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: No inception date

Financial grant

 On 13 October 2010, the EFTA Surveillance Authority approved the Icelandic Investment Incentive Scheme.
The programme, planned for the years 2010-2013, would include direct grants, numerous tax concessions and sale/lease of land below market prices to encourage initial investment projects. All sectors, apart from the financial one, would be eligible for state aid within the scheme. The annual budget was predicted to be roughly 17 million EUR.
According to the letter from the ESA to Iceland, the scheme is aimed to "promote new investment in commercial operations, the competiveness of Iceland and regional development by specifying what incentives are permitted in respect of initial investments and how they should be span".
Further, ESA argued that "in the present case, the measures will strengthen the competitive situation of the supported undertakings in the eligible regions compared to their actual or potential competitors in the EEA. The scheme applies to all sectors, with the exemption of the financial sector, and therefore has a potential to distort trade within the EEA since it cannot be excluded that in some of these sectors there is competition between the aid beneficiaries and undertakings in the EEA".
After the scheme was approved, Iceland made substantial amendments to the initial without notifying the ESA. Also, grants to individual companies within the scheme surpassed the initial annual budgets (cf. Related Measures).
Following a 2014 assessment by the ESA, "the Supplementary Regulation should have been notified to the Authority. However, the Authority received no notification". As a result, ESA decided that the amended Investment Incentive Scheme represented incompatible state aid and asked Iceland to recover the funds provided to companies within the programme (cf. Related Measures).
Since the scheme introduction did not constitute state aid itself but provided the framework, this measure is classified as amber, protectionist and not implemented.
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.

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