The European Commission has proposed, in two separate decisions, that Italy and Spain align their taxation of ports with State aid rules. The Commission remains committed to ensure a level playing field across the EU in this key economic sector.
Mainly, as stated by Margrethe Vestager, Commissioner in charge of competition policy, ports are a major infrastructure concerning regional development and economic growth. That’s why, the EU state aid rules to provide room for Member States to support and invest in ports.
She stated that
To ensure fair competition across the EU, ports generating profits from economic activities should pay taxes in the same way as other companies – no more, no less.
What’s more, cross-border competition has a crucial role in the ports sector. Therefore, the Commission aspires to ensure a level of playing field in this economic sector.
According to the European Commission’s statement, a corporate tax exemption for ports will gain profits from economic activities, and can provide them with competitive benefits on the internal market. That is why it requires State aid which may not be compatible with the EU regulations.
Also, ports carry out both non-economic and economic activities. Specifically:
- Non-economic activities, such as maritime traffic control and safety or anti-pollution surveillance, typically fall within the competence of public authorities. Such public remit activities are outside the scope of EU State aid control.
- The commercial operation of port infrastructure, such as providing paid access to the port, on the other hand constitutes an economic activity. EU State aid rules apply to these activities.
In Italy, ports are fully exempt from corporate income tax. On the contrary, in Spain, ports are exempt from corporate income tax on their main sources of revenue, such as port fees or income from rental contracts.
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In April 2018, the Commission informed Italy and Spain on the matter of the taxation of ports. According to the statement, the European Commission has the belief that in both Italy and Spain, the existing tax regimes provide the ports with a selective advantage that may not follow the EU State aid rules.
As a result, the Commission invited both Countries to adapt with their legislation in order to ensure that ports, from January 1, 2020, are to pay corporate tax the same way as other companies in Italy and Spain, respectively.
The decision follows recent Commission decisions requiring the Netherlands, Belgium and France to abolish exemptions from corporate tax for their ports.