EC Takes Action Over Alumina Tax Break Offered By France, Ireland and Italy

by Ulrika Lomas, for LawAndTax-News.com, Brussels

09 December 2005

The European Commission this week decided that under EU state aid rules, for the period up to 30.12.2003, part of the total exemptions from excise duty on mineral oils used as fuel for alumina production granted by France, Ireland and Italy constituted illegal operating aid liable to distort competition within the EU’s Single Market.

Alumina is a white powder, produced from bauxite ore, used in smelters to produce aluminium.

The Commission explained on Wednesday that:

"The aid has been given without prior Commission approval and would normally therefore be fully repayable. However, given the specificities of the case and in particular the fact that these exemptions had been authorised under EU rules on excise duties by Decisions of the EU’s Council of Ministers based on Commission proposals, the Commission considers that until publication of its decision to launch a formal investigation procedure...the beneficiaries might had grounds to believe that the measures in question did not involve incompatible state aid."

"Consequently, the Commission has ordered the beneficiaries to repay only that part of the incompatible aid received from 03.02.2002 onwards. The investigation of the exemptions as from 1st January 2004 remains open."

“The Commission’s action will remedy serious distortions of competition by ordering repayment of large tax breaks benefiting selected companies” commented Competition Commissioner Neelie Kroes.

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