the second year will
leave the beneficiaries with a tax amount to bear which is
still higher
the energy taxation Directive
requires from 2004 onwards.

In addition,

examination.

than what

follows

(61) As regards undertakings to which the Energy Tax Rebate
Act was applicable until 31 December 2001,
the
Commission considers that the aid complies with point
the guidelines. Point 51.1.b
51.1.b second indent of
second indent requires beneficiaries to pay a significant
proportion of the national tax. The reason for this is that
they should be left with an incentive to improve their
environmental performance. This
from the
wording of point 51.1.b first indent, which allows for
tax reductions from a harmonised tax if the beneficiaries
pay more than the Community minimum rates ‘in order
to provide firms with an incentive to improve environ-
mental protection’. While for the period under exami-
tax,
nation the Austrian energy tax was a national
from 1 January 2004 the energy taxation Directive estab-
lishes harmonised taxation, setting minimum tax rates for
the use of the energy products taxed and subject to the
rebate under the Austrian energy taxation legislation. The
energy taxation Directive takes the objective of environ-
mental protection explicitly
in
particular the third, sixth, seventh and twelfth recitals).
The Commission therefore considers that the compliance
with the minimum rates of the energy taxation Directive
will provide undertakings with an incentive to improve
environmental
the
compliance with the
Commission can accept
minimum rates also as being equal
to a significant
proportion of the national tax as required under point
51.1.b second indent of the guidelines. Austria sets the
minimum tax burden on companies in a way which
complies with the minimum tax rates not only on
natural gas and electricity, but also on coal, which has
not been subject to energy taxation in Austria. By doing
so, Austria ensures that
the minimum tax burden in
2002 and 2003 corresponds to the taxation level, and
also has the minimum environmental effect, envisaged by
the Directive as a whole.

into account

protection.

reason

(see

this

For

the

Compatibility of the announced modification of the
aid (9)

(60) As regards undertakings to which the Energy Tax Rebate
Act was not applicable until 31 December 2001, the

(9) The Commission notes that these modifications have not yet entered

into force.

Legitimate expectations

(62) Where unlawfully granted State aid is found to be incom-
patible with the common market, it must be recovered
from the beneficiary. Through recovery of the aid, the
competitive position that existed before it was granted is
restored as far as is possible. However, Article 14(1) of
Council Regulation (EC) No 659/1999 of 22 March
1999 laying down detailed rules for the application of

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Official Journal of the European Union

22.7.2005

that

states

‘the
the EC Treaty (10)
Article 93 of
Commission shall not require the recovery of the aid if
this would be
contrary to a general principle of
Community law’. The case-law of the Court of Justice
and the Commission’s own decision-making practice
have
the
Commission’s actions, a legitimate expectation exists on
the part of the beneficiary of a measure that the aid has
been granted in accordance with Community law, then
an order to recover the aid would infringe a general
principle of Community law.

established that, where,

result of

as

a

(63)

is the responsibility of a Member State to make
It
national measures compatible with Community State
aid rules in order to prevent distortions of competition,
to notify any State aid measures to the Commission in
accordance with Article 88(3) of the EC Treaty and to
refrain from implementing it pending its examination. In
principle, undertakings cannot claim legitimate expec-
If undertakings
tations in respect of
could successfully base themselves on a national
law,
even adopted in good faith, but which does not
comply with the State aid rules and therefore has the
effect of distorting competition, the aim of Community
State aid control could not be attained.

illegal State aid.

(64)

In its Judgment in Van den Bergh en Jurgens (11), the
Court of Justice held:

(67)

‘The Court has consistently held that any trader in regard
to whom an institution has given rise to justified hopes
may rely on the principle of protection of
legitimate
expectation. On the other hand, if a prudent and discri-
minating trader could have foreseen the adoption of a
Community measure likely to affect his interests, he
cannot plead that principle if the measure is adopted.’

(65) Austria has not presented the Commission with any
legitimate expec-
argument based on the existence of
the
the beneficiaries under
tation on the part of
it transpires from the Court’s case-
scheme. However,
law that the Commission is required to take into consid-
eration on its own initiative the exceptional circum-
stances that provide justification, pursuant
to Article
14(1) of Regulation (EC) No 659/1999, for it to refrain
from ordering the recovery of unlawfully granted aid
where such recovery is contrary to a general principle
of Community law, such as respect for the legitimate
expectation of beneficiaries.

