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PR(97)05: Differentiated Norwegian social security contribution system may continue under regional state aid rules

11.10.2002

In a set of proposals directed to Norway the EFTA Surveillance Authority has outlined a way to clear the system for employers' contributions to the national Social Security Scheme (Folketrygden).

In Norway social security charges are levied on employers in relation to the salary of each employee. Lower contribution rates are applied in respect of employees residing in remote regions. In the opinion of the Authority, such lower rates constitute state aid to enterprises capable of benefiting from them. Moreover, such aid constitutes operating aid, which normally is incompatible with the aid disciplines in the European Economic Area (EEA).

Nevertheless, the Authority has found that the current system, as such, may be upheld as regional aid compatible with the EEA Agreement. The EEA rules permit aid to be granted in order to take account of special regional development problems arising out of special features of the Nordic countries, such as very low population density and long distances within the national borders. Notably, the provisions of regional aid to compensate for additional transport costs are applicable under such conditions.

In drawing its conclusions the Authority has based itself i.a. on a detailed examination of additional transport costs for enterprises benefiting from lower social security contributions. The Authority is ready to accept the lower rates in areas eligible for regional aid.

As to required adjustments, the Authority has come to the conclusion that certain economic activities, irrespective of location, cannot benefit from lower rates. That concerns production activities which have no alternative location, notably production and distribution of electricity, extraction of crude petroleum and gas, mining of metal ores, and extraction of certain industrial minerals. The same applies to enterprises with more than 50 employees engaged in freight transport by road, enterprises in telecommunication, and providers of financial services engaged in cross-border activities. Likewise, certain industrial sectors which are subject to particular sectoral aid regimes under the EEA Agreement, such as shipbuilding and steel, cannot benefit from lower rates.

The Norwegian Government is asked to undertake the necessary adjustments in the course of the year.

For more information, please contact Knut Almestad on tel. +32-2-286 18 20 or  Amund Utne on tel. +32-2-286 18 50.

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