Commission Decision (EU) 2017/2115
of 27 July 2017
on aid scheme SA.38393 (2016/C, ex 2015/E) implemented by Belgium — Taxation of ports in Belgium
(notified under document C(2017) 5174)
(Only the French and Dutch texts are authentic)
(Text with EEA relevance)
THE EUROPEAN COMMISSION,
Having regard to the Treaty on the Functioning of the European Union, and in particular the first subparagraph of Article 108(2) thereof,
Having regard to the Agreement on the European Economic Area, and in particular Article 62(1)(a) thereof,
Whereas:
On 3 July 2013, the Commission sent a questionnaire on the functioning and taxation of ports to all Member States to gain an overview of the state of play and clarify the situation of ports in the light of European Union State aid rules pursuant to Article 107 of the Treaty on the Functioning of the European Union (‘TFEU’). The Belgian authorities responded by letters dated 30 September and 9 October 2013. By letter dated 20 January 2014, the Commission requested additional information on the taxation rules applicable to ports. The Belgian authorities responded by letter dated 13 March 2014 and the Port of Brussels sent its observations in a letter received on 18 March 2014.
By letter of 21 March 2016, the Belgian authorities forwarded comments on the proposed appropriate measures to the Commission.
By letter dated 8 July 2016, the Commission decided to initiate the procedure provided for in Article 108(2) TFEU, pursuant to Article 23(2) of the Procedural Regulation.
Belgium presented its comments by letters dated 9 September 2016 (Federal Ministry of Finance) and 16 September 2016 (Walloon Region and Walloon ports).
The Commission received comments from the following interested parties: Sea Invest, user of the ports of Antwerp, Ghent and Zeebrugge (14 September 2016), the Port of Rotterdam, acting on behalf of five Dutch publicly owned seaports (16 September 2016), the Port of Brussels (16 September 2016), the Flemish Port Commission (Vlaamse Havencommissie) (19 September 2016) and, after an extension of the deadline to present comments, the ports of Antwerp and Zeebrugge (4 October 2016).
The European Commission forwarded those comments to Belgium, which was given the opportunity to respond. It received comments from Belgium by letter of 14 November 2016. A meeting was organised between the Belgian authorities and the Commission on 19 December 2016, during which additional comments were communicated to the Commission. A further meeting was organised between the Belgian federal and regional authorities, certain beneficiaries of the measure and the Commission on 10 January 2017.
In Belgium, the land occupied by ports is part of public property (domaine public/openbaar domein). In the 1990s, the operation of the main Belgian ports was transferred to decentralised bodies. Some ports are operated by autonomous municipal port authorities (such as the ports of Ghent, Ostend and Antwerp), while others are operated by legal persons under public law (such as the autonomous ports of the Centre and West, Liège, Charleroi and Namur) or by a limited liability company under public law for the port of Zeebrugge.
The ports are operated by port authorities, which are public entities.
In its letter of 8 July 2016, the Commission considered that the Belgian authorities had not accepted the timetable for the implementation of the appropriate measures indicated by the Commission in its letter of 21 January 2016 and that the Belgian Government apparently did not clearly accept even the principle of subjecting the ports to corporate tax or undertaking to abolish the tax exemption in favour of the Belgian ports. The Commission concluded from this that the Belgian authorities had not accepted the appropriate measures proposed by the Commission on 21 January 2016 unconditionally, unequivocally and in full.
Since the Commission still considered that the corporate tax exemption in favour of Belgian ports, where they engaged in economic activities, constituted an existing State aid scheme and since it had doubts about the compatibility of this aid scheme with the internal market, it decided to initiate the procedure provided for in Article 108(2) TFEU, pursuant to Article 23(2) of the Procedural Regulation.
The Belgian ports and Belgian authorities consider that ports are not ‘undertakings’ within the meaning of Article 107(1) TFEU, since their tasks, notably the administrative management of public and private property, are not of an economic nature. They stress that these tasks are of general interest and are imposed on or delegated to them by the public authorities, which are free to define the scope of non-economic services of general interest. They point out that the port authorities have special powers to carry out these tasks, are subject to the control of the authorities and do not have a profit-oriented objective, the surplus being reinvested in the port infrastructure and, in the case of some ports, paid to their shareholder municipality.
