2007/498/EC: Commission Decision of 7 February 2007 on the aid scheme under Law No 21/2003 (Articles 14, 15 and 16) of the Region of Sicily C 31/2005 (ex N 329/2004) which Italy is planning to implement (notified under document number C(2007) 285)   (Text with EEA relevance)
Date: 2007-02-07
Institutions: European Commission
Subjects: Italy, Sicily, State aid, aid to undertakings, control of State aid, regional law, tax exemption

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(Acts adopted under the EC Treaty/Euratom Treaty whose publication is not obligatory)

II

DECISIONS

COMMISSION

COMMISSION DECISION

of 7 February 2007

on the aid scheme under Law No 21/2003 (Articles 14, 15 and 16) of the Region of Sicily C 31/2005
(ex N 329/2004) which Italy is planning to implement

(notified under document number C(2007) 285)

(Only the Italian version is authentic)

(Text with EEA relevance)

(2007/498/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

(2)

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
to those provisions (1) and having regard to their
pursuant
comments,

Whereas:

I. PROCEDURE

(1)

By letter of 28 July 2004, the Italian authorities notified
Articles 14, 15 and 16 of Regional Law No 21 of 29
December 2003 (hereinafter referred to as ‘Regional Law
No 21/2003’). By letter of 22 September 2004,
the
Commission requested further information. By letter of
the Italian authorities requested a
24 January 2005,
deadline
the
extension which was
Commission by letter of 25 January 2005.

accepted

by

(3)

(4)

(5)

(6)

By letter of 26 January 2005,
the Italian authorities
stated that the aid provided for in Articles 14 and 15
is being implemented under Commission Regulation (EC)
No 69/2001 of 12 January 2001 on the application of
Articles 87 and 88 of the EC Treaty to de minimis aid (2)
pending clearance by the European Commission.

By letter of 29 March 2005, the Commission asked the
Italian authorities for further information. Following a
reminder sent to them on 27 April 2005, the Italian
requested information by
authorities
letters of 18 May and 2 June 2006.

submitted the

Further information was requested by letter of 10 June
2005. The Italian authorities replied by letters of 12 July
and 14 July 2005.

By letter of 6 September 2005,
the Commission
informed Italy of its decision to initiate the procedure
laid down in Article 88(2) of the EC Treaty and Article
62 of the EEA Agreement in respect of the measure.

The Commission decision to initiate the procedure was
published in the Official Journal of the European Union (3).
The Commission invited interested parties to submit their
comments on the aid.

(1) OJ C 263, 22.10.2005, p. 30.

(2) OJ L 10, 13.1.2001, p. 30.
(3) See footnote 1.

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(7)

(8)

(9)

The Commission did not receive any comments from
interested parties.

(14) Articles 14 and 15 provide for a five-year exemption
from IRAP for certain new companies
started
operations in 2004 and for certain existing companies.

that

By letter of 10 November 2005, the Italian authorities
asked the Commission to suspend the procedure pending
the ruling by the Court of Justice in Case C-475/2003
concerning the compatibility of the Italian regional tax
on productive activity (IRAP) with Article 33(1) of the
Sixth Council Directive 77/388/EEC of 17 May 1977 on
harmonisation of the laws of the Member States relating
to turnover taxes — Common system of value added tax:
assessment (4). The Commission
uniform basis of
accepted the request by letter of 18 October 2005. The
Court of Justice has subsequently declared the IRAP to be
compatible
Directive
77/388/EEC (5).

Article

33(1)

with

of

(15) Article 14 provides for successive five-year exemptions
from IRAP (as from the start of operations) for:

(a) companies in the tourism sector, the hotel sector and
the craft sector, companies in the cultural sector,
agri-food
that
and
started operations in 2004;

ITC companies

companies

(b) all industrial companies starting operations in 2004

with a turnover of less than EUR 10 million.

By letter of 10 May 2006,
the Italian authorities
informed the Commission about an amendment to the
measures provided for in Articles 14 and 15. By means
of this amendment, the measures are implemented under
the de minimis Regulation also ‘in the case of a negative
decision being adopted by the Commission’.

