Luxembourg, 26/03/2002 (Agence Europe) - In the Spain versus the European Commission affair, the Court of Justice points out that, if Spain changes the conditions set during approval of State aid, this may allow the Commission to consider such aid as not approved, states a Court press release. The Court declares that special tax credits, described as new aid, are incompatible with the Community provisions on State aid.
Spain had initiated action before the Court for cancellation of the 1999 European Commission decision on the illegality of the aid granted by Spain to state-owned shipyards. In August 1997, the Commission had authorised restructuring aid in favour of Spanish state-owned shipyards, providing for special tax credits with a ceiling of 58 billion pesetas for the period 1995-1999.
Before August 1995, the shipyards were part of the INI (Instituto Nacional de Industria) and could offset their losses by profits made by other companies within the same group, according to the general rules on tax consolidation applicable in Spain. In August 1995, the shipyards came under the control of the State holding, AEI (Agencia Industrial del Estado) which was in deficit and could therefore not give compensation. For this reason, the Commission authorised State aid in the form of special tax credits. The shipyards, however, again moved, in September 1997, to another holding company, the SEPI (Sociedad Estatal de Participaciones Industriales), which could benefit from the Spanish general rules allowing it to offset losses by gains. Further to this change, the shipyards obtained a general tax credit in 1998, corresponding to their losses in 1997, but also a special tax credit amounting to 18.451 billion pesetas. Under these conditions, the Commission concluded that this special tax credit was incompatible with its initial decision, taken in a situation where no tax credit could compensate for losses in the absence of profits by the AEI holding. The Commission therefore decided that the sum of the special tax credit, plus interest, should be recovered.
The Court recalls in a press release that, if the Commission notes aid that has been granted earlier in application of a given aid regime no longer meets the conditions initially set, the aid in question must then be considered as new aid. The Court notes that, following control changes that came about in 1997, the shipyards were again able to offset their losses after taxes by profits made elsewhere within the group. The Court considers that the Commission was entitled to consider the conditions allowing aid to be granted as no longer being fulfilled, and that the payment of the sum of 18.451 billion pesetas made in 1998 was no longer conform to the earlier decision to clear the aid.