23.5.2015   

EN

Official Journal of the European Union

L 128/21

(1)

By letter dated 7 October 2011, the European Commission informed the Belgian authorities that it was launching a monitoring exercise to look into scheme N 649/2005 ‘Payroll tax partial exemption measures for R&D’ (hereinafter ‘the scheme’).

(2)

By letters dated 7 October 2011, 2 February 2012 and 6 January 2013, the Commission requested information on the implementation of the scheme. Specifically, it asked the Belgian authorities to send it a list of the companies which had benefited from aid of more than EUR 200 000 in 2009 and 2010. The Belgian authorities replied by letters dated 17 November 2011, 2 May and 4 June 2012 and 23 May 2013.

(3)

A meeting was also held between the Commission's services and the Belgian authorities on 13 June 2013.

(4)

By letter dated 4 December 2013, the Commission informed Belgium of its decision (hereinafter ‘the opening decision’) (3) to initiate the procedure laid down in Article 108(2) TFEU (hereinafter 'the formal investigation procedure').

(5)

The Belgian authorities submitted their comments and their replies to the questions raised in the opening decision by letters dated 3 March, 1 April and 4 and 27 July 2014. They provided supplementary information by e-mail on 17 September, 17 October and 21 November 2014. By 21 November 2014, the Commission had all the information it needed to examine the scheme's compatibility with the internal market.

(6)

The firm D39S SPRL submitted comments on 9 April 2014. By letter dated 16 May 2014, the Commission forwarded these comments to the Belgian authorities. They did not submit any comments in response.

(7)

The scheme was approved by Commission Decision C(2006) 2941 final of 4 July 2006 (4) (hereinafter ‘the Decision’).

(8)

The scheme provided for the following three measures:

(9)

Payroll tax is withheld at source on employees' salaries by all employers and paid to the State. The three measures referred to in recital 8 exempt the companies concerned from paying part of the payroll tax withheld on the salaries of the researchers identified in recital 8 points (a) and (b) and the scientific staff identified in recital 8 point (c).

(10)

In the Decision the Commission took the view that measures 1 and 2 were general measures that did not constitute State aid within the meaning of Article 107(1) TFEU.

(11)

Measure 3 did count as State aid within the meaning of Article 107(1) TFEU but on investigation was found to be compatible with the internal market in accordance with the criteria set out in Commission Regulation (EC) No 70/2001 (8).

(12)

Article 5a of Regulation (EC) No 70/2001 sets out the rules on aid for research and development. Measure 3 was qualified as aid for R&D projects whose eligible costs were personnel costs in respect of staff employed on a research project (9). The aid intensity ceiling of 35 % is the ceiling applicable to pre-competitive development projects (10).

(13)

The monitoring exercise identified some irregularities in respect of both the provisions of Belgian law establishing measure 3 and its implementation. The Commission therefore initiated the formal investigation procedure in the light of the following factors:

(14)

The Commission also examined in the opening decision the question of the applicable legal basis for analysing the compatibility with the internal market of the aid granted unlawfully under the scheme. In recital 40, it concluded that the aid should be analysed in the light of the Community framework for State aid for research and development and innovation (hereinafter ‘the R&D&I Framework’) (14).

(15)

During the screening exercise, the Belgian authorities acknowledged that they had failed to amend the national legislation to include a reference to the categories of research as referred to in recital 13(a), to notify the amendments to the scheme (believing that they had been made in the spirit of the Decision) and to notify the Commission that the scheme had been extended beyond 4 July 2011.

(16)

By letters dated 3 March and 1 April 2014, the Belgian authorities sent the list of companies that had benefited from the exemption from payroll tax between 2006 and 2013 (most recent tax data available). A total of 231 companies had benefited from the scheme over the period as a whole.

(17)

The Belgian authorities also stated in their letter dated 3 March 2014 that they were looking into the compatibility of the scheme with Commission Regulation (EU) No 651/2014 (15) and in particular Article 25 thereof on aid to research and development projects. The Belgian authorities have not informed the Commission of the outcome of this exercise.

(18)

The firm D39S, a research and development centre in the electronics and telecommunications sector, stated that the exemption from payroll tax provided significant support to young innovative companies enabling them to hire additional staff. The exemption had allowed it to increase its research and development activity while still responding quickly to market demands.