(16) Article 15 provides for successive five-year exemptions as
of 2004 from IRAP payable on the share of the tax bases
exceeding the average for the years 2001 to 2003 for all
existing companies,
those operating in the
chemical and petrochemical sectors.

except

II. DESCRIPTION OF THE MEASURE

(a) Legal basis of the measure

(10) Articles 14, 15 and 16 of Regional Law No 21/2003.

(b) Objective of the measure

(11) According to the Italian authorities,

the measure is
designed to promote the setting up of new companies
and to narrow the gap between companies in Sicily and
companies located in other regions of Italy.

(12) Moreover, the measure in question is aimed at fostering
the integration of the economy of the European Union
with the economies of the countries which signed the
Final Declaration of the Barcelona Euro-Mediterranean
Ministerial Conference on 27 and 28 November 1995
(Barcelona Conference).

(13)

The measure comprises two schemes: Articles 14 and 15
of Regional Law No 21/2003 provide for an exemption
from IRAP for certain companies, and Article 16 of the
the Euro-
same Law provides for the setting up of
Mediterranean Financial Services and Insurance Centre.

(17) Only companies having cumulatively their

registered
office, their administrative headquarters and their place
of business in Sicily are eligible for the aid scheme.

companies,

estate brokerages,

(18) Article 16 establishes the Euro-Mediterranean Financial
Services and Insurance Centre, which comprises sub-
sidiaries or associated enterprises of credit institutions,
real
insurance
trust
companies and finance companies that collect funds on
international markets for use exclusively outside of the
territory of the Italian State with non-residents. Active
within the Centre are also companies providing inter-
mediation and assistance services for international trade.
A monitoring committee has been appointed by the
President of
the Region of Sicily with the task of
granting and withdrawing authorisation for companies
to operate within the Centre.

(19)

These companies enjoy the following benefits:

(a) 50 % reduction in the rate of
generated within the Centre,

IRAP for revenue

(b) exemption from duties on regional concessions,

(4) OJ L 145, 13.6.1977, p. 1.
(5) Case C-475/2003 of 3 October 2006 Banca popolare di Cremona
Soc.coop.arl v Agenzia Entrate Ufficio Cremona, not yet published.

(c)

fixedrate discount on registration duty, mortgage tax
and cadastral duties,

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17.7.2007

(d) exemption from corporate tax on revenue generated
in Sicily (6) in connection with activities conducted
within the Centre.

also ‘in the case of a negative decision being adopted
by the Commission’.

(20)

The tax benefits available under the scheme are granted
only in respect of transactions with third countries that
signed the Barcelona Declaration of 27 and 28
November 1995 (7).

(26)

The measure provided for in Article 14 has applied with
effect from 2005. The Italian authorities have undertaken
to apply it for five tax years.

(21)

The precise location of the Centre within Sicily and the
criteria for granting authorisation to carry on business at
the Centre is to be determined in the implementing
regulations.

(27)

The measure provided for in Article 15 is also being
applied for five tax years, from 2004 to 2009.

(22)

The measures stem from the implementation by the
the tax autonomy granted by
Region of Sicily of
Articles 36 and 38 of
the Sicilian Regional Statute,
which ranks as a constitutional act.

(28)

The measure provided for in Article 16 applies from the
entry into force of
the tax year
following that in which the free trade area referred to
in the Barcelona Declaration is effectively put in place
(2010).

the measure until

(c) Budget for the measure

(23)

The Italian authorities estimate that, once they have
introduced the above clauses, the budgetary impact of
Articles 14 and 15 will be around EUR 170 million
(EUR 120 million and EUR 48 million respectively)
between 2004 and 2009. They have not provided any
estimate of the impact of Article 16.

(d) Duration of the measure

(24)

Regional Law No 21/2003 entered into force on 30
December 2003, but the coming into force of Articles
14, 15 and 16 is explicitly subject to clearance by the
European Commission.

(25)

By letter of 26 January 2005,
the Italian authorities
informed the Commission that the aid provided for in
the de
Articles 14 and 15 was implemented under
the
pending
minimis
Commission. Subsequently, by letter of 10 May 2006,
they stated that the aid provided for in Articles 14 and
15 was implemented under the de minimis Regulation

Regulation,

clearance

by

(6) To be precise, Sicily would assume, within the meaning of Article
8(2) of Law No 212/2000 of 27 July 2000 laying down provisions
on the status of the rights of the taxpayer (Official Gazette No 177
of 31 July 2000), the corporate tax debt payable by beneficiaries
with their tax domicile outside of Sicily. Revenue from corporate
taxes paid by Sicilian companies accrue to the Region of Sicily.
(7) The ‘third countries’ in question are Algeria, Cyprus, Egypt, Israel,
Jordan, Lebanon, Malta, Morocco, Syria, Tunisia, Turkey and the
Palestinian Authority.