In their view, the principal economic activities which take place in the ports are carried out by concessionaires which take care of the handling (loading and unloading) of goods, while the port authorities have nothing at all to do with the commercial contracts concluded between concession-holding companies and shipowners. The ports are therefore not operated commercially by the port authorities but by the companies to which the infrastructure concession is granted and on which these companies must themselves construct the superstructures (cranes, warehouses) necessary for the handling services.
Finally, they consider that the economic activities of the ports, such as lifting (crane services) and towing, are entirely ancillary in nature.
The Flemish Port Commission considers that, since the port authorities increasingly have to finance non-economic infrastructures coming within the remit of the regions, the corporate tax exemption does not constitute an advantage.
The Port of Rotterdam points out that the ports of Antwerp, Zeebrugge and Ghent have a real tax rate below 1 % of accounting profit.
The Belgian authorities maintain that, since the ports pay the tax on legal persons, the condition that the advantage must be granted from State resources is not met.
Most of the interested parties and the Belgian authorities consider that the reference system with regard to the taxation of legal persons is not corporate tax (as stated in the opening decision), but Article 1 of the CIR, which establishes two taxation systems in parallel for resident legal persons (corporate tax and tax on legal persons) according to the criteria defined in Article 2 of the CIR (activity of the legal person consisting, or not, in a ‘business’ or ‘operations of a profit-making nature’). They add that Article 180 of the CIR, which provides that the ports are not subject to corporate tax, merely clarifies and applies Article 1 of the CIR. Certain interested parties and the Belgian authorities also consider that the tax on legal persons is the reference system for the ports, which are not ‘companies’ within the meaning of Article 2 of the CIR, and that Article 180(2) of the CIR does not derogate from the general rules for the taxation of legal persons, but merely applies these general rules. They therefore maintain that, even if Article 180(2) were deleted, the ports would not necessarily be subject to corporate tax since the administration would have to examine their situation individually in the light of the general criteria of Articles 1 and 2 of the CIR and, since the ports are not ‘companies’ within the meaning of Article 2 of the CIR, they would not be subject to corporate tax.
The Walloon Region and the Walloon ports add that this duality (existence of two systems for the taxation of income: corporate tax and tax on legal persons) is essential and inherent in the income tax system and derives from the Belgian Constitution. Moreover, in their view, the Belgian Constitution does not require the legislator to subject certain activities to tax and, for the public administrations by definition (the State, communities, regions, provinces and municipalities), the public and private property assigned to a public service is exempt from taxation by virtue of a generally accepted principle of law. The Belgian authorities also point out that, according to the case-law of the national courts, public services, tasks and goods are not taxed unless expressly provided for by law.
For the port authorities of Antwerp and Zeebrugge and the Belgian authorities, entities which, like the ports, do not distribute their profit but reinvest it or which pursue an objective beyond their own interests are subject to the tax on legal persons, which is in keeping with the logic of the system.
They also maintain that they are in a different situation from that of other undertakings subject to corporate tax. Although enjoying a certain autonomy and notwithstanding the possible existence of economic activities, the port authorities are public authorities and carry out tasks of general interest, on a non-profit basis, in accordance with their statutes. They do not use industrial or commercial methods and their actions are not guided by short-term returns on investments. The concession fees and port charges do not always cover the costs they incur. They carry out public service tasks, the net cost of which would not be deductible from the corporate tax base pursuant to Article 49 of the CIR. If this net cost were subject to corporate tax, this would lead to discrimination in relation to other undertakings and to a reduction in the investment capacity of the ports.
The Flemish Port Commission maintains that, in other Member States, and in particular the Netherlands, the same port activities are financed by the public authorities, so the conditions of competition are not distorted.
They indicate that, according to the Notice of 19 July 2016, in a network infrastructure different elements of the network complement each other, instead of competing with one another (paragraph 211 and footnote 311), which rules out a distortion of competition. They point out that, in this Notice, the Commission applies this principle to the construction of railway infrastructure (paragraph 219) and the construction of road infrastructure, including toll-roads (paragraph 220), but they consider that it also applies to ports.