(19)

According to Article 107(1) TFEU ‘any aid granted by a Member State or through state resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the internal market’.

(20)

For a national measure to be qualified as State aid, the following cumulative criteria therefore have to be met: (i) the measure must confer an economic advantage on its recipient; (ii) the advantage must be imputable to the State; (iii) the advantage must be selective; and (iv) the measure must distort or threaten to distort competition and be likely to affect trade between Member States.

(21)

In the case at hand, the exemption from payroll tax granted to young innovative companies is a tax measure financed by state resources. The measure is available only to companies that fall under the definition of young innovative company and, as such, it is selective. By helping to finance their research and development costs, the measure confers an economic advantage on them. Lastly, as the beneficiaries operate in markets that are open to intra-EU trade, the measure is likely to affect competition and trade between Member States.

(22)

The scheme was classed as State aid in the Decision (16). The Belgian authorities did not dispute this classification during the monitoring exercise.

(23)

In the opening decision, the Commission found that, by failing to notify that the rate of exemption from payroll tax had been increased (from 50 % to 75 % by the Economic Recovery Act of 27 March 2009, and from 75 % to 80 % by the Act of 17 June 2013 laying down tax and financial provisions and provisions on sustainable development) and that the scheme had been extended beyond 4 July 2011 (the Decision provided for an initial duration of 5 years), Belgium had implemented unlawful aid. Belgium did not contest this finding and during the formal investigation procedure provided the data on the aid received by the beneficiaries under the scheme that the Commission needed in order to assess the compatibility of the aid.

(24)

In recital 40 of the opening decision, the Commission concluded that the compatibility of the scheme should be examined in the light of the R&D&I Framework, while leaving open the question of which section of the framework was applicable: the rules on aid for R&D projects (point 5.1 of the R&D&I Framework) or the rules on aid for young innovative enterprises (point 5.4 of the R&D&I Framework), given that the scheme appeared to target this specific category of undertaking.

(25)

As indicated in recital 16 above, the Belgian authorities stated that 231 companies had benefited from the scheme during the reference period. An analysis of the data revealed that:

(26)

Analysis of the last item (proportion of aid falling under measure 3) reduced the scope of the assessment as the amount of aid received under measure 3 was less than the total amount communicated by the Belgian authorities (for the scheme as a whole). Of the 48 companies referred to in recital 25(b), 14 received aid under measure 3 of more than EUR 200 000 over the reference period as a whole.

(27)

Point 5.1 of the R&D&I Framework sets out the criteria that have to be met for aid for R&D projects to be found compatible with the internal market.

(28)

In the light of the above, the Commission concludes that the aid paid out under measure 3 meets the requirements of point 5.1 of the R&D&I Framework.

(29)

In the opening decision, the Commission indicated that, because the scheme implemented aid in favour of young innovative companies, its compatibility was also to be examined on the basis of point 5.4 of the R&D&I Framework on aid to young innovative enterprises (recital 46). However, the Commission had doubts about whether the beneficiaries of the scheme met all the conditions set out in point 5.4 (definition of small enterprise, age, percentage of expenditure allocated to R&D, amount of aid).

(30)

An analysis of the data provided by the Belgian authorities showed that at the end of 2013 only two companies met all the conditions laid down in point 5.4 of the R&D&I Framework (while also meeting the requirements of point 5.1).

(31)

The Commission therefore concluded that point 5.1 of the R&D&I Framework on aid for research and development projects was the appropriate legal basis.

(32)

The R&D&I Framework, on the basis of which the scheme's compatibility was assessed, expired on 30 June 2014.

(33)

After 1 July 2014, if the conditions of Chapter 1 are met and if the requirements of Article 25 (aid for research, development and innovation) are complied with, the scheme could be covered by the exemption available under the GBER. The Belgian authorities are invited to inform the Commission of the outcome of their analysis and, if needed, to notify the prolongation of the scheme.

(34)

The Commission finds that Belgium has unlawfully implemented the scheme in breach of Article 108(3) TFEU. However, in the light of the above, the Commission considers that the continued application of the scheme by the Belgian authorities after 4 July 2011 and the amendments made to it are compatible with the internal market under Article 107(3)(c) TFEU until 30 June 2014,