France: exemption of social contribution taxes for employers in overseas territories
Description
On 1 September 2008, the French authorities notified the European Commission their intention to implement a tax exemption scheme in overseas territories (DOM).
The measure consists in tax cuts relative to social contributions for employers of companies in Guadeloupe, Guyane, Martinique, la Réunion, Saint-Barthélemy and Saint-Martin or companies involved in air transportation between France and these territories. The number of beneficiaries exceeds 1000 companies. The budget related to the measure is expected to amount 942 million euros. The measure will be effective until 31 December 2013.
The commission found that the measure constitutes State aid within the meaning of Article 87(1) of the EC Treaty and gave the following assessment:
State resources are involved in the notified scheme since the aid is granted from national state resources through the general state budget and overseas territories. The measure is selective since it will be granted only to certain firms located in the DOM, St. Barthélemy and St.Martin, to which it provides an advantage by according an exemption of social contribution taxes, which distorts or threatens to distort competition. The measure is likely to affect trade between Member States since the scheme applies to sectors where intra-community trade exists. (par. 31-33 of of the letter from the EC to France - Brussels, 19.11.2009 C(2009)6877 final)
The Commission decided not to raise objections since the measure is compatible with the Common Market according to the Article 87(3a) EC Treaty. (par. 34-83 of the letter)
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? | |
| 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: Yes
Date of inception: 1 Jan 2009
Duration: 60 months
GTA Evaluation: Red
Source:
the letter from the EC to France - Brussels, 19.11.2009 C(2009)6877 final (french). Available from : < http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=... >
Government Response:
- 259 reads