The Walloon Region and the Walloon ports note in particular that the inland ports exempt from corporate tax are not in competition with other private inland ports making the same infrastructure accessible to the public. The Federal authorities add that the inland ports, which are small, are complementary to the other ports and are in competition only with road transport.
The Port of Rotterdam points out that the Dutch public ports are in competition in particular with the ports of Antwerp, Zeebrugge and Ghent.
The Walloon Region and the Walloon ports consider that Article 106(2) TFEU constitutes an appropriate basis for the compatibility of the measure: the ports have a clear legal mandate and the ports undeniably meet all the conditions laid down by that Article. They stress that compatibility in terms of Article 93 TFEU, which does not make the absence of an effect on trade a condition of its application, must be evaluated extensively.
The port authorities of Antwerp and Zeebrugge consider that the Commission's response to the arguments presented concerning the compatibility of the measure is insufficiently reasoned. They add that Article 93 TFEU could be used as a basis for the compatibility of the measure, since the ports have to finance infrastructure contributing to the trans-European transport networks.
The Belgian authorities ask the Commission for a transitional period with respect to subjecting the ports to corporate tax. They stress that the time limit provided for in the opening decision of 8 July 2016 (subjecting the ports to corporate tax from 1 January 2017) is too short, especially in relation to the time limit allowed the Netherlands in the context of case SA.25338. They emphasise that the deletion of Article 180(2) CIR would involve a legislative procedure lasting ‘generally speaking, at least three to six months’. In their view, legislative amendments which are far more complex than merely deleting Article 180(2) are required, since (i) this deletion would not necessarily result in the ports being made subject to corporate tax, (ii) the preparation of a new tax regime for the ports must take account of the constitutional principle of equality and (iii) the transition by a legal person from the tax on legal persons to corporate tax is not explicitly regulated in Belgian tax law. They add that the Commission, in the case of expiry of an aid scheme presumed to be existing, must respect a Member State's legitimate interests in ensuring legal certainty for beneficiaries.
The Port of Rotterdam asks the Commission to postpone subjecting the Dutch ports to corporate tax until a sector inquiry has been carried out and all the seaports in the North Range become subject simultaneously to the tax or, at the very least, to subject the Belgian and French ports to corporate tax rapidly and simultaneously.
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.
In this respect, and unlike the Belgian authorities and certain interested parties, the Commission considers that the case-law of the Court concerning airports must be applied to ports, which are simply another type of infrastructure. The differences identified by certain interested parties between ports and airports – and especially the differences in legal structure or the fact that the ports are public-law entities which are not profit-oriented – are not relevant in terms of the general criterion relating to the supply of goods or services on a market, which forms the basis for the Court case-law. Likewise, the Commission notes that the Court, in paragraph 90 of the Aéroports de Paris judgment, recalls that ‘the Court of First Instance properly found that the commercial fees in issue constituted consideration for […] services as manager of the airport facilities’; it is therefore incorrect to assert that this case did not relate to the supply of infrastructure services, as the Belgian authorities and certain interested parties maintain.
In order to determine whether the Belgian ports are undertakings, there is no need to evaluate the economic or non-economic nature of each of their activities. It is sufficient to establish that the entities referred to by the measure at issue in fact engage in one or more economic activities, for which they will be regarded as an ‘undertaking’. In this respect, the fact that an entity engages in one or more sovereign or non-economic activities does not disqualify it altogether from being designated an ‘undertaking’.
The fact that third-party undertakings use certain port land and infrastructure to provide services to shipowners or ships does not prevent the management activities carried out by the port authorities, consisting in particular in renting the land and infrastructure to these third-party undertakings, also being of an economic nature.
- The fact that the tasks of ports are of general interest and imposed on or delegated to them by the public authorities: this is the case for all services of general economic interest (‘SGEIs’), which are nevertheless economic activities. More generally, ‘the fact that a particular service is provided in-house has no relevance for the economic nature of the activity’39. On the other hand, the general interest may be taken into consideration to assess, where appropriate, compatibility of aid granted by a State to an undertaking to support its economic activity.
