The General Court of the European Union (TGUE) on Wednesday rejected an appeal filed by Madeira, agreeing with the European Commission’s decision to consider illegal state aid to the region’s free zone.
According to a press release, in this Wednesday’s judgment, the General Court points out that the Commission was right to conclude that the IRC reduction scheme applied to companies in the Free Trade Zone of Madeira (ZFM) was in breach of the Brussels decisions, an amount that was reimbursed to be claimed by Portugal and is estimated at one billion euros.
On 4 December 2020, the European Commission, following an inspection, found the State aid scheme for the Madeira Free Trade Area (ZFM) to be incompatible with internal market rules and required its recovery within eight months.
This procedure has been initiated due to doubts on the part of the European Commission regarding, on the one hand, the application of tax exemptions to income from actual and material activities carried out in the Autonomous Region and, on the other hand, the link between the amount of aid and the creation or maintenance of effective jobs in Madeira.
The companies subject to the recovery are those that have received more than 200 thousand euros under the ZFM aid scheme and cannot prove that their taxable income or jobs created are related to activities actually carried out in the region.
The ZFM regime takes the form of a corporate tax reduction on profits arising from activities actually and materially carried out in Madeira (3% from 2007 to 2009, 4% from 2010 to 2012 and 5% from 2013 to 2020), a exemption from municipal and local taxes, as well as an exemption from tax on the transfer of real estate for the formation of a company in the ZFM, up to maximum aid amounts based on the tax base ceilings applicable annually to the beneficiaries of the tax base.
These maximum limits are set on the basis of the number of jobs that the beneficiary maintains in each financial year.
The Autonomous Region of Madeira appealed the decision, an appeal that was rejected on Tuesday.
The Madeira International Business Center (IBC), also known as the Free Trade Zone, has more than 2,400 registered companies, responsible for 82% of the region’s export volume, generating tax revenues of about 100 million euros, and about 6,000 direct and indirect jobs . O.
Companies could only benefit from a reduced IRC rate (ranging from 3% to 5% between 2007 and 2020) if they created and maintained a certain number of jobs in the archipelago, which Brussels says has not happened.
In 2021, the amount to be recovered was estimated by the government at one billion euros, an amount disputed by the regional authorities.
Source: DN
