ESA finds no State aid in 2020 amendments to Norwegian Petroleum Tax Act

The EFTA Surveillance Authority (ESA) has today closed two complaints concerning temporary amendments to the Norwegian Petroleum Tax Act (PTA). ESA finds that the June 2020 amendments to the PTA do not entail State aid. 

The Norwegian authorities in 2020 proposed and adopted amendments to the PTA to counter the consequences of the COVID-19 pandemic and the rapid fall in oil and gas prices, and a possible investment downturn in the sector.

ESA received two complaints – in December 2020 and July 2021 – implying that Norway was granting a selective advantage to petroleum companies to the detriment of certain petroleum companies and businesses active in other economic sectors.

The petroleum tax system as set out in the Petroleum Tax Act consists of two interlinked elements: the ordinary corporate income tax and the special tax. In 2020, the ordinary corporate income rate was set at 22% and the special tax rate at 56%.

The 2020 amendments to the PTA allowed an immediate deduction of investment costs instead of depreciation over time, and an increased additional depreciation of 24% (also known as ‘uplift’). The amendments only concerned the calculation of the special tax element. The amendments were applied for investment costs incurred in 2020 and 2021. They also cover investment costs included in petroleum deposit development plans submitted to authorities before 1 January 2023 and approved by 1 January 2024.

Both complainants argued that Norway provides unlawful State aid through these amendments.

Following a thorough examination, ESA finds no indications that the 2020 amendments to the PTA entail State aid. This is because the amendments apply generally to all petroleum companies incurring investment costs covered by the amendments.

ESA considers that since the petroleum tax system is a specific tax system applicable to petroleum companies only, there is no selective treatment of petroleum companies compared to other sectors. Also, the temporal limitation of the amendments does not lead to a selective treatment for petroleum companies making use of the rules, as opposed to those that cannot.  

ESA concludes that the amendments are not selective. According to EEA State aid rules, a measure that is not selective does not constitute State aid.

 

Please find ESA’s decision here.
 

For further information, please contact: