Finland: Temporary Accelerated Depreciation for productive investments
Description
On 17 March 2009 the Finnish authorities notified the 'Act on the temporarily accelerated depreciation for productive investments' for reasons of legal certainty.
The objective of the measure is to remedy a serious disturbance in the economy. According to the Finnish Government, the notified measure aims to stimulate investments and thus to respond to the current economic downturn.
The measure accelerates the depreciation of new factory and workshop buildings, as well as of new machinery and equipment used in factory and workshop buildings, which are acquired in 2009 or 2010. The maximum rate of the annual depreciation foreseen by the notified measure will be double the currently applicable maximum depreciation rate.
The aid is available to all firms. The Finnish government estimates the number of beneficiaries to be over 1000.
The expected losses of income taxes caused by the application of the new temporary accelerated depreciations are estimated by the Finnish authorities to amount to 148 million EUR (65 million EUR in 2009 and 83 million EUR in 2010). From 2011 onwards, as a consequence of the temporary accelerated depreciations, income taxes will be higher. The net effect of the measure is the interest rate advantage due to the deferred tax payments.
The Commission did not find that the measure constitute state aid within the meaning of Article 87.1 of the EC Treaty, however, the Commission gave the following assessment:
"The acceleration of the depreciation has the effect of deferring the payment of income taxes. These depreciations therefore result in the granting of a cash advantage to those companies eligible for such depreciation. The notified measure confers therefore an economic advantage on those companies. Moreover, that advantage is accorded through the use of State resources (State or municipal budgets). As this advantage can improve the situation of the beneficiaries in comparison to competitors in other Member States, this may also affect trade between Member States." (par. 15 of the letter to Finland - Brussels, 14.10.2009 C (2009) 7674 final)
A state measure in the GTA database is assessed solely in terms of the extent to which its implementation affects the extent of discrimination against foreign commercial interests. On this metric, the state aid proposed here is discriminatory.
Any Evidence-Based Deliberation:
| Question | Result |
|---|---|
| Is there anything in the public record to suggest that evidence of the effectiveness of the proposed measure was considered during official deliberations? | Yes |
| Is there any evidence that alternatives to the proposed measure were considered? | |
| Is there anything in the public record that suggests that empirical evidence informed the comparison across the alternatives available to government? | |
| Was such evidence identified? | |
| Is such evidence publicly available? | |
| Did the official decision-maker in question provide an explanation as to why a chosen measure was favoured over alternatives? | |
| Is there any evidence to suggest that potentially affected trading partners were consulted before the measures were taken? | |
| Is there any evidence that safeguards have been put in place to ensure that implementation of the initiative is transparent and non-discriminatory? | |
| Did the government state its intention to review the measure within one year of implementation? |
Date Discovered:
Implemented: No
Date of inception: 1 Jan 2009
Duration: 24 months
GTA Evaluation: Red
Source:
of the letter to Finland - Brussels, 14.10.2009 C (2009) 7674 final. Available from < http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=... >
Government Response:
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