21/03/2012 (Agence Europe) - Investigation opened into the reduction of, or exemption from, a Danish tax on the protection of drinking water. On Wednesday 21 March, the European Commission decided to open a formal procedure under EU rules to investigate state aid for the reduction of, or exemption from, the Danish tax on the protection of drinking water in the farming sector. The tax in question is payable in full by the owners of public water supply systems. However, users who hold a water-extraction permit for their own well (which is generally the case in the farming sector) are granted a reduction, or are fully exempt, if the permit is for less than 6,000 m³ a year. At this stage, the Commission takes the view that the reduction or exemption is a measure comprising an element of state aid as it seems to be selective and not justified in terms of the logic of the Danish tax system. The Commission also asserts that the aid seems at this stage to be difficult to justify in the light of the relevant competition rules. (OL/transl.fl)