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PR(06)36: The EFTA Surveillance Authority accepts a Norwegian scheme on regionally differentiated social security contributions for the period from 2007 to 2013

19.7.2006

The EFTA Surveillance Authority decided today not to raise objections to a new Norwegian aid scheme concerning regionally differentiated social security contributions paid by the employers. The new scheme will take effect from 1 January 2007.

According to the National Insurance Scheme Act (Folketrygdloven), all employers in Norway are subject to compulsory contributions to the national social security scheme. These contributions are calculated in relation to the gross salaries of employees. The general rate in Norway is 14.1 per cent. Aid under the scheme will be granted in the form of reduced social security contributions, i.e. as tax rate reductions.

The objective of the notified scheme is to reduce or prevent depopulation in the least populated regions in Norway by stimulating employment in these regions. On this basis, the Norwegian authorities have divided the country into different zones with varying rates of social security contributions. In the determination of these zones, the Norwegian authorities have aimed at reflecting the specific problems in the different areas while putting special attention to avoid the creation of high tax borders that would have lead to critical distortions of competition between the regions. The scheme is applicable in the least populated areas in Norway, covering 17.7 % of the population.

Recipients of aid under the scheme will be all undertakings and institutions where the registered location of the business activity is within the area eligible for aid. If an undertaking or institution has more than one registered business location, the aid will only be granted with respect to the employees employed at a location of business activity within the eligible area.

The Authority has assessed the scheme on regionally differentiated social security contributions on the basis of new Regional Aid Guidelines adopted by the Authority and accepted by the EFTA States. While similar schemes have previously been found not to be compatible with the state aid rules, the new guidelines open up for operating aid such as regionally differentiated social security contributions. These guidelines will in principle apply to aid granted in the period from 1 January 2007 and until the end of 2013. The aid is approved for the duration of the guidelines.

The Authority’s assessment is based in particular on the Guidelines’ provisions concerning operating aid in the least populated regions. In the Authority’s view, the Norwegian authorities have sufficiently justified the necessity, appropriateness and proportionality of the notified scheme.

The Authority considers that the scheme on regionally differentiated rates for social security contributions constitute compatible state aid within the meaning of Article 61(3)(c) of the EEA Agreement and the provisions of the Regional Aid Guidelines.

For further information, please contact:
Mr Amund Utne Director, Competition and State Aid Directorate
Tel. (+32)(0)2 286 18 50,
Ms Maria J. Segura Catalán Officer, Competition and State Aid Directorate
Tel. (+32)(0)2 286 18 53, or
Ms Marie Wiersholm, Officer, Competition and State Aid Directorate
Tel. (+32)(0)2 286 18 65

19 July 2006




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