The European Commission released a statement approving, under EU State aid rules, Polish support to SMEs in the shipbuilding sector. This measure aims to encourage new investment and benefit regional development in Poland.
The Commission has also opened an in-depth investigation into a Polish tax scheme for shipyards, as there are concerns that the scheme would give some shipyards a selective advantage over competitors.
The Polish regional investment aid scheme wants to support small and medium-sized enterprises (SMEs) in the shipbuilding sector in the Polish Pomorskie and Zachodniopomorskie regions. The aid will include grants, interest-rate subsidies and guarantees. The overall budget is around PLN 77 million (around €18 million).
The Commission found that the aid will encourage new investment to modernise a sector that has been very important for the country. The Commission also found that the aid was limited to the minimum necessary. It therefore concluded that the positive effects of the project on regional development outweigh any distortion of competition brought about by the State aid.
In September 2016, Poland adopted a law giving shipyards operating in Poland an option to pay a 1% flat-rate tax on sales from the building and conversion of ships, instead of paying the generally applicable corporate or personal income tax. Thus, shipyards paid less tax than under the normal corporate income tax (19% on taxable income) or personal income tax regime (18% or 32% on taxable income for natural persons, or 19% for entrepreneurs).
The Commission investigated the proposed tax incentive for shipyards after Poland notified the measure to the Commission in December 2016. The Commission does not question Poland’s right to decide on its tax system. However, under the EU Treaty the Commission has to verify that the tax system respects EU State aid rules and does not selectively favour certain companies over others, the Commission noted.
“Operating aid is not allowed under EU State aid rules, because it distorts competition on the merits. In the present case the Commission is concerned that the aid would harm shipyards in the EU, which are not eligible under the Polish tax scheme. In addition, the aid does not seem to be necessary, given that there are shipyards in Poland which are able to compete on the market on their own merits,” the European Commission said.
This, however, does not mean that Poland cannot intervene in its shipbuilding industry. Certain categories of aid, such as aid for research, development and innovation or regional aid, are allowed under EU State aid rules.
The Commission will now investigate further to determine whether its concerns are valid.