III. GROUNDS FOR INITIATING THE PROCEDURE

(a) Articles 14 and 15: IRAP exemptions

(29)

In its letter of 6 September 2005, the Commission took
the view that the notified aid scheme constituted State
aid within the meaning of Article 87(1) of the EC Treaty
since State resources are involved, since it is selective
through being targeted at particular
sectors and/or
particular categories of undertaking, since it confers a
financial advantage on certain categories of undertaking
in terms of a reduced tax burden and since it might
distort competition and affect trade at Community level.

(30) One of the reasons for initiating the procedure was that
the Commission had doubts as to whether
the aid
provided for in Articles 14, 15 and 16 of Regional
Law No 21/2003 was compatible with the single market.

(31)

First of all, the Commission had doubts whether the
measure fulfilled the conditions set out in the Guidelines
on national regional aid (8)
In fact,
according to the notification, the measure would grant
operating aid to Sicilian companies meeting the criteria
indicated at points 14 and 17 and to companies
operating in the Euro-Mediterranean Financial Services
and Insurance Centre.

(‘the Guidelines’).

(8) OJ C 74, 10.3.1998, p. 9.

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(32)

(33)

(34)

(35)

In point 4.15 of the Guidelines, operating aid may be
granted if the measure is justified in terms of its contri-
bution to regional development and its nature and if its
level is proportional to the handicaps it seeks to alleviate.
the Commission doubted whether the
In this regard,
Italian authorities had succeeded in justifying the
granting of operating
the
aid
existence of any handicaps and gauging their importance
and whether the aid would be justified in terms of its
contribution to regional development.

demonstrating

by

the operating aid
The Commission had doubts that
provided for in Articles 14 and 15 of Regional Law
No 21/2003 could be compatible with the common
market and that it would contribute to the creation of
new companies and reduce the gap between companies
operating in Sicily and companies operating elsewhere in
Italy. In this respect, the Commission noted that the link
between the lowering of IRAP for beneficiaries (e.g. those
covered by Article 15)
creation of new
companies in Sicily is unclear and left unexplained by
the Italian authorities. Then,
in theory,
lowering IRAP will
the number of new
increase
companies is not sufficient in itself for the aid to be
considered compatible.

and the

the fact

that,

In the notification, the Italian authorities argued that the
threshold of EUR 10 million was low enough to ensure
that Article 14 applied only to SMEs. The Commission
argued that Article 14 was only superficially de facto
restricted to SMEs because it did not take into account
the number of employees and, above all, the fact that the
company benefiting from the measure was a ‘linked’ or
‘partner’ enterprise within the meaning of
the SME
guidelines (9). Moreover, even if
the Italian authorities
could prove that only SMEs within the meaning of the
guidelines benefit
the Commission
from the measure,
observes that the measure in question still constitutes
operating aid.

the Italian authorities claimed that

the
Furthermore,
prevalence of micro enterprises
resulted in higher
financing costs and greater labour intensity; labour and
debt costs constitute a large part of the IRAP's tax base,
thereby placing Sicilian companies at a disadvantage. The
Commission noted that, even if the problem facing the
Sicilian economy was the high ratio of micro enterprises
and its consequences, a general
IRAP reduction for
companies of all sizes would not address the issue
because
targeted at micro enterprises.
the aid did not seem to be designed to
Moreover,
island
address

the problems associated with Sicily's

it was not

(9) Commission Regulation (EC) No 70/2001 (OJ L 10, 13.1.2001,
p. 33). Regulation as
last amended by Regulation (EC) No
1976/2006 (OJ L 368, 23.12.2006, p. 85). See in particular, the
Annex to the Commission Recommendation of 6 May 2003
concerning the definition of micro, small and medium-sized enter-
prises (OJ L 124, 20.5.2003, p. 36).

