2005/655/EC: Commission Decision of 8 September 2004 on the aid scheme implemented by Italy providing for tax credits for investments (notified under document number C(2004) 2638)   (Text with EEA relevance)
Date: 2004-09-08
Institutions: European Commission
Subjects: Italy, State aid, control of State aid, investment aid, tax relief

17.9.2005

EN

Official Journal of the European Union

L 241/59

COMMISSION

COMMISSION DECISION

of 8 September 2004

on the aid scheme implemented by Italy providing for tax credits for investments

(notified under document number C(2004) 2638)

(Only the Italian text is authentic)

(Text with EEA relevance)

(2005/655/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

(3)

Having regard to the Treaty
establishing the European
Community, 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 called on interested parties to submit their comments
pursuant to the provisions cited above (1),

(4)

Whereas:

indicating that,

On 16 December 2003 the Commission again invited
Italy to provide information,
in the
absence of a reply, it was empowered to adopt an infor-
mation injunction pursuant to Article 10(3) 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). No information was received from Italy.
By decision of 22 April 2004, the Commission enjoined
Italy to submit all the relevant information necessary for
the complete assessment of
the measure within one
month. No information was received from Italy within
the deadline.

On 26 May 2004 Italy requested an extension of 15
working days in order
to reply to the information
injunction. The Commission, while informing Italy that
the deadline set by Commission decision had expired,
acknowledged Italy’s intention to submit
information
by 17 June 2004.

(1)

(2)

I. PROCEDURE

In April 2003 the
Italian authorities notified the
Commission, pursuant to Article 88(3) of the Treaty, of
an aid scheme for investments in selected areas. As the
entry into force of the scheme was not made subject to
prior approval by the Commission, it was registered as
illegal aid under number NN 53/03.

Additional
information was submitted by the Italian
authorities on 4 July 2003. On 17 September 2003
investi-
the Commission decided to initiate the formal
to Article 88(2) of
the
gation procedure pursuant
Treaty
and
(the decision initiating the procedure)
requested Italy to provide all the necessary information
for assessing the measure. The Commission decision was
published in the Official Journal of the European Union (2).
No comments were received from interested parties or
from Italy.

(6)

(7)

(5)

By letter dated 17 June 2004 (registered on 22 June
2004), Italy submitted additional information.

II. DESCRIPTION OF THE AID

The legal basis for the aid scheme is Article 94(14) of
Law No 289 of 27 December 2002 (Finance Act for
2003).

The aim of the aid scheme is to promote investments in
specific areas of the Italian territory, for regional devel-
to last until
opment objectives. The
31 December 2006 and the annual budget for 2003,
2004 and 2005 is EUR 2 million.

scheme

is

(1) OJ C 300, 11.12.2003, p. 2.
(2) See footnote 1.

(3) OJ L 83, 27.3.1999, p. 1. Regulation as amended by 2003 Act of

Accession.

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Official Journal of the European Union

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(8)

assets. The

As in the case of two other Italian regional aid schemes
approved by the Commission (4), of which the notified
scheme is in practice a territorial extension, the aid is
given in the form of a tax credit for investments in
‘net’
aid
depreciable
investments, identified as the difference between (1) the
amount of investments in new assets over a given period
and (2) the amount of sales and depreciation of all the
enterprise’s assets in the same period. The aid intensity is
indicated as 8 % nge, with a top-up of 10 percentage
points gross for small enterprises and 6 percentage
points gross for medium-sized enterprises.

granted

for

is

(9)

Beneficiaries of the aid scheme are enterprises belonging
to a wide range of sectors (5) that carry out investments
in the areas listed in Article 4 of Law No 448 of
23 December 1998 and in Ministry of Finance Circular
No 161 of 25 August 2000. These areas are:

— the provinces of Agrigento, Avellino, Bari, Benevento,
Brindisi, Cagliari, Caltanissetta, Campobasso, Caserta,
Catania, Catanzaro, Cosenza, Crotone Enna, Foggia,
Frosinone,
Isernia, Lecce, Massa, Matera, Messina,
Napoli, Nuoro, Oristano, Palermo, Potenza, Reggio
Calabria, Salerno, Sassari Siracusa, Taranto, Trapani,
Vibo Valentia and Viterbo;

— the municipalities of Tivoli (Rome), Formia (Latina),

Sora (Frosinone) and Cassino (Frosinone).

