ANNOUNCEMENT 03 Aug 2011In August 2011, the government of Portugal announced a targeted tax change.
NUMBER OF INTERVENTIONS
the letter from the EC to Portugal - Brussels, 3.8.2011 C(2011) 5546 final. Available from : < http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=3_C34_2009 >
On 17 November 2008, registered on the same date, the Portuguese authorities notified regional investment aidin favour of an investment project by Petroleos de Portugal, Petrogal S.A. ( 'Petrogal'), concerning its refinery activities in Sines and Matosinhos.
The beneficiary was originally set up on 22 April 1999 under the name of GALP - Petróleos e Gás de Portugal SGPS, S.A., mainly for the purpose of trading in oil and natural gas, bringing together two pre-existing Portuguese government owned companies which were placed under Galp Energia´s control namely Petrogal, focusing on petroleum products, and GDP - Gas de Portugal, SGPS, S.A., focusing on natural gas. Petrogal owns the sole two refineries in Portugal. The refining business comprises all refining, supply and logistics activities. Petrogal is the largest marketer of petroleum products in Portugal, as well as one of the largest in the Iberian Peninsula. It effectively manages all the imports of crude oil, and a part of the imports of refined products into Portugal; it also manages 80 % of the storage capacity of crude oil and refined products and has an important position in Portugal's logistics infrastructure for oil products.
Petrogal plans to reconfigure and expand the existing refinery units in Sines and Matosinhos, the only two existing refineries in Portugal. The cost of the investment project is estimated at EUR 974 064 894 at present value (EUR 1 058 934 146 in nominal value).
In this context, the aid provided by Portugal would be a tax credit to be deducted from future payments of corporate income tax. Portugal intends to grant regional aid amounting to EUR 160 484 007 in nominal value to be awarded as from 2011 until the completion of the project in January 2017.
The commission found that the measure constitutes State aid within the meaning of Article 107 (1) TFEU and gave the following assessment:
'The aid is granted for an investment resulting in the increased production of diesel and heavy naphtha. Since these products are the subject of trade between Member States, the measure is therefore likely to affect trade between Member States. The aid granted to Petrogal will relieve the company from costs which it normally would have had to bear itself. Consequently, Petrogal will benefit from an economic advantage over its competitors. By favouring Petrogal and its production in this way, the aid therefore distorts or threatens to distort competition.' (par. 203 of the letter from the EC to Portugal - Brussels, 3.8.2011 C(2011) 5546 final)
The EC came to the conclusion that the State aid which Portugal plans to grant to Petrogal is compatible with the internal market in accordance with Article 107(3)(a) of the Treaty. Implementation of the State aid is accordingly authorized.
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.