Commission Decision (EU) 2021/1757 of 4 December 2020 on the aid scheme SA.38399 — 2019/C (ex 2018/E) which Italy implemented —Corporate Taxation of Ports in ItalyText with EEA relevance.

3.4.

Selectivity

(80) With regard to the corporate income tax (IRES) exemption for PSA, Italy and most of the interested parties comment that the classification of PSA in the category of non-economic public bodies in the Italian Consolidated Tax Act TUIR necessarily entails their exemption from corporate income tax

ANCIP (National Association of Port Companies); Confetra (Italian General Confederation of Transport and Logistics)

. This would not be an exception to the system or a specific measure in favour of the PSA, since it is perfectly consistent with the principles of the Italian tax system

Italy cites Judgment of the Court of 21 December 2016, Commission v World Duty Free Group, C-20/15 P, ECLI:EU:C:2016:981, paragraph 58.

.

(81) The tax system laid down in the Italian TUIR is also perfectly consistent with the nature and the functions attributed to PSA, since they are public bodies entrusted solely with administrative functions and therefore subject to the application of Article 74 TUIR. Article 73 TUIR, on the contrary, presupposes that the entity concerned carries out commercial activities, albeit as a secondary activity, and would therefore not be applicable to PSA

ANCIP (National Association of Port Companies); Assoporti (Italian Ports Association); Confetra (Italian General Confederation of Transport and Logistics)

.

3.5.

Distortion of competition and effect on trade

(82) One interested party considers that the measure has no effect on trade and competition, as there are no private ports in Italy

Confetra (Italian General Confederation of Transport and Logistics)

. PSA do not need to incentivise potential concessionaires by offering low or reduced concession fees, as the demand for access to port areas is in any way higher than the supply of available areas.

(83) Some interested parties also comment that ports do not compete with other transport service providers, as the various transport infrastructures serve different goods and traffic markets and are not substitutable.

1. ASSESSMENT

4.1.

Existence of State aid under Article 107(1) of the Treaty

(84) Under Article 107(1) of the Treaty, any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods is incompatible with the internal market where it affects trade between Member States.

4.1.1.

The presence of undertakings

4.1.1.1.

The concept of undertaking

(85) According to the case-law, the concept of an undertaking encompasses every entity engaged in an economic activity, regardless of the legal status of the entity and the way in which it is financed

Judgment of the Court of 23 April 1991, Klaus Höfner and Fritz Elser v Macrotron GmbH, C-41/90, ECLI:EU:C:1991:161, paragraph 21.

. The fact that an entity does not seek to make profit is not decisive to establish if it is an undertaking or not

Judgment of the Court of 1 July 2008, MOTOE, C-49/07, ECLI:EU:C:2008:376, paragraphs 27 and 28.

. The fact that it is publicly owned is not decisive, either.

(86) As clarified by the Union courts, any activity consisting in offering goods and services on a given market, that is, services normally provided for remuneration, is an economic activity. The essential characteristic of remuneration lies in the fact that it is consideration for the service in question

Judgment of the Court of 6 November 2018, Scuola Elementare Maria Montessori v Commission, Joined cases C-622/16 P to C-624/16 P, ECLI:EU:C:2018:873, paragraph 104 and the case-law cited therein.

. Also non-profit entities can offer goods and services on a market

Judgment of the Court of 29 October 1980, Van Landewyck v Commission, Joined Cases 209 to 215 and 218/78, ECLI:EU:C:1980:248, paragraph 88. Judgment of the Court of 16 November 1995, FFSA and Others v Ministère de l'Agriculture and de la Pêche, C-244/94, ECLI:EU:C:1995:392, paragraph 21. Judgment of the Court of 1 July 2008, MOTOE, C-49/07, ECLI:EU:C:2008:376, paragraphs 27 and 28. See also the Commission Notice on the notion of State aid as referred to in Article 107(1) of the Treaty on the Functioning of the European Union, OJ C 262, 19.7.2016, paragraph 9.

.

(87) When it comes to the construction and exploitation of public infrastructure, the Union courts have clarified that it is the future use of the infrastructure, i.e. its economic exploitation or not, that determines whether the funding of the construction of such infrastructure falls within the scope of Union State aid rules or not

Judgment of the General Court of 24 March 2011, Freistaat Sachsen and Others v Commission and Mitteldeutsche Flughafen and Flughafen Leipzig/Halle v Commission, Joined cases T-443/08 and T-455/08, ECLI:EU:T:2011:117, paragraph 95, confirmed by Judgment of the Court of 19 December 2012, Mitteldeutsche Flughafen and Flughafen Leipzig-Halle v Commission, C-288/11, ECLI:EU:C:2012:821, paragraphs 42 to 44.