(36)

(37)

(38)

(39)

(40)

status in that it is not related to extra costs linked to
insularity, such as transport costs. For example, it does
not seem evident to the Commission that companies
operating in the sectors of tourism, hotels and cultural
goods encounter particular disadvantages as a result of
being located in Sicily (Article 14).

In addition, the Commission notes that the submissions
by the Italian authorities do not contain enough infor-
mation to guarantee that the aid will be on a declining
scale over time. In the example given, it seems that the
Italian authorities intend to reduce the proportion of the
IRAP exemption. However, this does not guarantee per se
that the aid amount will be on a declining scale.

Furthermore, it does not seem to the Commission that,
as Article 15 provides aid to companies of all sizes, the
use of data concerning only companies with a turnover
of less than EUR 10 million and with fewer than 10
ITC and tourist/hotel
employees
industrial,
sectors can demonstrate the proportionality of
the
measure in question.

in the

The Commission argued that the measure seems to be
materially selective in that the tax advantages provided
for in Articles 14 and 15 exclude from the group of
possible beneficiaries various categories of company
(see point 56),
the tourism,
hotel,
agri-food and ITC sectors.
cultural
the measure seems to favour existing and
Moreover,
new industrial companies with a turnover of less than
EUR 10 million but excludes those operating in the
chemical and petrochemical sectors.

favouring in particular
goods,

In their submissions, the Italian authorities stated that
companies in the chemical and petrochemical sectors
were excluded from the benefit of Article 15 because
they were not affected by the high transport costs as-
sociated with the island status of Sicily and because the
number of companies in those sectors was very small.
it does not seem to the Commission that
However,
companies
aid
sectors
measure are affected by high transport costs; moreover,
the number of beneficiaries has no influence on the
classification of a particular measure as aid.

eligible

in all

the

the

for

between

the Commission noted that

the measure dis-
Lastly,
‘non-Sicilian’
‘Sicilian’
criminates
companies in so far as it prevents companies with their
registered office in another Member State benefiting from
the aid. It seems to the Commission that there is no
objective reason to justify this choice on the part of

and

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cannot be

the measure

It also noted that

the Italian authorities and that this provision of the aid
scheme is, therefore, in breach of Article 43 of the EC
Treaty. For this reason, too, the Commission observed
compatible with the
that
common market (10).
the measure
confers a selective advantage on Sicilian companies in
that only taxable undertakings having cumulatively their
registered office,
their administrative headquarters and
their place of business in Sicily can benefit from the
scheme. This does not seem to be the case of all
companies that carry on a productive or commercial
activity in Sicily and are subject
to IRAP on that
activity. The Italian authorities did not provide any
argument about that aspect in their submissions.

(41)

(42)

(43)

(44)

(b) Article 16

First of all, the Commission argued that the Italian auth-
orities did not clarify in their submissions why they
believe that the aid for the establishment of the Euro-
Mediterranean Financial Services and Insurance Centre
the exemption laid down in Article
can qualify for
87(3)(a) of the EC Treaty.

The Italian authorities stated in their submissions that the
measure in question constitutes operating aid. The
Commission took the view that the distortion of compe-
tition resulting from aid in the financial sector can be
very marked and that financial activities do not help
significantly to remedy the handicaps faced by regions
eligible for the exemption under Article 87(3)(a), as
stated in the Commission notice on the application of
State aid rules to measures relating to direct business
taxation (11) and in various decisions taken since. The
Commission recalled that
the aforementioned notice
clearly states that, in order to be considered compatible
with the common market, State aid intended to promote
the economic development of particular areas must be ‘in
proportion to, and targeted at, the aims sought’. From
this perspective, offshore activities and activities that have
little or no impact on the local economy are unlikely to
be allowed as compatible State aid. The Commission
doubted therefore that there is proportionality between
the level of aid and the handicap it seeks to offset.

the Commission doubted that

the measure
Lastly,
provided for in Article 16 could be considered to be a
project of
common European interest within the
meaning of Article 87(3)(b) of the EC Treaty.

In fact, the main justification put forward by the Italian
authorities in support of the aid was that the measure is
considered to be a project of common European interest
within the meaning of Article 87(3)(b) of the EC Treaty

(10) See Case C-156/98 Germany v Commission (2000) ECR I-6857,

paragraphs 76 to 87.

