Luxembourg, 07/03/2002 (Agence Europe) - The Court of First Instance has considered as incompatible with European law the individual tax subsidies granted by the province of Alava (Spain) to the companies Daewoo Electronics Manufacturing Espana (Demesa) and Ramondin Capsulas, states a press release from the Court of Justice. The above companies, the Diputación Foral de Alava and the Comunidad Autónoma del País Vasco had initiated proceedings before the Court of First Instance. They called for decisions taken by the European Commission to be cancelled. These decisions had concluded that certain advantages granted to these two companies by Diputación Foral de Alava were incompatible with Community provisions.
On the advantage allowing Diputación to sell a piece of land below the market price to Demesa and to defer payment for this land, the Court of First Instance considers that the Commission fixed the market price in an arbitrary fashion and that it did not sufficiently prove that Demesa had received aid due to the fact that it had occupied the land free of charge for nine months.
Regarding the historic rights of Territorio Histórico de Alava in tax matters, the Court of First Instance points out that tax autonomy enjoyed by this territory, recognised by the Spanish constitution, is not in the balance.
On tax credit and reduction of the tax base for corporate tax in favour of newly created enterprises, the press release points out that these tax measures are in fact aid likely to cause competition distortion and to affect trade.
As far as the reduction of the tax base in favour of the newly created companies is concerned, the court of First Instance notes, however, that the Commission did not establish the fact that Demesa had effectively benefited from this advantage.