ANNOUNCEMENT 01 Jan 2009In January 2009, the government of Finland announced a targeted tax change.
NUMBER OF INTERVENTIONS
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=3_N159_2009 >
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.