(11) OJ C 384, 10.12.1998, p. 3 (see point 33).

incompatible

because Article 16 is similar to a provision in Law No
19/1991 on the development of economic activities and
international cooperation in the region of Friuli-Venezia
Giulia, the province of Belluno and neighbouring areas,
which set up the Trieste Financial Services and Insurance
the
Centre, which was
found
Commission in 2003 after being authorised by it
in
1995 under the exemption of Article 87(3)(b) (12) of
the
the Commission
remarked that, in its first decision, the aid for the estab-
lishment of the Trieste Financial Services and Insurance
Centre was considered compatible with the common
(now
market under the exemption in Article 92(3)(c)
Article 87(3)(c)) and not under
exemption in
Article 87(3)(b) (13).

EC Treaty.

In this

regard,

the

by

(45)

(46)

The Italian authorities claimed that the reasons for over-
turning the previous decision of compatibility by the
Commission are based on the fact
that Sicily is a
region eligible for state aid under Article 87(3)(a) of
the EC Treaty and that,
the
integrated with the
European capital market
African capital market so that favouring this integration
in accordance with the Barcelona Declaration remains a
major European objective.

in the present case,

is not

The Commission remarked that each analysis has to be
carried out on a case-by-case basis, taking into account
the different characteristics of seemingly similar schemes
that might though be very significant, as in the economic
context. In this connection, it stressed, for example, that
the total aid (over the five-year duration of the scheme)
provided for the establishment of the Trieste Financial
Services and Insurance Centre was capped and that the
total amount of loans and investments by companies at
the Centre was limited.

(47) Moreover,

the Commission considers

the same
reasoning as that applied in 2003 in the case of Trieste
still holds in this case, for the following reasons:

that

(a) One of

the main arguments for overturning the
Trieste decision was
this kind of measure
that
constitutes operating aid which the Commission
authorises only exceptionally in sectors of activity
which require special treatment. This is not the case
in the financial sector and the Commission has taken
the view that, nowadays, aid to participants in the
can engender very significant
financial markets
distortions in this sector.

(12) To be more precise, the Centre was established by Article 3 of Law
No 19/1991 of 19 January 1991. The relevant Commission
decisions are Decision 95/452/EC of 12 April 1995 (OJ L 264,
7.11.1995, p. 30) and Decision 2003/230/EC of 11 December
2002 on the existing aid scheme that
Italy was authorised to
implement for the Trieste Financial Services and Insurance Centre
(OJ L 91, 8.4.2003, p. 47).

(13) See footnote 12.

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(b) Another

for overturning

such as finance,

the Trieste
argument
decision was that,
in its assessment made in the
light of the State aid rules, the Commission may
also take into account the adverse effects on compe-
tition that have been highlighted by the work on the
for Business Taxation (14). This
Code of Conduct
work showed that tax incentives on internationally
mobile activities,
insurance and
intra-group services, may have adverse effects on
in particular because they
other Member States,
create opportunities for tax avoidance. The Trieste
regime, which was assessed as a harmful regime
under criteria laid down in the Code, may have
such potential. The Commission points out that the
Italian authorities, in their comments at the time on
appropriate measures for the Trieste scheme, referred
to the meeting on 19 March 2002 of the Code of
Conduct Group, at which Italy stated that the Centre
would be closed within a period compatible with the
programme of work on the Code of Conduct.

Lastly, after stressing that two of the countries that had
signed the Barcelona Declaration, Cyprus and Malta, were
already members of the European Union at the time of
the Commission
the present measure,
notification of
considers that the situation in the countries that will
benefit from investments by the companies established
at the Centre differs in many respects from the situation
of the eastern European countries in 1995. In particular,
the special problems of transition have either never been
encountered by many of the signatories to the Barcelona
Declaration or have been encountered in the past (for
example, Turkey and Israel are clearly free market
economies) and the transitional period has ended (for
example, in Algeria).