- The fact that the port authorities are vested with special powers to perform these tasks40: such special powers do not prevent the port authorities from being able to engage in an economic activity by offering goods or services on a market. Where appropriate, these powers may constitute an instrument for intervening on this market.
The fact that the port authorities increasingly themselves have to finance non-economic activities coming within the responsibilities of the regions, and even activities unrelated to port operation: such a characteristic in no way alters the economic nature of the port activities consisting of supplying goods or services on a market. Absent or imperfect compensation by the State for the costs associated with non-economic activities that it imposes on the ports confirms, rather than refutes, the fact that ports engage in economic activities alongside certain non-economic activities. The tax benefit derived by a port from the scheme at issue is proportional to the profits made by that port and is in no way linked to the (uncompensated) cost of the non-economic activities imposed on it by the State. The Commission cannot therefore take account of this in its assessment of the scheme.
- The fact, assuming it to have been established41, that the ports do not have a profit motive and systematically reinvest their profits: it is settled case-law that the absence of profit motive on the part of the person providing a service does not imply that this service is of a non-economic nature42. Likewise, the systematic reinvestment of the profits in the activity is not decisive in differentiating an economic activity from a non-economic activity. Any undertaking for that matter has the choice between distribution and reinvestment of all or part of the profits it has made.
Although the proportion of expenditure associated with a given activity that is covered by revenue collected from users and, conversely, the proportion that is covered by tax (the taxpayer) may sometimes point to the existence of a market and an economic activity, the way in which the prices are set is not as such decisive from this point of view.
Furthermore, although the Walloon Region and the Walloon ports point out that the fees for the use of the infrastructure do not cover the reconstitution of the capital invested, they do not provide any factual evidence in support of their argument.
Incidentally, this argument is presented as the demonstration of the general interest nature of the port activity, which, as such, is not relevant to determine the economic or non-economic nature of the port activities. The Commission also notes that, by definition, the costs of SGEIs (which are economic activities) are not in general covered in full by the revenue collected from users, so the existence of a funding shortfall does not necessarily preclude the existence of an economic activity within the meaning of Article 107 TFEU.
Consequently, making available both port infrastructure and land against payment of remuneration in fact constitute services offered on a market and therefore economic activities.
As regards the services offered by the ports in exchange for the payment of port charges (access to the port infrastructure in general and any specific services), the Commission points out that the judgment of the Belgian Constitutional Court of 19 November 2015 (No 162/2015) recognising that the port charges constitute ‘pure remuneration’, by third parties, for the intervention of the port authorities, as well as the references made in the Flemish Port Decree of 2 March 1999 establishing that the port charges must be set in ‘reasonable proportion’ to the value of the consideration received, confirm that the ports offer services on a market against remuneration. The fact that this remuneration is supposed to reasonably cover the value of the consideration means that it can be ruled out a priori that the services provided to users of the ports are financed essentially by taxation rather than by real remuneration for the service obtained by these users, which again confirms the economic approach adopted by Belgium in the relationship between the ports and their users and the economic nature of the activities at issue.
The Commission also notes that, in their comments, the ports of Antwerp and Zeebrugge emphasise that the choice of concessionaire is made after an ‘invitation to tender’, which confirms that these ports, where they give access to the port infrastructure, offer goods or services on a market.
The fact that the economic activities of an entity are minor or marginal in relation to its non-economic activities does not in principle allow these economic activities to be regarded as exempt from the State aid rules.
In addition, and without it being necessary to undertake a port-by-port evaluation of the proportion of the different economic activities, it can be inferred from the preceding arguments that a very large part of the activities considered to be non-economic by the interested parties and the Belgian authorities (renting of land, access to infrastructure against remuneration) are, in reality, economic. As indicated above, it is not contested that the port charges and concession fees account for the vast majority of the turnover of the Belgian ports and this revenue even exceeds total current expenditure in the case of the port of Antwerp.
The Commission therefore considers that the activities carried out by the Belgian ports covered by the measure are – at least in part – economic activities.
The Commission points out that, under Belgian tax law, the profit generated by economic activities carried out by the Belgian ports referred to in Article 180(2) of the CIR are not subject to corporate tax. Therefore, the ports are not required to bear the costs normally borne by entities subject to corporate tax.
