Brussels, 26/10/2006 (Agence Europe) - On 16 December 2003 the Commission concluded that the special tax regime applicable in France for takeovers of ailing companies under Article 44 septiès of the General Tax Code was incompatible with the state aid rules laid down in the EC Treaty and should be recovered from the recipients. The European Commission has now decided to institute proceedings in the Court of Justice in view of France's failure to comply with the Commission's 2003 decision because almost three years later, France has still not taken measures to recover the aid as required by the decision. The special tax regime, in force since 1989 (and notified to the Commission) gives full tax exemption on profits generated by newly established companies formed from the assets of bankrupt or failing companies. Since the Commission's assessment focused purely on the existence of aid within a regulatory framework and did not cover application of the tax regime to individual cases, and given that the amount of aid received was mainly contingent on the recipient's ability to generate profit, the Commission did not rule out that recovery might not be necessary in some cases. For example, measures might be compatible under certain exceptions to the prohibition on state aid or they might be below the threshold above which they would constitute state aid within the meaning of the EC Treaty. Otherwise, however, the aid had to be recovered, explains the Commission in a press release. (ab)