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EU Pressures Italy To End Tax Exemptions For Ports

by Ulrika Lomas, Tax-News.com, Brussels

10 December 2020


On December 4, 2020, the European Commission said that Italy must abolish its corporate tax exemptions for ports in order to align its tax regime with EU state aid rules.

In Italy, port authorities are fully exempt from corporate income tax. In January 2019, the Commission invited Italy to adapt its legislation to ensure that ports would pay corporate tax on profits from economic activities in the same way as other companies in Italy, in line with EU state aid rules.

In November 2019, the Commission opened an in-depth investigation to assess whether its initial concerns as to the compatibility of the Italian tax exemptions with EU state rules could be confirmed. The Commission has now concluded that assessment. It said that the corporate tax exemption granted to Italian ports provides them with a selective advantage, in breach of EU state aid rules.

In particular, the Commission argued that the tax exemption does not pursue a clear objective of public interest, such as the promotion of mobility or multimodal transport. The tax savings generated can be used by the port authorities to fund any type of activity or to subsidize the prices charged by the ports to the customers. The Commission said this is to the detriment of competitors and fair competition.

Competition Commissioner Margrethe Vestager said: "EU competition rules recognize the relevance of ports for economic growth and regional development, allowing member states to invest in them. At the same time, to preserve competition, the Commission needs to ensure that, if port authorities generate profits from economic activities, they are taxed in the same way as other companies."

The Commission said that Italy must now take the necessary steps to remove the exemption, in order to ensure that, from January 1, 2022, all ports are subject to the same corporate taxation rules as other companies.

TAGS: compliance | tax | business | European Commission | tax compliance | interest | corporation tax | legislation | Italy | tax breaks | European Union (EU) | Europe

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