In addition, Belgium did not submit any evidence of a nature to alter this conclusion by the Commission during the cooperation procedure launched on 9 July 2014 or in its comments after the opening of the formal investigation procedure on 8 July 2016. It did not challenge the comments presented by the Dutch ports either, according to which the ports of Antwerp, Zeebrugge and Ghent have a real tax rate well below the corporate tax rate in Belgium (33,99 %).
Consequently, the Commission considers that the ports at issue benefit from an advantage within the meaning of Article 107(1) TFEU which corresponds to the difference between the corporate tax that the ports should have paid for their economic activities and the proportion of the tax on legal persons which can be attributed to these economic activities.
Contrary to the arguments put forward by the Belgian authorities, since the taxation of the economic activities of the ports in the form of the tax on legal persons leads to taxation which is more favourable to the taxpayer than taxation in the form of corporate tax would have been (see section 5.1.2 above concerning the existence of an economic advantage), it gives rise to a shortfall in tax revenue for the State.
Consequently, the Commission considers that this measure constitutes a transfer of State resources within the meaning of Article 107(1) TFEU.
In the course of the procedure, the Belgian authorities have defended two lines of argument in turn. In their replies to the questionnaire sent on 3 July 2013 by the Commission, the Belgian authorities first pointed out that Article 180(2) of the CIR was the legal basis for the exemption from corporate tax in favour of the ports. However, they then argued, in their comments dated 19 December 2016, that it was not merely as a result of applying the general rules of the CIR provided for in Articles 1 and 2 of the CIR that the ports were not subject to corporate tax, since ports were not ‘companies’ within the meaning of Article 2 of the CIR.
State aid is an objective concept and only the effects of the measure must be taken into account. The fact that the Belgian ports do not pay corporate tax is not contested, but the basis for this absence of payment of corporate tax, according to the Belgian authorities, can be either Article 180(2) of the CIR or Articles 1 and 2 of the CIR.
In their comments dated 19 December 2016, the Belgian authorities maintain that Article 180(2) of the CIR has no legal implications and is purely declarative. Deleting it would not in any way alter the situation of the ports in relation to corporate tax. According to the Belgian authorities, the ports are exempt from corporate tax pursuant to Articles 1 and 2 of the CIR and the general criteria of the Belgian tax system. The Belgian authorities maintain that the ports are not ‘companies’ within the meaning of Articles 1 and 2 of the CIR.
In this scenario, the reference system would be constituted by Articles 1 and 2 of the CIR, which provide that ‘companies’ are subject to corporate tax, whereas resident legal persons other than companies are subject to the tax on legal persons. According to the Belgian authorities, since ports are not ‘companies’, they would necessarily be subject to the tax on legal persons. Article 180(2) of the CIR, which, according to the Belgian authorities, merely draws the consequences from the general rules set out in Articles 1 and 2, would therefore not constitute a derogation to the reference system and would even form an integral part of it. In so far as ports are not ‘companies’, the rules relating to the tax on legal persons could also be considered to be a narrower reference system.
This interpretation is therefore based essentially on the assumption that the nature of the activities carried out by the ports would necessarily preclude the possibility of their classification as ‘companies’ for the purposes of the taxation of income (of resident legal persons), whereas they constitute ‘undertakings’ within the meaning of Article 107 TFEU, as established above. Neither the observations made by Belgium, nor those of the third parties, provide any convincing evidence to validate this assumption.
The Commission considers, on the contrary, that the ports are in principle ‘companies’ for the purposes of taxation of income as regards the bulk of their activities and that they carry out economic activities of a nature to classify them as ‘undertakings’ within the meaning of Article 107 TFEU. Nor is this classification as companies called into question by any provision of national law.
Therefore, the Commission does not concur with the position that, even if Article 180(2) were deleted, the ports would not be subject to corporate tax under the general criteria provided for in Articles 1 and 2 of the CIR. In the light of the references cited in the previous recital, the Commission considers, on the contrary, that, pursuant to the general rules of Belgian national law, the ports, which are ‘companies’ within the meaning of Article 2 of the CIR, should be subject to corporate tax, in the absence of formal and unconditional exemption from this tax under Article 180(2) of the CIR. For the same reasons, the Commission disputes that the rules relating to the tax on legal persons constitute the reference system for the taxation of the ports.
