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PR(05)02: State aid: The EFTA Surveillance Authority brings Iceland before the EFTA Court for failure to recover unlawful aid

2.2.2005

Today, the EFTA Surveillance Authority decided to bring Iceland before the EFTA Court for failure to fulfil its obligations under the Authority’s decision 21/04/COL of 25 February 2004 with regard to State aid to International Trading Companies.

The time to comply with the Authority’s decision was set to two months. Almost one year after the decision, the Icelandic Government has still not made the necessary legal changes to stop the aid nor taken measures to recover unlawful aid already granted.

The Authority has therefore decided to apply to the EFTA Court to have its decision enforced.

Background
In March 1999, Iceland adopted a legislative package for the promotion of the establishment of International Trading Companies (ITCs) in Iceland. ITCs were subject to payment of a lower corporate income tax than the one generally applicable to any taxable undertaking in Iceland and were fully exempted from payment of net wealth tax and partially exempted from payment of stamp duty.

In the decision of 25 February 2004, the Authority found that the Icelandic tax measures in favour of the ITCs constituted State aid incompatible with the EEA Agreement. Iceland was requested to terminate the tax measures and to take all necessary measures to recover incompatible State aid from the beneficiaries.

For further information, please contact Mr. Niels Fenger, Director, Legal & Executive Affairs, tel. +(32)(0) 2 286 18 30.

2 February 2005




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