Brussels, 27/01/2014 (Agence Europe) - In an opinion published on Thursday 23 January in case C-184/11, Advocate General Eleanor Sharpston suggests that the European Court of Justice fine Spain €50 million for failing to recover in a timely fashion all the unlawful state aid for the Basque Country between 1994 and 1997, despite a Court of Justice ruling to this effect.
The aid was granted by the three provinces in the Spanish Basque Country in the form of a business tax credit covering 45% of their investment and a reduction over the space of four years in the tax base for new companies, which remained in force until 1999 or 2000. The European Commission asked Spain to recover the aid in 2001. It failed to do so and was found guilty by the Court of Justice in 2006 in cases C-485/03 and C-490/03. The Commission then lodged a further case in April 2011 calling for a €64.54 million fine to be imposed.
In the opinion, Sharpston explains that the vast majority of the aid to be recovered, 86% of it in fact, was not recovered until after new the court case was lodged in 2011. Since then, in October 2013, the Commission has told the Court that all the aid has now been recovered. Spain says it recovered the aid to avoid having to pay a weightier fine, but it challenges the validity of the duty to recover the aid. As neither the 2001 Commission decision nor the 2006 Court judgment clearly defined the incompatible aid, it will be necessary - regardless of the fact that all the aid has now been recovered - for the Court to determine how much Spain was in fact required to recover.
The Advocate General considers that the need to recover the disputed aid has to be assessed in accordance with the 1998 regional aid guidelines. In her view, the “incentive requirement” in those guidelines permits the non-recovery only of aid for which it is established that the application was submitted before work started on the investment project. In recovering the aid in the form of a tax base reduction for new businesses, the Spanish authorities originally deducted €100,000 per three-year period from the amount to be recovered from each beneficiary (in effect applying the de minimis state aid rules), but it was not entitled to do so. Sharpston says that some of the tax deductions that the Commission says must be recovered were applied retroactively by Spain based on its own law, but this should not be included because this aid was not listed as unlawful aid in the 2001 decisions or the 2006 ruling.
In the light of these conclusions, the Advocate General estimates that, in round figures, a total principal sum of €322 million fell to be recovered at the date of the 2006 judgment, some 10% lower than the €358 million suggested by the Commission. She further proposes that the Court consider the amount of interest due also to be 10% lower than the figures given by the Commission. Some 14% of the total had been recovered by the date the present proceedings were brought. Sharpston says that a lump sum fine is appropriate as a dissuasive measure, given the length of time taken to recover the aid. (FG/transl.fl)