In their comments, the Belgian authorities and certain interested parties maintain that the exemption from corporate tax for the ports is inferred, quite apart from the general rules of the CIR (Articles 1 and 2), from other general rules of national law (a general principle of law, a rule derived from case-law according to which public services, tasks and goods are not taxed unless explicitly provided for by law, or even by the Belgian Constitution itself).
In the light of the references cited above, the Commission considers that the normal application of the general rules of Belgian law would result in the ports being subject to corporate tax with respect to the income from their economic activities.
Therefore, even if Articles 1 and 2 of the CIR constituted the legal basis for non-payment of corporate tax by the Belgian ports, this non-payment would be a measure which is prima facie selective with respect to the economic activities of the ports.
As results from the arguments developed above, the Commission considers that Article 180(2) of the CIR is the only legal basis for non-payment of corporate tax by the Belgian ports and that, in the absence of this provision, the ports would pay corporate tax like any other company or undertaking deriving taxable income from an economic activity.
The Commission considers that the reference system in the case at issue is constituted by the general tax rules arising from Articles 1 and 2 of the CIR. Article 1 of the CIR establishes a dual system for the taxation of income for legal persons resident in Belgium: it subjects ‘companies’ to corporate tax and ‘legal persons other than companies’ to the tax on legal persons. Article 2 of the CIR comprises the criteria for the definition of ‘companies’ and therefore the determination of the legal persons to be subject to corporate tax and by elimination those whose income will be subject to the tax on legal persons. Article 179 confirms that taxpayers subject to corporate tax are resident companies.
In so far as, for the reasons set out in recital (86), the ports are ‘companies’ within the meaning of Article 1 of the CIR, the reference system for the taxation of the income of the ports can also be defined more narrowly as all the rules relating to corporate tax, namely Articles 1 and 179 of the CIR, which provide that resident ‘companies’ are subject to corporate tax which is defined as a ‘tax on the total income’.
In terms of this reference system, Article 180(2) of the CIR explicitly constitutes a derogation (it is its raison d'être), since it removes the ports from the scope of Article 179 and corporate tax, even though the ports are then subject to the tax on legal persons by virtue of Article 220(2) of the CIR. In the absence of the explicit, specific exemption provided for in Article 180(2) of the CIR, Belgian ports – like other resident companies – would in fact be automatically subject to corporate tax.
It results from the above that Article 180(2) of the CIR derogates from the general rules of the taxation of income of ‘companies’ (both by reference to the general rules under Articles 1 and 2 of the CIR and by reference to the less general rules under Article 179 of the CIR) and introduces differentiations between economic operators in a comparable legal or factual situation in terms of the objective pursued by the reference tax system. In fact, whichever reference system is adopted (corporate tax or taxation of the income of resident legal persons in general), the objective of income tax is to tax income, an objective in relation to which all undertakings are in the same factual and legal situation as regards the profits from their economic activities.
The measure at issue is therefore prima facie selective regarding the economic activities of the ports.
As indicated above, it is for the Member State to demonstrate that the derogation is justified by the nature or general scheme of the reference tax system. In the final step of the three-step analysis, only the characteristics inherent in the reference tax system can justify differentiated treatment.
In this respect, Decision No 151/2016 of the Belgian Constitutional Court of 1 December 2016 in any case does not have the scope which the Belgian authorities try to assign to it. In fact, this decision does not concern the exemption from corporate tax in favour of the ports in relation to State aid, but the liability to corporate tax of intermunicipal associations, cooperation structures and project associations, in relation to the principles of equality and non-discrimination, which means that the absence of discrimination in national law does not prejudge the absence of selectivity within the meaning of Article 107(1) TFEU.