. It is recognised that the commercial exploitation and the construction of port or airport infrastructure for such commercial exploitation constitute economic activities

Judgment of the General Court of 20 September 2019, Havenbedrijf Antwerpen and Maatschappij van de Brugse Zeehaven v Commission, T-696/17, ECLI:EU:T:2019:652, paragraph 47.

.

(88) In accordance with this case-law, the Commission concluded in a series of decisions that the construction and commercial exploitation of port infrastructures constitute economic activities

Commission Decision of 15 December 2009 on State aid N 385/2009, Public financing of port infrastructure in Ventspils Port (OJ C 72, 20.03.2010, recitals 53 to 58). Commission Decision of 15 June 2011 on State aid N 44/2010, Public financing of port infrastructure in Krievu Sala (OJ C 215, 21.7.2011, p. 21, recitals 60 to 68). Commission Decision of 22 February 2012 on State aid SA.30742 (N/2010), Construction of infrastructure for the passenger and cargo ferries terminal in Klaipeda (OJ C 121, 26.4.2012, p. 1, recitals 45 to 47).

. For example, the commercial exploitation of a port or airport terminal by making it available to users against the payment of a fee constitutes an economic activity

Commission Decision of 18 September 2013 on State Aid SA.36953 (2013/N), Port Authority of Bahía de Cádiz (OJ C 335, 16.11.2013, p. 1, recital 29).

. Consequently, public funding of a port infrastructure favours an economic activity and is in principle subject to State aid rules

Commission Decision of 27 March 2014 on State aid SA.38302, Port of Salerno (OJ C 156, 23.5.2014, recitals 32 to 36). Commission Decision of 22 February 2012 on State aid SA.30742 (N/2010), Construction of infrastructure for the passenger and cargo ferries terminal in Klaipeda (OJ C 121, 26.4.2012, p. 1, recital 45 to 47). Commission Decision of 2 July 2013 on State Aid SA.35418 (2012/N), Extension of Piraeus Port, (OJ C 256, 5.9.2013, p.2, recitals 21 and 22). Commission Notice on the notion of State aid as referred to in Article 107(1) of the Treaty on the Functioning of the European Union (OJ C 262, 19.7.2016, point 215, p. 47).

.

(89) Conversely, investment for infrastructure that is necessary to perform activities that fall under the responsibility of the State in the exercise of its public powers is not subject to State aid control

Examples for such non-economic activities are: (a) Maritime traffic control; (b) Firefighting; (c) Police; (d) Customs. Commission Notice on the notion of State aid as referred to in Article 107(1) of the Treaty on the Functioning of the European Union (OJ C 262, 19.7.2016, point 215, p. 47).

. Only infrastructures that form part of the essential functions of the State are non-economic in nature.

4.1.1.2.

PSA carry out economic and non-economic activities

(90) Italy and the majority of interested parties claim that PSA are non-economic public bodies of national importance with administrative, organisational, regulatory, budgetary and financial autonomy. In their view, PSA do not perform economic activities and are not undertakings.

(91) The Commission considers that the classification of PSA as non-economic public bodies under Italian law is not sufficient to conclude that they are not undertakings. In order to determine whether the activities performed by PSA are those of an undertaking within the meaning of the Treaty, it is necessary to establish the nature of their activities

Judgment of the General Court of 20 September 2019, Havenbedrijf Antwerpen and Maatschappij van de Brugse Zeehaven v Commission, T-696/17, ECLI:EU:T:2019:652, paragraph 54.

.

(92) Based on the description of the activities of PSA (see sections 2.1.2 to 2.1.5), the Commission considers that the granting of access to ports against remuneration (anchorage dues and dues on goods loaded and unloaded), the granting of authorisations against remuneration to perform port operations, and the granting of concessions against remuneration constitute economic activities. Therefore, the Commission concludes that PSA perform both non-economic and economic activities.

(93) The Commission does not dispute that PSA may be entrusted with the exercise of certain public powers which are of a non-economic nature (such as maritime traffic control and safety or anti-pollution surveillance, carried out on their own or in conjunction with other public bodies such as the Maritime Authority)

Commission Notice on the notion of State aid as referred to in Article 107(1) of the Treaty on the Functioning of the European Union (OJ C 262, 19.7.2016, point 17, p. 5).

. In carrying out these activities, they are not undertakings within the meaning of Article 107(1) of the Treaty.

