Authorisation of State aid pursuant to Article 61 of the EEA Agreement and Article 1(3) in Part I of Protocol 3 to the Surveillance and Court Agreement — EFTA Surveillance Authority decision to propose appropriate measures in relation to a scheme on tax and fee concessions in favour of Norðurál hf. The proposal has been accepted by Iceland.
Date: 2006-01-12
Institutions: EFTA Surveillance Authority
Subjects: Iceland, State aid, aluminium, control of State aid, iron and steel industry, tax relief

12.1.2006

EN

Official Journal of the European Union

C 7/7

Authorisation of State aid pursuant to Article 61 of the EEA Agreement and Article 1(3) in Part I
of Protocol 3 to the Surveillance and Court Agreement

EFTA Surveillance Authority decision to propose appropriate measures in relation to a scheme on
tax and fee concessions in favour of Norðurál hf. The proposal has been accepted by Iceland.

(2006/C 7/07)

Date of adoption: 1.6.2005

EFTA State: Iceland

Aid No: Case 55362

Title: Tax and fee concessions in favour of the aluminium
smelter Norðurál hf. at Grundartangi, Iceland

Acceptance of the appropriate measures by the EFTA
State: By letter dated 15 July 2005 the Icelandic authorities
accepted the appropriate measures proposed by the Authority.

Objective: The objective of
the aid granted by means of
scheme on tax and fee concessions is to enhance the attracti-
venes of the Vesturland region for investment purposes.

Legal basis: The legal instruments of

(i) Act No. 62/27 May 1997 on Enablement to Enter into
agreements on an Aluminium Smelter at Grundartangi
(hereinafter the ‘Grundartangi Act’); and

(ii) the Investment Agreement of 7 August 1997 between the
sole shareholder of Norðurál hf., Columbia Ventures
Corporation, and the Government of Iceland (hereinafter
referred to as the ‘Investment Agreement’).

Budget/Duration: EUR 88,3 million and 10,7 % aid intensity.
The scheme has been permitted to be valid until 31 October
2018.

Form of the aid: Tax and fee concessions

Decision:

1. The EFTA Surveillance Authority proposes to the Icelandic

authorities the following appropriate measures:

(a) The authorities shall take any legislative, administrative
the
and other measures necessary to ensure that
following aid measures in the Grundartangi Decision,
considered above to constitute an aid scheme, do not
involve incompatible operating aid:

— The right to allocate amounts into a special account
pursuant to Article 7.1 of the Investment Agreement
and Article 6.1 of the Grundartangi Act;

— the exemption from net worth tax pursuant

to
Article 7.2 of the Investment Agreement and Article
6.2 of the Grundartangi Act;

— the exemption from Industrial charge and Market
charge pursuant to Article 7.3 of the Investment
Agreement and Article 6.3 of the Grundartangi Act;

— the reduction of stamp duties pursuant to Article 11
of the Investment Agreement and Article 6.7 of the
Grundartangi Act; and

— the special calculation of municipal property tax
pursuant to Article 8 of the Investment Agreement
and Article 6.6 of the Grundartangi Act.

Measures must be taken to ensure that aid granted on
the basis of the abovementioned aid measures under the
aid scheme does not exceed the ceiling of EUR 88,3
million in 2003 prices, representing the total amount of
aid which may be granted to Norðurál hf. for all three
investments, as well as that the aid intensity of 10,7 %
— which forms an integral part of the absolute ceiling
for the grant of State aid to Norðurál hf. — is not
exceeded.

The Icelandic authorities must calculate the aid incurred
each year on the basis of the discounted value applying
the annual reference rates.

The aid scheme can in no circumstances be applied
beyond the date of 31 October 2018 irrespectively of
whether the total amount of aid under the above stated
ceiling has been granted. Measures must therefore be
taken in order to ensure that the aid scheme will expire
on 31 October 2018.

(b) The authorities shall take any legislative, administrative
and other measures necessary to abolish incompatible
aid resulting from the exemption from dividends with-
holding tax provided for in Article 7.1 of the Investment
Agreement and Article 6.1 of the Grundartangi Act and
must therefore abolish this provision in its entirety.

2. The relevant measures to comply with the appropriate
measures must be effective within three months of the date
of the adoption of the present decision, unless the Authority
agrees to a later date should that be considered objectively
necessary and justified by the Authority.

Icelandic

authorities

to the
The
Authority the relevant measures it will take to comply with
the appropriate measures as soon as possible and in any
event not later than six weeks from receipt of this proposal

communicate

shall

C 7/8

EN

Official Journal of the European Union

12.1.2006

3. Iceland is requested to submit simplified annual reports
regarding the implementation of the aid in accordance with
Article 21 in Part II of Protocol 3 to the Surveillance and
Court Agreement in conjunction with Articles 5 and 6 of
the Authority's decision 195/04/COL.

4. The Authority asks the Icelandic authorities to agree to this
proposal
to Article
for appropriate measures, pursuant
19(1) in Part II of Protocol 3 to the Surveillance and Court

Agreement, and to provide the answer within six weeks
from receipt of this proposal.

The authentic text of the decision, from which all confidential
information has been removed, can be found at:

http://www.eftasurv.int/fieldsofwork/fieldstateaid/stateaidreg-
istry