The alleged fact that the resources of the ports do not always cover their costs cannot constitute a justification for exemption from corporate tax since, in this situation of absence of profit, no tax is due under the normal system for the taxation of income, and since a loss can be carried forward and charged against any future profits generated by economic activities, exemption is superfluous and has a consequence only where the ports make a taxable profit. The Commission notes that, over the period 2004-2014 (eleven financial years), the results of the ports of Antwerp, Ghent, Zeebrugge and Ostend have been almost consistently positive (one negative result for Antwerp in 2011 and one negative result for Ostend in 2013), so the justification invoked is theoretical and even contradicted by the facts. Moreover, no provision for exemption from corporate tax similar to that benefiting the ports is made for other ‘companies’ in the event of their resources not covering their costs.
Finally, the arguments of the Belgian authorities and interested parties relating to the criteria developed by national case-law to assess whether a legal person is a ‘company’ within the meaning of Articles 1 and 2 of the CIR (in particular absence of industrial and commercial methods) are ineffective to demonstrate the justification for the measure by the logic inherent in the tax system, in so far as they aim in reality to prove that the ports are not ‘companies’, in which case the absence of liability to corporate tax would be selective due to the very choice of the criteria used to determine the limits of the reference system (see above) and not due to a derogation from this reference system which could possibly be justified.
In order to be classified as State aid, the measure must affect intra-EU trade and distort, or threaten to distort, competition. Both criteria are closely linked.
By strengthening the position of beneficiaries in international trade, the measure is therefore likely to affect intra-EU trade and distort competition.
In addition, even though it can be considered that the ports benefit from a legal monopoly to offer their services within the port they operate, the transport services they offer are, at least to a certain extent, in competition with those offered by other providers of transport services, notably the ports of other Member States.
Furthermore, the references to paragraphs 211, 219 and 220 of the Notice of 19 July 2016 are not relevant in the present case as they do not concern the port infrastructure mentioned in paragraph 215. The latter indicates that ‘public funding of port infrastructure favours an economic activity and is hence in principle subject to State aid rules’ and that ‘ports may compete with one another and the financing of port infrastructure is therefore also likely to affect trade between Member States’. Moreover, paragraphs 219 and 220 of the Notice indicate that aidfor the construction of the infrastructure concerned may not affect intra-Community trade or competition, whereas the measure at issue in the present procedure does not constitute aid for construction of infrastructure but operating aid linked to the profit made in the context of its operation.
In the light of the arguments set out above, the tax exemption for the Belgian ports provided for in Article 180(2) of the CIR constitutes State aid within the meaning of Article 107(1) TFEU, in so far as the exempted revenue is generated by economic activities carried out by the ports.
It is for the Member State concerned to demonstrate that the State aid measures can be regarded as compatible with the internal market. In their various contributions, responses and comments, the Belgian authorities have not put forward any arguments concerning the compatibility of the measure. The Walloon Region and the Walloon ports consider that Article 93 and 106(2) TFEU could constitute appropriate bases for compatibility. The port authorities of Antwerp and Zeebrugge do likewise regarding Article 93 TFEU.
Second, Article 93 TFEU stipulates that aids which meet the needs of coordination of transport or represent reimbursement for the discharge of certain obligations inherent in the concept of a public service can also be declared compatible with the internal market. Although the ports play a major role in the development of multimodal transport, not all the investments made by the ports are covered by Article 93 TFEU, which is limited to aids which meet the needs of coordination of transport. Moreover, the corporate tax exemption does not constitute investment aid but operating aid which is not targeted at specific investments The measure favours undertakings making the most profit or therefore having greater internal capacity prima facie to finance investments. It is not targeted either at compensation for the cost of certain obligations inherent in the concept of a public service, as pointed out above. In addition, the measure, a tax exemption, results in an unlimited advantage in relation to costs of any kind. It is therefore not limited to the amount needed for coordination of transport or for reimbursement for the discharge of certain obligations inherent in the concept of a public service and therefore does not guarantee compliance with the principle of proportionality. It has no identified incentive effect either. Therefore Article 93 TFEU is not applicable.
Third, and although Article 107(3)(c) was not invoked either by Belgium or by the interested parties, the Commission has examined whether the measure at issue is of a nature to ‘facilitate the development of certain economic activities or of certain economic areas’ without adversely affecting trading conditions to an extent contrary to the common interest. For the reasons already set out above (absence of proportionality, absence of incentive effect and absence of link with an identified public interest objective), the Commission considers however that Article 107(3)(c) TFEU is not applicable.
