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State Aid

Iceland to be brought to Court for failing to stop granting and failing to recover unlawful aid




In October 2014, Iceland was ordered by the EFTA Surveillance Authority to immediately stop granting investment aid that was not in line with EEA rules, and to recover the aid that had already been granted. Having failed to do so, Iceland will now be brought before the EFTA Court.

«Delays in the recovery of unlawful subsidies maintain the distortion of competition created by the aid. The Authority finds it unacceptable that almost a year after its decision, Iceland has still not complied with the obligation to reverse this aid measure. This leaves the Authority with no other option than to refer the matter to the EFTA Court», Mr. Sven Erik Svedman, President of the Authority, said.

Following an in-depth investigation, the Authority concluded in 2014 that Iceland's investment agreements with five companies: Becromal, Verne, Kísilfélagið, Thorsil and GMR Endurvinnslan, involved state aid which was not in line with the EEA Agreement. The Icelandic State was ordered to take all necessary measures to recover from the companies any aid granted on the basis of those agreements.

The Icelandic authorities were to immediately cancel any outstanding payments of the aid, and ensure that the recovery of aid was implemented within four months, i.e. by 9 February 2015. Furthermore, the Icelandic authorities were instructed to inform the Authority by 9 December 2014 of the total amount to be recovered as well as of the measures planned or taken to recover the aid.

Almost a year later, the Icelandic authorities have complied with none of the three obligations imposed in the Authority's decision.


In October 2010, the Authority approved an Icelandic scheme on investment incentives. The scheme, which expired at the end of 2013, was aimed at promoting investment in areas outside the capital region, in particular through the granting of tax exemptions. In the period 2010–2013 the Icelandic government entered into agreements with several companies.

In April 2013, the Authority decided to open an in-depth investigation into the scheme, the amendments made to the scheme and the investment agreements, in order to assess their compatibility with EEA law.

In October 2014, the Authority concluded that the amandments made to the Investment Incentive Scheme in Iceland, as well as five investment agreements, were incompatible with the functioning of the EEA Agreement. Any aid granted under these agreements was therefore not in line with EEA state aid rules and was not covered by the Authority's approval of the scheme in 2010. This decision has not been challenged.

More information

 Relevant documents


For further information, please contact:

Mr. Andreas Kjeldsberg Pihl
Press & Information Officer
tel. (+32)(0)2 286 18 66
mob. (+32)(0)492 900 187


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