On Friday 4 December, the European Commission found that implementation of the aid scheme for the Madeira Free Zone (Regime III) in Portugal does not comply with State aid rules.
The Commission argued that the investigation showed that planned tax reductions were applied to companies that made no real contribution to the region’s development, including jobs created outside Madeira (and even outside the EU), in breach of the conditions of EU state aid rules.
Portugal must now recover the aid declared incompatible, plus interest, from the companies that did not meet the conditions.
The Commission linked the amount of aid that could be granted to each beneficiary to the number of jobs created or preserved in Madeira.
The Commission found, however, that: - the number of jobs taken into account for the calculation of the aid amount included jobs created outside the Madeira Free Zone and even outside the EU; - part-time jobs were counted as full-time jobs and board members were considered as employees of companies benefiting from the scheme, without an adequate method of calculation; - the benefits of the tax reduction were not limited to those linked to activities effectively and materially performed in Madeira. The report can be found at: https://bit.ly/2VAsjYW (Original version in French by Lionel Changeur)