The Belgian authorities explained that the ports have been subject to the tax on legal persons since the 1960s and that prior to this they were subject to schedular tax (impôt cédulaire/cedulaire belastingen), which is similar to the tax on legal persons. The tax treatment accorded to the ports was also linked to their legal status, which has changed over time. According to the Belgian authorities, the ports were already subject to the tax on legal persons prior to the entry into force of the Treaty of Rome in 1958. On the basis of the information received, it would appear that the ports have always been exempt from corporate tax.
In accordance with Article 1(b)(i) of the Procedural Regulation, aid schemes that were put into effect prior to the entry into force of the Treaty are existing aid schemes.
On the basis of the information available, the exemption from corporate tax for the ports was applicable before 1958 and has not undergone any substantial changes since then. Consequently, the measure is deemed to be an existing aid scheme.
As regards the request for a transitional period made by the Belgian authorities, the Commission recalls that, at this stage of the procedure concerning existing aid, a transitional period cannot in principle be granted, unless there are exceptional circumstances. In the final decision, the Commission can grant the Member State concerned only a reasonable period for implementation in the light of the modifications required.
The Commission also notes that, since the start of the cooperation procedure launched on 9 July 2014, the Belgian authorities have already had a certain amount of time in which to start considering possible legislative amendments. It also points out that there is no question, as the Belgian authorities feared, of the ports being made subject to corporate tax from 1 January 2017.
In accordance with the mandatory role allotted to it by Articles 107 and 108 TFEU, the Commission must end State aid deemed incompatible with the internal market and re-establish the conditions for a level playing field as quickly as possible. If, at this stage in the procedure, the Commission considers that incompatible aid has been granted to certain undertakings, it cannot in principle suspend the State aid procedure in question or grant a transitional period, since that would amount to authorising the payment of aid incompatible with the internal market for a longer period, which would also be unfair in relation to competitors not receiving aid or even a lower amount of aid. The Commission notes in this respect that the Dutch ports, which have been subject to corporate tax since 1 January 2017, have asked it to take rapid action to ensure that the Belgian ports are subject to corporate tax.
As pointed out above, the possible existence of other State aid to other ports in other Member States does not justify suspension of the procedure or a delay in the entry into force of the national measures implementing the Commission decision. Such a delay would have the effect of prolonging the current distortions between Northern European ports, and more precisely between the Belgian ports, the Dutch ports already mentioned, and the French ports, since the latter are the subject of a similar parallel decision abolishing the tax exemptions from which they currently benefit.
Moreover, the Commission has never approved the measure at issue which has never been notified by the Belgian authorities. The principles of legal certainty and legitimate expectations are therefore not applicable in the present case, especially as, since the measure is existing aid, the Commission cannot order the recovery of the aid granted in the past.
The corporate tax exemption for the Belgian ports mentioned in Article 180(2) of the CIR constitutes an existing State aid scheme which is incompatible with the internal market.
It is therefore appropriate for the Belgian authorities to abolish the exemption from corporate tax at issue and to subject the entities in question to corporate tax. This measure should be adopted before the end of the calendar year in progress on the date of this decision and apply at the latest to the income generated by the economic activities from the start of the tax year following its adoption,
HAS ADOPTED THIS DECISION:
Article 1
The corporate tax exemption for the Belgian ports listed in Article 180(2) of the CIR constitutes an existing State aid scheme which is incompatible with the internal market.
Article 2
1.
Belgium shall remove the corporate tax exemption referred to in Article 1 and subject the entities for which this exemption applies to corporate tax.
2.
The measure by which Belgium executes its obligations under paragraph 1 shall be adopted before the end of the calendar year in progress on the date of notification of this decision. This measure shall apply at the latest to the income from economic activities generated from the start of the tax year following its adoption.
Article 3
Belgium shall inform the Commission within two months of the date of notification of this decision of the measures taken to comply with it.
Article 4
This Decision is addressed to the Kingdom of Belgium.
Done at Brussels, 27 July 2017
For the Commission
Margrethe Vestager
Member of the Commission