23.12.2004

EN

Official Journal of the European Union

C 319/7

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EFTA SURVEILLANCE AUTHORITY DECISION

of 25 February 2004

with regard to International Trading Companies

(ICELAND)

(2004/C 319/06)

THE EFTA SURVEILLANCE AUTHORITY,

Having regard to the Agreement on the European Economic Area (1), in particular to Articles 61 to 63 and to Protocol 26 thereof,

Having regard to the Agreement between the EFTA States on the establishment of a Surveillance Authority and a Court of Justice (2), in particular to Article 24 and Article 1 in Part I of Protocol 3 (3) thereof,

Having regard to the Procedural and Substantive Rules in the field of State aid (4), in particular Chapter 17B (5) thereof,

Having regard to the Authority's decision to open the formal investigation procedure (6),

Whereas:

I.   FACTS

1.   Procedure

2.   Description of the measures: The fiscal legislation applicable to ITCs in Iceland

Act No 31/1999 limits the scope of activities in which an ITC can engage to the following:

—	trade in its own name with foreign entities outside Iceland, or as an intermediary in such trading, in goods which are not covered by the EEA Agreement and which do not originate in Iceland;

—	act as an intermediary in the trading of services between foreign entities outside Icelandic jurisdiction;

—	operate as a holding company that owns and invests in foreign enterprises, or intangible assets, officially registered outside of Iceland, such as trademarks, patents, design rights and publishing rights;

—	own or control and register aircraft and vessels other than fishing vessels in Iceland, provided that such aircraft and vessels are only used for activities in which ITCs can engage;

—	own or control and register aircraft or vessels other than fishing vessels in Iceland, and lease or sub-lease to foreign entities for transport outside Icelandic jurisdiction;

—	it may not trade in its own name neither in goods with parties in Iceland nor with parties outside Iceland, nor may it serve as an intermediary in such trading and it may not process goods in Iceland partly or fully.

3.   Comments submitted by the Government of Iceland

II.   ASSESSMENT

Article 61(1) of the EEA Agreement states that:

1.   Selective advantage in favour of certain undertakings

2.   State resources

3.   Distortion of competition and effect on trade

4.   New aid

5.   Compatibility with the functioning of the EEA Agreement

6.   Recovery of aid already paid

7.   Conclusion

HAS ADOPTED THIS DECISION:

1.	The tax measures in favour of ITCs enacted in Iceland with Act No 31/1999 and Act No 29/1999 and related legislation constitute State aid within the meaning of Article 61 of the EEA Agreement. The tax regime applicable to ITCs in Iceland is incompatible with the functioning of the EEA Agreement.

2.	Iceland shall terminate the tax measures referred to in point 1.

3.

Iceland shall take all necessary measures to recover from the beneficiary the aid referred to in point 1 and unlawfully made available to the beneficiary, deducting any repayment already made to the respective authorities. Recovery shall be accomplished without delay and in accordance with the procedures of national law provided that they allow the immediate and effective execution of the decision. The aid to be recovered shall include interest from the date on which it was at the disposal of the beneficiary until the date of its recovery. Interest shall be calculated on the basis of the reference rate set by the Authority and shall be net of interest that has already been charged by the respective authorities.

4.	Iceland shall inform the Authority, within two months of notification of this Decision, of the measures taken to comply with it.

5.	This decision is addressed to Iceland. The Icelandic Government shall be informed by means of a letter containing a copy of the decision.

6.	This decision is authentic in the English language.

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(1)  Hereinafter referred to as the ‘EEA Agreement’.

(2)  Hereinafter referred to as the ‘Surveillance and Court Agreement’.

(3)  It has to be noted that the amendments to Protocol 3 to the Surveillance and Court Agreement, following an agreement between EFTA States of 10 December 2001, amending Protocol 3 to the Agreement between the EFTA States on the Establishment of a Surveillance Authority and a Court of Justice, entered into force on 28 August 2003. These amendments incorporated ‘Council Regulation (EC) No 659/1999 of 22 March 1999, laying down detailed rules for the application of [ex] Article 93 of the EC Treaty’ into Protocol 3.

(4)  Guidelines on the application and interpretation of Articles 61 and 62 of the EEA Agreement and Article 1 of Protocol 3 to the Surveillance and Court Agreement, adopted and issued by the EFTA Surveillance Authority on 19 January 1994, OJ L 231 of 3 September 1994, EEA Supplement No 32, last amended by the Authority's Decision No 198/03/COL of 5 November 2003, not yet published.

(5)  Chapter 17B on the Application of State aid rules to measures relating to direct business taxation, as adopted by the Authority's Decision No 149/99/COL of 30 June 1999, OJ L 137 of 8 June 2000, page 11, EEA Supplement No 26.

(6)  EFTA Surveillance Authority Decision 392/01/COL of 6 December 2001, OJ C 87 of 11 April 2002, page 10.

(7)  Chapter 17.B.3.1 of the State Aid Guidelines.

(8)  Similarly, see, for example, Commission Decision of 17 February 2003 on the State aid implemented by the Netherlands for international financing activities, OJ L 180 of 18.7.2003, page 52, para 82.

(9)  Case 173/73 Italy v Commission [1974] ECR 709.

(10)  See in this context the opinion of Advocate-General Ruíz-Jarabo in Case C-6/97 Italian Republic v Commission [1999] ECR I-2981, para. 27.

(11)  Chapter 17B.3.2 of the State Aid Guidelines.

(12)  Case T-55/99 Confederación Española de Transporte de Mercancías (CETM) v Commission [2000] ECR II-3207, para. 53.

(13)  Chapter 17B.3 of the State Aid Guidelines.

(14)  See in this context Commission Decision of 20 December 2001 on the State aid implemented by Spain in 1993 for certain newly established firms in Vizcaya (Spain), OJ L 40 of 14.2.2003, page 11, para 64.

(15)  Chapter 12 of the State Aid Guidelines which concerned the de minimis rule. This Chapter was deleted by the EFTA Surveillance Authority Decision No 198/03/COL of 5 November 2003. By EEA Joint Committee Decision No 88/2002 of 25 June 2002 (OJ L 266, 3.10.2002, p. 56) Commission Regulation (EC) No 69/2001 of 12 January 2001 on the application of Articles 87 and 88 of the EC Treaty to de minimis aid (OJ L 10, 13.1.2001, p. 30) was incorporated into Annex XV of the EEA.

(16)  See, i.e., Case C-142/87 Belgium v Commission (‘Tubemeuse’) [1990] ECR I-959, para. 43 and Joined Cases C-278/92, C-279/92 and C-280/92 Spain v Commission [1994] ECR I-4103, paras. 40 to 42.

(17)  Case 730/79 Philip Morris v Commission [1980] ECR 2671.

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