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PR(99)12: EFTA Surveillance Authority clears proposed new regulations on the Norwegian scheme of regionally differentiated social security contributions

30.9.2002

The EFTA Surveillance Authority yesterday decided not to raise objections to a proposed new Norwegian scheme of regionally differentiated social security contributions. This proposal will be presented as part of a tax bill to the Norwegian Parliament ("Stortinget").

Background

On 2 July 1998, the EFTA Surveillance Authority decided[1] that the Norwegian scheme of regionally differentiated social security contributions involved State aid in the meaning of Article 61(1) of the EEA Agreement. The EFTA Surveillance Authority further found that parts of this aid could, on certain conditions, be exempted according to Article 61(3)(c) of the EEA Agreement, while other parts could not be exempted. The EFTA Surveillance Authority indicated in its Decision that some activities confined to certain areas could upon further notification qualify for regional transport aid. On 2 September 1998, the Norwegian authorities brought an action before the EFTA Court for annulment of the Decision. On 20 May 1999 the Court, however, dismissed the application and upheld the Authority's Decision[2].  

The Norwegian Notification

In the light of the above Decision, the Norwegian authorities notified a new scheme of regionally differentiated social security contributions. The scheme pertains to certain areas and activities which could benefit from lower social security contributions. The notified areas are divided into four geographical zones with differentiated rates. The rates vary from 10.6% in zone 2 to 0% in zone 5 ("preferential zones"). The full rate (in zone 1) is 14.1%. The notification further defines which activities, although located in preferential zones, could not benefit from lower social security contributions. Such activities are related to hydropower production, mining of metal ores and certain minerals, gas and oil production, shipbuilding, steel, telecommunications, financial services, and freight transport by road.    

The Assessment

After assessing the notification in the light of its Decision of 2 July 1998 and the rules on regional transport aid, as laid down in the EFTA Surveillance Authority State Aid Guidelines[3], the EFTA Surveillance Authority concludes that the notified aid qualifies for exemption under Article 61(3)(c) of the EEA Agreement. The EFTA Surveillance Authority concludes that the reduced social security contributions could be accepted as indirect compensation for additional transport costs. The EFTA Surveillance Authority further finds that the aid facilitates the regional development without adversely affecting trading conditions to an extent contrary to the common interest.

In accordance with its Decision of 2 July 1998, the approval of the scheme is limited in time, not going beyond 31 December 2003. The Norwegian authorities are also obliged to submit to the EFTA Surveillance Authority simplified annual reports, to facilitate the monitoring of the application of the scheme. Finally, the Norwegian authorities are also obliged to introduce specific rules to ensure that cumulation control measures are in place.

For further information please contact Mr Amund Utne on tel. +32-2-286 18 50.


[1] Dec. No. 165/98/COL, OJ L 327 of 3 December 1998 (page 1).

[2] Case E-6/98. Not yet reported. The Judgment is available from the EFTA Court homepage (www.efta.int).

[3] Adopted and issued by the EFTA Surveillance Authority on 19 January 1994, OJ L 231 of 3 September 1994 (page 1).




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