Therefore,
qualifies
87(3)(b) of the EC Treaty.

for

the Commission doubts

that Article 16
the exemption provided for by Article

that

therefore

explained

it
The Commission has
considered a more thorough analysis of the issue to be
necessary. Such an analysis would need to include any
comments made by interested third parties. Only after
considering such comments
could the Commission
decide whether the measure proposed by the Italian
authorities
to an extent
contrary to the common interest.

trading conditions

affects

(48)

(49)

(50)

IV. COMMENTS FROM ITALY

(51)

The Commission received no comments from the Italian
authorities or from interested third parties wishing to
allay the doubts raised when the formal
investigation
procedure was initiated.

V. ASSESSMENT OF THE MEASURE

V.1. Legality

(52)

By notifying the aid scheme with a standstill clause or, in
the case of Articles 14 and 15, by implementing it under
the de minimis Regulation until authorised by the
Commission, the Italian authorities have complied with
the procedural requirements of Article 88(3) of the EC
Treaty.

V.2. State aid character of the scheme

(53)

The Commission considers that the measure constitutes
State aid within the meaning of Article 87(1) of the EC
Treaty for the following reasons:

Presence of state resources:

(54)

The measure involves the use of State resources in terms
of tax revenues forgone by the Region of Sicily and
corresponding to the reduced tax liability of the bene-
ficiary.

Economic advantage:

(55)

The measure confers on the beneficiary an economic
advantage resulting from the reduction in the effective
tax burden, which translates into a financial advantage
in terms of a reduced payment of tax from which the
companies benefit immediately in the years when the
reduction is applied.

Presence of selectivity in that
‘certain undertakings or
goods’:

the measure favours
the production of certain

— Articles 14 and 15

(56)

examined together because

The Commission notes that Articles 14 and 15 have to
be
similar
advantages on different categories of beneficiary. The
two articles combined exclude from the group of
possible beneficiaries various categories of undertaking:

they confer

(14) The EU's Finance Ministers established the Code of Conduct Group
(Business Taxation) at a Council meeting on 9 March 1998, under
the chairmanship of UK Paymaster General Dawn Primarolo, to
assess the tax measures that may fall within the scope of
the
Code of Conduct. In a report of November 1999 the Group ident-
ified 66 harmful tax measures, one of which was the measure
establishing the Trieste Financial Services and Insurance Centre.

(a) new companies with a turnover of more than EUR
10 million which operate in all sectors other than
those mentioned in Article 14(1) (i.e. tourism, hotels,
cultural goods, agri-food, ITC and craft activities);

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(b) new companies with a turnover of less than EUR 10
million which operate in all sectors other than those
mentioned in Article 14(2) (i.e.
industry); these are
basically companies in the agricultural and service
sectors);

(61) Moreover, the measure is selective insofar as it excludes
insurance and finance companies investing in Italy and in
other countries which do not appear on the exhaustive
list given in footnote 7.

(c) existing companies operating in the chemical and

petrochemical sectors (Article 15).

(62) Accordingly,

the Commission concludes

that

the

proposed measure is selective.

in particular
goods,

the sectors of
agri-food and ITC,

the measure favours certain productive
Consequently,
tourism, hotels,
sectors,
in which all
cultural
the five-year exemptions
companies are eligible for
favours existing and new
from IRAP. Secondly,
industrial companies with a turnover of less than EUR
10 million,
excluding companies operating in the
chemical and petrochemical sectors.

it

Even if the Italian authorities were to prove that there
were no new companies with a turnover of more than
EUR 10 million in industry, excluding the chemical and
petrochemical sectors, the measure, according to estab-
lished case law (15), would amount to a selective measure
favouring the abovementioned productive sector because
the
to
IRAP exemption is not
companies active in sectors other than industry.

available

five-year

Distortion of competition and trade between Member
States

(63)

In accordance with settled case law (16), for a measure to
distort competition it is sufficient that the recipient of the
aid competes with other undertakings on markets open
to competition.

(64)

The Commission observes that the measures contained in
Articles 14 and 15 seem to distort competition and
affect trade between Member States because they have
the effect of relieving beneficiaries of a burden that
they would otherwise have to bear.

Lastly, the measure seems to confer a selective advantage
on Sicilian companies in that only the taxable under-
takings having cumulatively their registered office, their
administrative headquarters and their place of business in
Sicily can benefit from the scheme. This does not seem
to be the case with all undertakings carrying on a
productive or commercial activity in Sicily and which
are subject to IRAP on that activity.

