Brussels, 21/12/2006 (Agence Europe) - Following an in-depth investigation, the European Commission concluded, on 20 December, that the French tax scheme for financing assets leased by economic interest groupings (EIGs) constitutes state aid. In a press release, the Commission says that this scheme, which has mainly benefited the maritime transport sector, constitutes state aid because of the selective advantage it confers on some sectors and the discretionary nature of how aid is granted. The scheme is incompatible with the common market, with the exception of the aid to facilitate the development of rail transport and of such other aid measures as may be compatible under sectoral or regional rules, according to the Commission. For reasons of legal certainty, the recovery of the unlawful, incompatible aid will be limited to aid granted since the decision to open a formal investigation procedure was published. France must now amend the fiscal EIG scheme to bring it into line with state aid rules.
Under French General Tax Code, the tax deductible depreciation of assets leased by an EIG may not exceed the amount received by way of rent. It also provides, however, for an exception to this rule. Subject to prior ministerial approval, operations involving assets depreciable over a period of more than eight years are not subject to the above restriction. In addition to the removal of the depreciation ceiling, such operations benefit from a one-point increase in the depreciation coefficient normally applicable to the asset concerned and also, where appropriate, from exemption from capital gains tax in the event of an asset being sold by the EIG to its user. The Commission considers that these advantages clearly favoured certain economic sectors, primarily the transport sector, in which assets depreciable over more than eight years are used (ships, aircraft, trains, etc.). It says, too, that an analysis of the parliamentary proceedings leading to the scheme's adoption bears out this assessment of the selective nature of the scheme, and that the French authorities clearly intended to promote maritime investment. The conditions for granting ministerial approval were, moreover, discretionary. Apart from the users of the assets concerned, the members of the EIG, which are financial institutions for the most part, also benefit from the aid at issue in that they receive a share of the benefit of the tax advantages.
During the course of the investigation procedure, many beneficiaries of the scheme at issue, from the maritime and air transport sectors, and also the financial sector, put forward their points of view and expressed serious concern about the outcome of the procedure. Despite the unlawful nature of the tax scheme at issue - France failed to notify it, despite being required to do so under the Treaty - the Commission has limited recovery of the aid to that which was granted after 13 April 2005, when the decision to open the formal investigation procedure was published. The exceptional circumstances, due, among other things, to the Commission's learning of the scheme during an investigation into complaints concerning the financing of ships, justifies this time limit on the recovery of aid. The Commission believes any other approach would have been contrary to the principle of legal certainty. (ol)