Article 1 
1. By way of derogation from Articles 28, 30 and 110 TFEU, the Spanish authorities shall be authorised until 31 December 2027 to lay down, in respect of the products falling within the categories listed in Annex I that are produced locally in the Canary Islands, total exemptions from or partial reductions in the tax known as ‘ Arbitrio sobre las Importaciones y Entregas de Mercancías en las islas Canarias ’ (‘AIEM tax’). Those exemptions or reductions shall form part of the strategy for economic and social development of the Canary Islands and contribute to the promotion of local activities. 2. Application of the total exemptions or of the partial reductions referred to in paragraph 1 shall not lead to differences in excess of 15 % for the products falling within the categories listed in Annex I. The Spanish authorities shall ensure that the exemptions or reductions applied to the products do not exceed the percentage strictly necessary to maintain, promote and develop local activities. The authorised tax differential shall not exceed the proven additional costs. 3. The fiscal advantage shall apply subject to a limit of EUR 150 million per annum, except in duly justifiable cases.
Article 2 
1. The Spanish authorities shall select the products referred to in Article 1(1) taking into account the following criteria: (a) local production exists and its share of the local market accounts for at least 5 %; (b) significant importation of goods (including from mainland Spain and other Member States) exists which could jeopardise the continuation of local production, and its share of the local market accounts for at least 10 %; (c) additional costs exist which increase the costs of local production in comparison with products produced elsewhere, compromising the competitiveness of products produced locally. 2. The Spanish authorities may derogate from the market share thresholds referred to in points (a) and (b) of paragraph 1 in duly justified circumstances, which include: (a) labour-intensive production; (b) production which is otherwise of strategic importance for local development; (c) production subject to periodical fluctuations; (d) production located in particularly disadvantaged areas; (e) production of medical products and personal protective equipment required to address health crises.
Article 3 
By 1 January 2021, the Spanish authorities shall communicate to the Commission the initial list of products to which exemptions or reductions are applied to. Those products shall fall within the product categories set out in Annex I. Amendments to this list of products may be made by the Spanish authorities, provided that the Commission is notified of all the relevant information.
Article 4 
By 30 September 2025 at the latest, the Spanish authorities shall submit a monitoring report to the Commission to enable it to assess whether the conditions justifying the authorisation set out in Article 1 continue to be fulfilled. The monitoring report shall contain the information set out in Annex II.
Article 5 
This Decision shall apply from 1 January 2021.
Article 6 
This Decision is addressed to the Kingdom of Spain.