(94) However, the fact that when PSA carry out some of their activities, they exercise powers of a public authority, does not, in itself, prevent them from being classified as undertakings

Judgment of the General Court of 30 April 2019, UPF v Commission, T-747/17, ECLI:EU:T:2019:271, paragraph 64. Judgment of the General Court of 20 September 2019, Havenbedrijf Antwerpen and Maatschappij van de Brugse Zeehaven v Commission, T-696/17, ECLI:EU:T:2019:652, paragraphs 53 and 54.

.

(95) PSA also carry out economic activities. They provide a general service to the users of the ports (ship-owners and vessel operators) by giving access to port infrastructure to ships in return for remuneration commonly referred to as port fees (namely dues on goods unloaded and loaded and anchorage dues). By granting authorisations and concessions for remuneration, they make certain infrastructure or land available to undertakings which use those areas for their own purposes or to provide ship-owners and vessel operators with services.

(96) Italy and several other interested parties claim that PSA do not have direct contractual relationships with ship-owners and vessel operators (only concessionaires do). Nevertheless, the Commission is of the opinion that the fact that concessionaires use certain port land and infrastructure to offer services to ship-owners and vessel operators does not exclude that certain activities carried out by PSA, such as to rent the port land and infrastructure to those third-party undertakings, are also of an economic nature

Judgment of the General Court of 20 September 2019, Havenbedrijf Antwerpen and Maatschappij van de Brugse Zeehaven v Commission, T-696/17, ECLI:EU:T:2019:652, paragraph 48.

.

(97) This position is consistent with the position adopted by the Commission in several cases involving State aid to Italian PSA

Commission Decision of 19 December 2012 on State aid SA.34940, Port of Augusta (OJ C 077, 17.3.2013, recitals 42 and 43). Commission Decision of 27 March 2014 on State aid SA.38302, Investment Aid to the Port of Salerno (OJ C 156, 23.5.2014, recitals 33 to 36). Commission Decision of 19 June 2015 on State aid SA.39542, Dredging and disposal of dredged materials in the Port of Taranto (OJ C 259, 7.8.2015, recitals 38 to 41). Commission Decision of 28 June 2016 on State aid SA.36112, Port Authority of Naples and Cantieri del Mediterraneo S.p.A. (OJ C 369, 7.10.2016, recitals 44 to 47).

. Moreover, in the cases concerning the corporate income tax exemption for ports in Belgium and France, the Commission also made clear that the renting out of public domain against remuneration constitutes an economic activity

Commission Decision of 27 July 2017 on State aid SA.38393, Ports taxation in Belgium (OJ L 332, 14.12.2017, paragraph 62). Commission Decision of 27 July 2017 on State aid SA.38398, Ports taxation in France (OJ L 332, 14.12.2017, paragraph 55).

. The General Court confirmed this position

Judgment of the General Court of 30 April 2019, UPF v Commission, T-747/17, ECLI:EU:T:2019:271, paragraph 65 and 66. Judgment of the General Court of 20 September 2019, Havenbedrijf Antwerpen and Maatschappij van de Brugse Zeehaven v Commission, T-696/17, ECLI:EU:T:2019:652, paragraph 47. The judgments were not appealed.

.

(98) In sum, a PSA will be regarded as an undertaking if - and in so far as - it actually carries out one or more economic activities

Judgment of the General Court of 30 April 2019, UPF v Commission, T-747/17, ECLI:EU:T:2019:271, paragraph 64 and the case-law cited.

. PSA grant access to port infrastructure to ship-owners and vessel operators in return for remuneration (namely dues on goods unloaded and loaded and anchorage dues). They grant authorisations for port operations against remuneration (authorisation fees), and they rent out public domain against remuneration (concession fees). These activities qualify as economic activities. The Commission therefore considers that PSA are undertakings in relation to the economic activities they carry out.

4.1.1.3.

Absence of profit motive not sufficient to rule out classification as undertaking

(99) Italy and several interested parties claim that PSA do not pursue a commercial logic and do not seek profit maximisation. In this respect, the Commission wishes to emphasise that the fact that goods or services are offered on a non-profit-seeking basis does not prevent the entity which carries out those operations on the market from being classified as an undertaking.

Judgment of the Court of 1 July 2008, MOTOE, C-49/07, ECLI:EU:C:2008:376, paragraph 27. Judgment of the Court of 27 June 2017, Congregación de Escuelas Pías Provincia Betania, C 74/16, ECLI:EU:C:2017:496, paragraph 46. Judgment of the General Court of 12 September 2013, Germany v Commission, T-347/09, ECLI:EU:T:2013:418, paragraph 48. Judgment of the General Court of 20 September 2019, Havenbedrijf Antwerpen and Maatschappij van de Brugse Zeehaven v Commission, T-696/17, ECLI:EU:T:2019:652, paragraph 80.

