Brussels, 17/03/2005 (Agence Europe) - On Wednesday the Commission decided that the Italian tax system granting a reduction of taxes to companies quoted on the stock market for the first time in 2004, constituted illegal state aid and has demanded that it be repaid. Introduced without the prior consent of the Commission, these measures were valued at EUR 56 million for the Italian budget last year. Neelie Kroes European Commissioner for Competition declared that, “Commission action will prevent serious distortions to competition by banning significatnt taxt reductions to a determined group of beneficiaries in Italy”.
In 2004, Italy set up a preferential tax regime for companies that were quoted on the stock markets for the first time last year. This consisted of a three-yearly reduction of 13% in corporation tax, as well as an integral reduction of admission costs. Following the enquiry, the Commission noted that this measures was not likely to be applied to companies that could be quoted in Italy in 2004 and that under this system, they could benefit from tax incentives of several million euro. A Commission press release, given that these firms are all rapid growth companies, the system in question could have significant effects over the planned three years of application. The Commission avers that the Italian tax regime consists of slective state aid as it only grants tax reduction benefits to companies floated on the stock market in 2004 and therefore favours companies sset up in Italy. Tax incentives in Italy were linked to income generated by the firms over this period and the measures works in a way that is not authroorised by Commuity state aid rules. Moreover, this aid id reserved for the highest performing companies in the Italian economy, which results in intra-Community trade and competition being damaged, explains the Commission.