On 27 July 2017, the European Commission formally requested Belgium and France to abolish corporate tax exemptions for their ports, considering that their national regimes for the taxation of ports were incompatible with EU State aid regulation.
Profits by port operators must be taxed under normal national corporate tax laws to avoid distortions of competition. This decision follows inquiries initiated by the European Commission in 2013 regarding the functioning and taxation of ports in Member States.
In Belgium, a number of sea and inland waterway ports (notably the ports of Antwerp, Bruges, Brussels, Charleroi, Ghent, Liège, Namur and Ostend, as well as along the canals in Hainaut Province and Flanders) are exempt under Belgian law from the general corporate income tax regime.
These ports are subject to a different tax regime, with a different taxable base and tax rates, resulting in an overall lower level of taxation for Belgian ports as compared to other companies 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 under French law.
At the end of its investigation, the Commission concluded that the corporate tax exemptions granted by Belgium and France to their ports give them a special advantage which distorts competition between Member States and therefore constitutes an incompatible aid. Commissioner Margrethe Vestager, the EC’s Commissioner in charge of competition policy, stated:
“Ports are key infrastructure for economic growth and regional development. Recently, the Commission has introduced new rules to save Member States time and trouble when investing in ports and airports, whilst preserving competition. At the same time, the Commission decisions for Belgium and France – as previously for the Netherlands – make clear that unjustified corporate tax exemptions for ports distort the level playing field and fair competition. They must be removed.”
The Belgian and French authorities must now modify their legislation in order to include port operators in the scope of normal national tax laws before the end of 2017.
The law providing for corporate tax exemptions for ports already existed before the accession of France and Belgium to the European Community in 1958. Therefore, these measures are considered as existing aids and they should only be modified for the future. Thus, the beneficiaries of such exemptions cannot be compelled to reimburse the aid they have benefited from in the past – a notable feature of State Aid decisions that is absent in this case.
A similar procedure was launched against the Netherlands. In January 2016, the European Commission adopted a decision concluding that corporate tax exemptions granted to Dutch seaports constituted incompatible State aid, and the Commission requested the Netherlands to impose corporate tax on their ports from 1 January 2017.
Removing selective fiscal advantages does not mean that ports can no longer receive state support. Member States have many possibilities to support ports in line with EU state aid rules, for example to achieve EU transport objectives or to put in place necessary infrastructure investment which would not have been possible without public aid.
For example, the recent new Block Exemption Regulation of 14 June 2017 provides for investment aid to ports can now invest up to €150 million in sea ports and up to €50 million in inland ports with full legal certainty and without prior verification by the Commission.
The Regulation also allows public authorities to, for example, cover the costs of dredging in ports and access waterways. Furthermore, EU rules enable Member States to compensate ports for the cost of undertaking public service tasks (Services of General Economic Interest).
The non-confidential versions of these decisions are available under the case numbers SA.38393 (Belgian ports) and SA.38398 (French ports) in the State Aid Register on the Commission’s competition website.