(100) The Commission notes that neither Italy nor the interested parties claim that the fees charged by PSA are merely symbolic or are unrelated to the cost of the services provided. The Commission also observes that port fees (namely dues on goods unloaded and loaded and anchorage dues) and authorisation and concession fees constitute the largest share of revenue of PSA. According to a report by the Italian Ministry of Infrastructure and Transport, in 2017, port fees (fees on goods unloaded and loaded and anchorage fees) and concession fees accounted for 53,2% and 27,1% of revenues of PSA, respectively

Relazione sull’attività delle autorità di sistema portuale, Anno 2017, Ministero delle Infrastrutture e dei Trasporti, published on 16 September 2019 http://www.mit.gov.it/node/11420

.

4.1.1.4.

The setting of fees by law does not exclude the existence of an economic activity

(101) Italy and several interested parties claim that the fees for concessions and authorisations granted by the PSA to private undertakings for the commercial use of the basic port infrastructure and the provision of port operations and services do not constitute consideration for a service provided or a good offered (see 3.2.3).

(102) Italy claims that concession fees are established by law. PSA would therefore not carry out economic activities, because they are unable to intervene in the main element of any economic transaction carried out on market terms, namely the price of the service.

(103) To begin with, the Commission wishes to recall that according to the case-law, services which are capable of being characterised as economic activities are those which are normally provided against remuneration. The essential characteristic of remuneration lies in the fact that it constitutes consideration for the benefit in question

Judgment of the Court of 27 June 2017, Congregación de Escuelas Pías Provincia Betania, C 74/16, ECLI:EU:C:2017:496, paragraph 47 and the case-law cited. Judgment of the General Court of 20 September 2019, Havenbedrijf Antwerpen and Maatschappij van de Brugse Zeehaven v Commission, T-696/17, ECLI:EU:T:2019:652, paragraph 75.

. The existence of remuneration therefore constitutes a determinant factor in order to establish the existence of an economic activity

Judgment of the Court of 19 December 2012, Mitteldeutsche Flughafen and Flughafen Leipzig-Halle v Commission, C-288/11, ECLI:EU:C:2012:821, paragraph 40. Judgment of the General Court of 24 March 2011, Freistaat Sachsen and Others v Commission and Mitteldeutsche Flughafen and Flughafen Leipzig/Halle v Commission, Joined cases T-443/08 and T-455/08, ECLI:EU:T:2011:117, paragraph 93. Judgment of the General Court of 20 September 2019, Havenbedrijf Antwerpen and Maatschappij van de Brugse Zeehaven v Commission, T-696/17, ECLI:EU:T:2019:652, paragraph 76.

.

(104) The provision of services against remuneration established by law is not in itself sufficient to prevent the activity in question from being classified as an economic activity

Judgment of the General Court of 12 September 2013, Germany v Commission, T-347/09, ECLI:EU:T:2013:418, paragraph 30 and the case law cited. Judgment of the General Court of 20 September 2019, Havenbedrijf Antwerpen and Maatschappij van de Brugse Zeehaven v Commission, T-696/17, ECLI:EU:T:2019:652, paragraph 78.

.

(105) The Commission therefore considers that the argument that concession fees are established by law is not sufficient to conclude that PSA do not carry out economic activities. The Commission also notes that the law only sets minimum fees for concessions, leaving PSA room to influence fees in line with their business strategies. In any event, even if it were true that concession fees are entirely set by law, it would be irrelevant, as PSA make certain infrastructure or land available to undertakings against remuneration, which is considered as an economic activity.

(106) The Commission consequently concludes that the granting of concessions against remuneration should be qualified as economic activity.

4.1.1.5.

Economic incentives

(107) The Commission notes that the setting of fees by law does not exclude that the fees are set at least partly on the basis of an economic rationale. In the case at hand, numerous public and private stakeholders (national and regional authorities, PSA and other public bodies, undertakings providing port services and port operations, trade unions) are consulted before the fees for concessions and the authorisation fees for port operations are fixed at national level. The same is true for port fees (dues for goods loaded and unloaded and anchorage dues).

(108) The Commission considers that the corporate tax exemption granted to PSA allows PSA to apply lower fees. The level of fees is an important element of the commercial policy implemented by ports to encourage ship-owners and vessel operators to use the infrastructure of the port and companies to install themselves in order to develop their production or service activities there

Judgment of the General Court of 20 September 2019, Havenbedrijf Antwerpen and Maatschappij van de Brugse Zeehaven v Commission, T-696/17, ECLI:EU:T:2019:652, paragraph 81.

.

