State aid: EC takes Greece to court for failure to recover illegal tax exemptions
24 February 2010
To re-establish the situation prior to the granting of the aid, the EC’s decision required Greece to immediately and effectively recover the incompatible aid, including interest, from its beneficiaries. To date, Greece has not recovered the aid.
The European Commission has decided to refer Greece to the Court of Justice of the European Union on the basis of Article 108(2) of the Treaty on the Functioning of the European Union (TFEU) for failing to comply with a Commission decision of July 2008. The 2008 decision ordered Greece to recover state aid unlawfully granted to hundreds of companies through illegal tax exemptions. To date, Greece has not recovered the aid from the beneficiaries.
Competition Commissioner Joaquín Almunia commented: "The recovery of illegal aid is about restoring a level playing field in the Single Market. The Commission is determined to take all necessary steps to ensure that Member States comply with their recovery obligations."
Article 2 of Greek Law 3220/2004 allowed companies to deduct up to 35 per cent of profits in 2003 and 2004 from their tax base for projects in a series of sectors (among others, production of textile materials and basic metals, manufacturing of automobiles, energy production, mining, intensive agriculture and fishery, large international trading companies and specific tourism undertakings). The companies had to use their tax exempt income to finance expenses, such as the purchase, construction and expansion of plants, buildings and equipment, the purchase of vehicles, relocation, leasing costs, studies, training and many others. Companies could claim this benefit directly from the tax authorities as the aid scheme was part of the Greek tax system.
On 18 July 2007, the Commission adopted a negative decision as regards this measure. The Commission found that the State aid scheme implemented by Greece under Article 2 of the Greek Law 3220/2004, which had not been notified to the Commission, was incompatible with the EU state aid rules. To re-establish the situation prior to the granting of the aid, the Commission decision required Greece to immediately and effectively recover the incompatible aid, including interest, from the beneficiaries. Only aid that, at the time of its granting, fulfilled all the conditions of the de-minimis regulations, block exemption regulations or aid programmes previously approved by the Commission does not have to be returned.
To date, the Greek authorities have failed to provide the Commission with information confirming recovery of the aid and the Commission has therefore decided to refer Greece to the Court of Justice of the European Union.
Background
The Commission's firm approach towards member states that fail to recover illegal aid is fully in line with the State Aid Action Plan presented in June 2005 and with the Notice on the implementation of recovery decisions.
© European Commission
