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Three EU States' Tax Regimes For Ports Challenged

by Ulrika Lomas, Tax-News.com, Brussels

21 January 2016


The European Commission has announced that Netherlands must abolish an exemption from corporate tax for its six seaports, to align the regime with EU state aid rules, and separately has called on Belgium and France to align their tax regimes for ports with state aid rules.

Commissioner Margrethe Vestager, in charge of competition policy, stated: "Ports are key infrastructure for economic growth and regional development. I will soon present a proposal to facilitate unproblematic investments in ports that can create jobs, to exempt them from scrutiny under EU state aid rules. At the same time, the Commission's decisions today regarding the Netherlands, Belgium, and France make clear that if port operators generate profits from economic activities these should be taxed under the normal national tax laws to avoid distortions of competition."

The Commission highlighted that public companies, when carrying out economic activities, compete with private players, who are subject to paying corporate tax. It said: "The commercial operation of port infrastructure constitutes an economic activity. Public companies when carrying out economic activities should be subject to paying corporate tax, just like private companies are. These economic activities can be distinguished from other activities that [are] linked to the operation of infrastructure for the exercise of the essential responsibilities of the State (for example, safety, surveillance, traffic control), which fall outside the scope of EU state aid control."

Following complaints, the Commission asked the Netherlands in May 2013 to abolish provisions exempting certain public companies, including port operators, from corporate tax, because it was concerned that they may give the companies concerned an undue advantage over their competitors. In July 2014, the Commission opened an in-depth investigation.

In the course of the Commission's investigation, on June 4, 2015, the Netherlands adopted a law making public undertakings subject to corporate tax as of January 1, 2016. However, the law maintained a tax exemption for six publicly owned Dutch seaports (namely Groningen Seaports N.V., Havenbedrijf Amsterdam N.V., Havenbedrijf Rotterdam N.V., Havenschap Moerdijk, N.V. Port of Den Helder, and Zeeland Seaports). The Commission considers that the Dutch legislation addresses its state aid concerns, except for the six Dutch seaports that remain exempted from corporate taxation.

The Commission has concluded that this exemption also has to be abolished to remove the resulting distortions of competition. The Netherlands now has two months to take the necessary steps to remove the exemption in order to ensure that from January 1, 2017, the six ports are subject to the same corporate taxation rules.

In respect of Belgium and France, in July 2014, the Commission informed the nations about its concerns regarding their regimes for the taxation of ports.

In Belgium, a number of sea and inland waterway ports (notably the ports of Antwerp, Bruges, Brussels, Charleroi, Ghent, Liège, Namur, and Ostende, as well as along the canals in Hainaut Province and Flanders) are exempt from the general corporate income tax regime. These ports are subject to a different tax regime, with a different base and tax rates, resulting in an overall lower level of taxation for Belgian ports as compared to other companies active in Belgium.

Most French ports, notably the 11 "grands ports maritimes" (of Bordeaux, Dunkerque, La Rochelle, Le Havre, Marseille, Nantes - Saint-Nazaire, and Rouen, as well as Guadeloupe, Guyane, Martinique, and Réunion), the Port autonome de Paris, and ports operated by chambers of industry and commerce, are fully exempt from corporate income tax.

The Commission said it takes the preliminary view that, in both Belgium and France, the existing regimes provide the ports with a selective advantage that may breach EU state aid rules.

It has therefore now proposed measures to Belgium and France to adapt their legislation, to ensure public or private ports pay corporate tax on their economic activities in the same way as other companies in Belgium and France, respectively. Each country now has two months to react.

TAGS: tax | investment | marine | European Commission | Belgium | Netherlands | commerce | law | Guadeloupe | legislation | tax rates | France | Martinique | European Union (EU) | Europe

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