(66)

In the present case, on the one hand, the Commission
issue imposed a
the national measures at
notes that
in the
significant burden on Austrian undertakings

interests of environmental protection. Such a burden
would have been particularly heavy for energy-intensive
undertakings without
the tax rebate assessed in this
Decision. When the national measure was drawn up,
there was no established practice regarding the legal
assessment of exemptions from or reductions in such
taxes which formally apply to different sectors of the
economy but which are nevertheless selective, because
they grant an intrinsic, de facto and specific advantage
to certain sectors. On the other hand, it is conceivable
in the present case, the wording of the Court’s
that,
answer to the second question in Adria-Wien may have
led some beneficiaries to believe in good faith that the
national measures at
issue before the national court
would cease to be selective, and therefore cease to
constitute State aid,
if their benefit were extended to
sectors other than the manufacture of goods. Taking all
the Commission
these
in the present case,
comes
recovery would be contrary to the principle of protection
of legitimate expectations. Therefore, in accordance with
Article 14 of Regulation (EC) No 659/1999,
the
Commission decides that recovery shall not be required.

considerations
to the conclusion that,

into account,

Aid for agricultural primary production

The tax refund system is applicable to agriculture and
forestry under the same conditions as for other bene-
ficiary sectors. The Community guidelines on State aid
for environmental protection do not apply to agriculture.
When assessing multi-sectoral State aid in the context of
energy taxes (12), the Commission has, however, accepted
equal treatment for agriculture and forestry with other
aid
subject
sectors
guidelines. The
also
apply to the assessment of aid to the agricultural sector.

environmental
therefore

to the
above

considerations

general

VI. CONCLUSION

(68)

The Commission finds that Austria has unlawfully imple-
mented the Energy Tax Rebate Act 1996 in the form of
Law 158/2002 and without modification extended it
until 31 December 2003 in breach of Article 88(3) of
the Treaty.

(69) As regards undertakings to which the Energy Tax Rebate
Act was not applicable until 31 December 2001, the aid
scheme is incompatible with the Community guidelines
on State aid for environmental protection, and in
particular points 52 and 45 thereof, and any other dero-
gations from Article 87(2) and (3) of the EC Treaty.

(10) OJ L 83, 27.3.1999, p. 1.
(11) Case C-265/85 Van den Bergh en Jurgens BV v Commission [1987]

ECR 1155, paragraph 44.

(12) See, in particular, the Commission decisions on the German ecotax,
NN 47/99 (OJ C 166, 12.6.1999) and N 575/A/99 (OJ C 322,
11.11.2000).

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L 190/21

(70) As regards undertakings to which the Energy Tax Rebate
Act was applicable already before 31 December 2001,
the aid scheme is incompatible with the Community
guidelines on State aid for environmental protection,
thereof,
and in particular point 51.1.b second indent
and any other derogations from Article 87(2) and (3)
of the EC Treaty. Since no other grounds for compat-
ibility can be envisaged for the scheme as such, the latter
is incompatible with the common market.

an unlawful State aid scheme incompatible with the common
market.

Article 2

Austria shall abolish the scheme referred to in Article 1 in so far
as it continues to produce effects.

Article 3

(71) Nevertheless, in view of the specific circumstances of the
present case and in accordance with Article 14 of Regu-
lation (EC) No 659/1999, recovery shall not be required.

Austria shall take all necessary measures to modify the measure
retroactively as promised by the Austrian authorities in their
letter of 5 December 2003.

(72)

described

The Commission takes note of the commitment of the
Austrian Government to retroactively modify the energy
tax rebate. The Commission considers the modifications
compatible with the
to be
as
Community guidelines on State aid for environmental
protection,
in
conjunction with point 45 and point 51.1.b second
indent thereof,

in particular point 52 read

above

and

HAS ADOPTED THIS DECISION:

Article 1

The tax rebate granted by Austria for the year 2002 under the
Energy Tax Rebate Act 1996 as amended by Law 158/2002
and extended without modification until 31 December 2003 is

Article 4

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

Article 5

This Decision is addressed to the Republic of Austria.

Done at Brussels, 9 March 2004.

For the Commission

Mario MONTI
Member of the Commission