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EU Approves Tax Breaks For French Regions

by Ulrika Lomas,, Brussels

16 March 2017

The European Commission has approved proposals for reductions to France's octroi de mer tax, which is levied on goods imported to France's outermost regions and locally produced goods.

The proposed scheme provides for reductions of the tax for a specific list of products produced locally in the regions.

The Commission considers the scheme promotes the development of the outermost regions of Guadeloupe, Guyane, Martinique, Mayotte, and La Réunion without unduly distorting competition in the Single Market.

More than 800 products will benefit from the reduced tax.

The Commission explained that France has quantified the additional costs incurred by the companies in these regions for each product. The Commission concluded that the aid granted will not exceed what is necessary in order to compensate for those additional costs, and that it is proportionate, in line with EU rules.

All outermost regions, including the French ones, have been granted special regional aid status in the Treaty on the Functioning of the European Union. Under the regional aid guidelines, operating aid can be authorized to compensate for additional costs attributable to one or several of the permanent structural disadvantages faced by these regions and cited in the Treaty.

The scheme will remain in force until the end of 2020. The French authorities will carry out an evaluation of its effectiveness by the end of 2017.

Competition Commissioner Margrethe Vestager said: "The French outermost regions are located several thousands of kilometres from the home market in mainland Europe. As a result, companies producing local products in these outermost regions face significant additional costs. The aid provided under the octroi de mer scheme will contribute to regional development in line with EU rules."

TAGS: tax | European Commission | tax incentives | Guadeloupe | tax rates | France | Martinique | Mayotte | tax breaks | European Union (EU) | Europe

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