IMPLEMENTATION LEVEL

National

AFFECTED FLOW

Inflow

ANNOUNCED AS TEMPORARY

No

NON-TRADE-RELATED RATIONALE

No

ELIGIBLE FIRMS

all

JUMBO

No

TARIFF PEAK

No
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Inception date: 01 Jan 2009 | Removal date: 31 Dec 2013
Still in force

Tax or social insurance relief

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 themeaning of Article 87(1) of the EC Treaty and gave the followingassessment:
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 iscompatible with the Common Market according to the Article 87(3a) ECTreaty. (par. 34-83 of the letter)
 
A state measure in the GTA database is assessed solely in terms of theextent to which its implementation affects the extent of discriminationagainst foreign commercial interests. On this metric, the state aidproposed here is discriminatory.
 

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