(10)

The scheme does not apply to the production, processing
and marketing of agricultural products, to the transport
sector or to the steel industry as defined in the multi-
sectoral framework on regional aid for large investment
projects (6). Neither does it apply to firms in difficulty as
defined in the Community guidelines on state aid for
in difficulty (7). A
rescuing and restructuring firms
detailed description of all the conditions that enterprises
must meet to qualify for the aid is given in the decision
initiating the procedure (8).

III. GROUNDS FOR INITIATING THE PROCEDURE

(11)

In the decision initiating the procedure, the Commission
considered that the measure constituted state aid within
the meaning of Article 87(1) of the Treaty and expressed
doubts regarding its compatibility with the common
investment aid in
market, as it provides for regional

(4) N 324/02 for areas eligible for the derogation in Article 87(3)(a) of
the Treaty, and N 198/03 for areas eligible for the derogation in
Article 87(3)(c) of the Treaty.

(5) Extraction and manufacturing activities, services, tourism, commerce,
construction, production and distribution of electricity, steam and
hot water, and processing of fisheries and aquaculture products.

(6) OJ C 70, 19.3.2002, p. 8.
(7) OJ C 288, 9.10.1999, p. 2.
(8) See footnote 1.

areas which are not eligible for the regional derogations
in Article 87(3)(a) and (c) of
the Treaty. A detailed
description of the grounds for initiating the procedure,
which were not challenged by Italy,
is given in the
decision initiating the procedure (9).

IV. ASSESSMENT OF THE AID

1. Existence of aid

The scheme provides for tax credits for investments in
listed in legislative and administrative
specific areas,
provisions. The Commission considers that this confers
an economic advantage on certain undertakings through
it distorts competition and
state resources and that
affects trade between Member States,
for the reasons
set out in the decision initiating the procedure (10).

Consequently, the measure under examination constitutes
aid within the meaning of Article 87(1) of the Treaty and
is
considered
compatible with the common market only if it qualifies
for one of the derogations provided for in the Treaty.

in principle prohibited.

can be

It

(12)

(13)

2. Legality of the aid

(14)

In so far as the measure constitutes aid, the Commission
regrets that, by putting the measure into effect before
approval by the Commission, Italy has not fulfilled its
obligation under Article 88(3) of the Treaty.

3. Compatibility of the aid

(15)

The aid scheme does not qualify for the derogations in
Article 87(2) of the Treaty or for the derogations in
Article 87(3)(b) and (d), for obvious reasons, as already
indicated in the decision initiating the procedure (11). As
the aid scheme concerns the promotion of investments
for regional development, and was notified by Italy as
regional aid, the Commission has examined its compat-
the
in the light of
ibility with the common market
Community guidelines on national regional aid (12).

(16)

In this respect,
in the decision initiating the procedure
the Commission expressed several doubts as to the
compatibility of
the aid scheme with the common
market. The Commission considers that all the doubts
expressed at that time are confirmed. In particular:

(9) See footnote 1.
(10) See footnote 1.
(11) See footnote 1.
(12) OJ C 74, 10.3.1998, p. 9.

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(a) The scheme provides for aid to be granted in areas
that are not eligible for the derogations in Article
87(3)(a) and (c) of the Treaty. On the basis of the
Italian regional aid map for 2000-2006 (13),
the
provinces of Campobasso, Frosinone, Isernia, Massa
Carrara and Viterbo and the municipalities of Tivoli
and Formia are not entirely eligible for the dero-
gations
in question. Therefore, no regional aid
scheme can be applied in these areas;

mation submitted by Italy outside that deadline,
which Italy stated that:

in

— the aid scheme has so far not been applied,

(b) The scheme appears to provide for aid also in areas
that are eligible for the derogations in Article 87(3)(a)
in these areas aid
and (c) of the Treaty. However,
schemes providing for an identical
for
tax credit
investments have already been approved by the
Commission (14)
The
Commission therefore considers it possible that the
scheme under examination will be applied mainly in
the areas indicated in point (a) above;

applied.

and

can

be

(c) The

does

clearly

scheme

indicate

the
not
commitment to comply with the specific rules laid
down in the guidelines for the examination of state
aid to fisheries and aquaculture (15), in Council Regu-
lation (EC) No 2792/1999 of 17 December 1999
laying down the detailed rules and arrangements
regarding Community structural assistance in the
fisheries sector (16) and in Council Regulation (EC)
No 2369/2002 of 20 December 2002 amending
Regulation (EC) No 2792/1999 laying down the
detailed
regarding
Community structural assistance in the fisheries
sector (17).

arrangements

rules

and

(17)

The Commission was unaware of whether aid had been
awarded on the basis of the scheme and in which areas,
since Italy had not provided any information. The
Commission therefore issued an information injunction.
to Regulation (EC) No 659/1999, where,
Pursuant
despite an information injunction,
the Member State
concerned does not provide the information requested
the Commission can take a decision on unlawful aid
on the basis of the information available.