(65)

In the present case, the beneficiaries are companies of all
sizes that operate mainly in industry, excluding the
chemical and petrochemical sectors. These companies
compete with other companies on markets open to
in accordance with settled case
competition so that,
law, the IRAP exemption potentially distorts competition
and affects trade.

— Article 16: Euro-Mediterranean Financial Services and

Insurance Centre

Indeed,

from them.

that Article 16 confers
The Commission observes
selective advantages insofar as only certain companies
can benefit
the advantages are
provided only to insurance and finance companies
the Centre. The measure
authorised to operate at
therefore excludes all companies collecting funds on
the international markets in order to invest
them in
the countries referred to in footnote 7 and whose
activities with those countries are not carried on at the
Centre.

(15) See, for example, Case C-143/99 Adria-Wien Pipeline GmbH and
Wietersdorfer & Peggauer Zementwerke GmbH v Finanzlandes-
direktion für Kärnten [2001] ECR I-08365 concerning a rebate
granted only to undertakings manufacturing goods.

(66)

Similarly, the Commission considers that the measure
contained in Article 16 distorts competition and affects
Indeed, given the very
trade between Member States.
nature of their business, finance companies,
insurance
companies, real estate brokerages and trust companies
compete with other companies at European level.

(67) Accordingly,

the Commission concludes

that

the

proposed scheme constitutes State aid.

(16) Case T-214/95 Het Vlaamse Gewest v Commission [1998] ECR

II-717.

(57)

(58)

(59)

(60)

17.7.2007

EN

Official Journal of the European Union

L 185/17

(68)

V.3. Compatibility

Insofar as the measure constitutes State aid within the
meaning of Article 87(1) of the EC Treaty, its compati-
bility must be assessed in the light of the exemptions
provided for in Article 87(2) and (3). The exemptions
in Article 87(2), which concern aid having a social
character and granted to individual consumers, aid to
make good the damage caused by natural disasters or
exceptional occurrences and aid granted to certain areas
of the Federal Republic of Germany, do not apply in this
case. The measure cannot be considered to be an
important project of common European interest or to
remedy a serious disturbance in the Italian economy, as
provided for in Article 87(3)(b). Nor can the measure
qualify for the exemption under Article 87(3)(c), which
provides for authorisation to be granted for aid to
facilitate the development of certain economic activities
or of certain economic areas, where such aid does not
adversely affect trading conditions to an extent that is
contrary to the common interest. Lastly, the measure
does not have as its objective the promotion of culture
and heritage conservation as provided for in Article
87(3)(d).

(69) Article 87(3)(a) provides for the authorisation of aid to
promote the economic development of areas where the
standard of living is abnormally low or where there is
serious underemployment. Sicily is a region eligible for
that exemption.

(70)

the formal

the Commission explained the

investigation
In its decision to initiate
procedure,
reasons,
summarised in paragraphs 29 to 50, why it doubted
that
the measure could qualify for the exemption in
Article 87(3)(a). Furthermore, it ruled out the possibility
that the measure provided for in Article 16 of Regional
Law No 21/2003 could qualify for the exemption in
Article 87(3)(b), which provides for the authorisation of
aid to promote the execution of a project of common
European interest or to remedy a serious disturbance in
the economy of Italy.

(71)

In the absence of any comments from Italy or interested
third parties, the Commission can simply note that these
doubts are confirmed.

VI. CONCLUSION

(72)

The Commission concludes that the measure notified by
Italy and described in paragraphs 10 to 28 is not
and is not
compatible with the
covered by any of the exemptions laid down in the EC
therefore be prohibited.
Treaty. The measure must
According to the Italian authorities,
the aid has not
been granted, and therefore there is no need to recover it,

common market

HAS ADOPTED THIS DECISION:

Article 1

The aid scheme which Italy is planning to implement under
Articles 14, 15 and 16 of Law No 21/2003 of the Region of
Sicily constitutes State aid.

The aid referred in the preceding paragraph is incompatible with
the common market and may not therefore be implemented.

Article 2

Italy shall inform the Commission, within two months of noti-
fication of
the measures taken to comply
with it.

this Decision, of

Article 3

This Decision is addressed to Italy.

Done at Brussels, 7 February 2007.

For the Commission

Neelie KROES
Member of the Commission