Brussels, 10/07/2002 (Agence Europe) - On Wednesday the European Commission decided to begin formal procedures into the compatibility of "State Aid" and the rendering system in France. This initiative has been brought about by the fact that the rendering tax introduced to finance the system also hits meat coming from other Member States but without this meat benefiting from the system in France, which helps only French slaughterhouses and farmers, who get free waste disposal and carcass removal services.
The rendering tax funds a public service that collects and gets rid of animal carcasses, as well as closes down slaughterhouses that are deemed unfit for processing food for humans and animals. It has been in operation since 1 January 1997 and focuses on meat sales and products covered by anyone involved in the sale or wholesale of these products and is based on the price, excluding VAT of all these purchases across the board. Since 2001, the tax rate has been set at 2.1% per tranche of monthly purchases up to EUR 19,056 and 3.9% above this rate. Companies whose annual turnover is less than EUR 762,245 excluding VAT are except from the tax.
France has never informed the European Commission of the "State Aid" aspects of the rendering system. The latter, finding out by way of plaintiffs. The investigation focuses on: 1) The fact that meat coming from other Member States is taxed in order to fund the rendering system, which appears to only benefit French slaughterhouses and farmers, which if proved, will constitute discrimination against meat from other Member States; 2) As the rendering tax is only applied after a certain turnover is achieved and is not based on meat sales, certain companies are even exempt from the tax in cases where they sell more meat than other companies whose profits are higher due to sales of other products. The Commission believes that this exemption appears to be unjustifiable within the taxation system and could constitute a State Aid that is unfair to the companies which are taxed; 3) The free rendering public service results in the beneficiaries of the system, notably the slaughterhouses, producers and wholesalers of animal flour, being exempt from spending on eliminating waste products in their activities. The Commission could consider this as a State Aid favouring slaughterhouses, producers and wholesalers of animal flour and is therefore a State Aid incompatible with European competition rules; 4) The Commission wants to more closely examine the way in which the companies responsible for rendering services are selected by the public authorities, as well as the level of public payments to the companies involved.
France has been called on to submit its comments on the Commission decision within thirty days. A summary of the decision will be published in the Official Journal of the Communities, calling on third parties to also submit their comments, which will then be sent to the French government for their reaction. The Commission will attempt to reach a final decision in the 18 months following the opening of procedures. In the case of a negative decision being reached, it will be expected to declare whether the aid already awarded will have to be reimbursed.