(18)

Italy did not reply to the information injunction within
the deadline set by Commission decision. However, the
the infor-
Commission intends to take into account

(13) Commission Decision 2002/282/EC of 20 September 2000 on the
part of the Italian regional aid map for the period 2000 to 2006
concerning the areas eligible for the derogation in Article 87(3)(c)
of the Treaty (OJ L 105, 20.4.2002, p. 1).

(14) N 324/02 for areas eligible for the derogation in Article 87(3)(a) of
the Treaty, and N 198/03 for areas eligible for the derogation in
Article 87(3)(c) of the Treaty.

(15) OJ C 19, 20.1.2001, p. 7.
(16) OJ L 337, 30.12.1999, p. 10. Regulation as last amended by Regu-

lation (EC) No 485/2005 (OJ L 81, 30.3.2005, p. 1).

(17) OJ L 358, 31.12.2002, p. 49.

since its

— no undertaking has received aid under the scheme
because,
the corre-
sponding administrative instructions have not been
adopted, nor has the necessary tax code for using
the tax credit procedure been established.

inception in 2002,

(19)

The Commission takes note of Italy’s statement that no
undertaking has received aid under the scheme. It also
notes that the legislative provisions introducing the tax
credit entered into force on 1 January 2003, conferring
reference to
the right
to the tax incentive without
subsequent administrative instructions, and are still
in
force. Italy has not given any commitment or indication
as to the withdrawal of the aid scheme in the future. The
Commission therefore considers it appropriate to take a
decision on the scheme.

(20) On the basis of the information available, the regional
aid scheme under examination is applicable in areas
which are not eligible for regional aid. The Commission
cannot consider the aid scheme compatible with the
the Community
common market on the basis of
guidelines on national
the reasons
for
regional aid,
given in paragraphs 15 and 16 above and set out in
detail in the decision initiating the procedure (18).

V. CONCLUSION

(21)

The Commission finds that the measure under exami-
nation constitutes
state aid within the meaning of
Article 87(1) of the Treaty. Italy has unlawfully imple-
mented the aid in question, in breach of Article 88(3) of
the Treaty. On the basis of the analysis carried out in
points 15 to 20 above, the Commission considers that
the aid is incompatible with the common market.

(22)

This Decision, concerning the aid scheme providing for
tax credits for investment and any cases in which it has
been applied, must be
immediately,
including recovery of any individual award of incom-
patible aid already granted,

implemented

(18) See footnote 1.

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HAS ADOPTED THIS DECISION:

Article 1

The state aid scheme providing for

for
1.
investments, which Italy has unlawfully put
in
breach of Article 88(3) of the Treaty, is incompatible with the
common market.

tax credits
into effect

2.
Italy shall withdraw the aid scheme in question, in so far
as it continues to have effect, and shall from the date of this
Decision refrain from making any aid payment under the
scheme.

Article 2

The aid to be recovered shall include interest from the date on
which it was made available to the recipient until the date of its
recovery.

Interest shall be calculated in accordance with the provisions of
Commission Regulation (EC) No 794/2004 (19).

Article 3

Italy shall inform the Commission, within two months of noti-
fication of this Decision, of the action taken to comply with it,
indicating in detail
the measures adopted to withdraw the
incompatible scheme and providing documentation on those
measures.

Article 4

This Decision is addressed to the Italian Republic.

In so far as any aid has already been granted under the scheme
referred to in Article 1, Italy shall take all necessary measures to
recover it from the recipients.

Done at Brussels, 8 September 2004.

Recovery shall be effected without delay in accordance with the
procedures of national
they allow the
immediate and effective implementation of this Decision.

law provided that

For the Commission

Neelie KROES
Member of the Commission

(19) OJ L 140, 30.4.2004, p. 1.