Brussels, 16/07/2003 (Agence Europe) - On Wednesday, the European Commission decided to initiate an appeal before the Court of Justice further to the decision taken by the Budget Council that same morning to authorise Belgium to renew application of the preferential tax regime to certain coordination centres until end 2005. Approval for such application expires before that date. The Commission considers that the Council decision is illegal as it comes after its final decision of 17 February 2003. In a press release, it specifies that the Commission alone is in principle entitled to give its decision on whether aid is compatible. Furthermore, the treaty limited the Council's possibility to intervene in the field of State aid. Such intervention, the press release states, is possible before or during a Commission inquiry, but under no circumstances after the investigation has been closed. The Commission goes on to stress that a Council decision relating to aid for which the Commission has already enacted is detrimental to the institutional balance of the powers as foreseen in the treaty. It is also detrimental for the integrity and effectiveness of monitoring with regards State aid. All these arguments explain that the Commission has decided to refer the matter to the Court, as it had done in March 2002, when the Council under similar circumstances had allowed Portugal to grant aid to its pig farmers. Following the adoption, on 11 November 1998, of the communication on application of the rules relating to State aid to direct corporate taxation measures, the Commission initiated, on 11 July 2001, large-scale action toward 15 tax regimes, including the system of Belgian coordination centres. After an indepth inquiry, it decided, on 17 February 2003, that the tax regime for coordination centres was incompatible with State aid rules.
The Commission had provisionally authorised the coordination centres to continue their activities until expiry of the authorisations received from the tax administration. It had, however, banned all extension of authorisations after expiry. As a result, the Council's decision on the coordination centres brings into question the Commission's decision of 17 February. The Commission claims to make the Court recognise that, in taking this decision, the Council is acting in breach of the treaty since the latter does not permit amendment of decisions already adopted by the Commission in the context of monitoring of State aid.
As, in the past, this system was approved on two occasions, in 1984 and 1987, the Commission acknowledged the fact that the confidence expressed by the coordination centres was legitimate, and therefore did not demand repayment of aid already paid out. It also authorised the existing coordination centres to benefit from the system until their authorisations expire, and at any rate no longer than 31 December 2010. On the other hand, the Commission felt that the coordination centres for which approval naturally expires before this date were not entitled to renewal of the preferential tax regime.
Belgium challenged this last point and introduced a request to the Council with a view to authorising renewals on the basis of a provision of the treaty (Art. 88 par. 2, 3rd indent) which allows the Council to decide, when exceptional circumstances justify it, that State aid is compatible. On Wednesday, the Council gave a positive welcome to the Belgian request. In parallel to its action before the Council, Belgium initiated several actions before the Court, aimed above all at cancelling the decision of 17 February 2003. Pending the judgement on the substance of the case, the President of the court ordered, on 26 June 2003, suspension of the decision of the Commission in that it bans renewal of the advantages that the regime gives to centres whose authorisation reaches the expiry date after 17 February 2003. The Commission stresses that the reasoning developed in the ruling and the very wording of the provisions allows one to think that the aid granted on this basis is definitively acquired for the centres, even if the Court later gives a judgement on the substance of the Belgian appeal.