(109) Also, in the case of concessions, only one part of the concession fee (minimum fee) is fixed at national level. This part of the fee is the fixed component of the concession fee. The variable component of the concession fee allows PSA to pursue their own business strategies according to the specific market circumstances.

(110) Indeed, concession fees are made up of a fixed and a variable component. The fixed component is generally proportional to the surface of the areas concerned by the concession and takes account of several other parameters (location, level of infrastructure of the areas concerned). The variable component includes economic incentive mechanisms to achieve higher productivity, a better energy and environmental performance, and the improvement of service levels, in particular with regard to the transport and intermodal integration of the ports.

(111) Italy acknowledges that the variable component of the concession fees is economic in nature and would hence justify to be taken into account in the assessment base for a potential taxation of the income of the PSA. However, when concessionaires achieve the economic objectives set, the corresponding amount of the fee would be progressively reduced and would lead to a reduction of the overall concession fee. As a result, according to the Italian authorities, the revenues of PSA from concessions are in practice almost entirely made up of the fixed component, which is limited to remunerating the management and the regulatory activities of the PSA. Because Italy considers that the fixed component of the concession fees is a remuneration for non-economic activities, it concludes that PSA do not carry out any economic activity.

(112) However, the Commission notes that neither Italy nor any of the interested parties have presented any evidence to support their claim that the variable component of the fee leads to a reduction of the overall concession fee.

(113) More importantly, it is not disputed that the concession fees are set in a way that reflects the value of the service rendered (scope, location, and level of infrastructure). Neither are the concession fees merely symbolic.

(114) The Commission therefore concludes that the fact that the variable component of concession fees might reduce the overall revenue from concession fees when concessionaires achieve the economic objectives in the concession contract, is not sufficient to exclude that PSA carry out economic activities. The Commission also considers that the fact that revenues from concession fees may also finance certain non-economic activities does not alter the fact that the fees are received in return for a service, namely access to the port infrastructure

Judgment of the General Court of 20 September 2019, Havenbedrijf Antwerpen and Maatschappij van de Brugse Zeehaven v Commission, T-696/17, ECLI:EU:T:2019:652, paragraph 82.

.

4.1.1.6.

Fees are no taxes

(115) Italy and several interested parties also claim that the fees payable to PSA have the characteristics of a tax paid by the concessionaire to the State via the PSA.

(116) The Commission takes the view that this argument is not relevant for determining whether PSA carry out an economic activity as national qualifications alone cannot be used to circumvent application of common Union rules. Services which are capable of being characterised as economic activities are those which are normally provided against remuneration

Judgment of the General Court of 20 September 2019, Havenbedrijf Antwerpen and Maatschappij van de Brugse Zeehaven v Commission, T-696/17, ECLI:EU:T:2019:652, paragraph 75.

. The fees received by PSA constitute remuneration paid by users for the provision of specific services in return. As the General Court already noted in the case of the Spanish ports, where the ports also argued that port dues are taxes, port fees are fees charged for the use of port infrastructure

Judgment of the General Court of 15 March 2018, Naviera Armas v Commission, T-108/16, ECLI:EU:T:2018:145, paragraph 124.

.

4.1.1.7.

Economic activities of PSA are not ancillary activities

(117) Italy is of the opinion that the economic activities carried out by PSA when managing the ports are marginal and are insufficient to qualify PSA as undertakings. The case-law of the Court of Justice would rule out that bodies established and regulated for carrying out public and non-economic functions and activities, but at the same time carrying out certain economic activities, are classified as undertakings

Judgment of the Court of 19 January 1994, SAT Fluggesellschaft v Eurocontrol, C-364/92, ECLI:EU:C:1994:7. Judgment of the Court of 26 March 2009, Selex Sistemi Integrati v Commission, C-113/07, ECLI:EU:C:2009:191.

.

(118) Italy also considers that activities which might have an economic significance for the management of the port property and which may be relevant in the determination of the concession fees are inseparable from the public activities entrusted by law to the PSA, such as the control and management of the port property. According to Italy, the fees levied by PSA should therefore not be considered as corporate income.

(119) The Commission wishes to recall that the fact that an entity enjoys, in the exercise of part of its activities, public authority powers does not, in itself, prevent it from being classified as an undertaking for the purposes of Union competition law for its economic activities

Judgment of the General Court of 20 September 2019, Havenbedrijf Antwerpen and Maatschappij van de Brugse Zeehaven v Commission, T-696/17, ECLI:EU:T:2019:652, paragraph 85 and the case law cited.

.

(120) According to the case-law, in so far as a public entity carries out an economic activity which may be separated from the exercise of its prerogatives as a public authority, that entity, as regards that activity, acts as an undertaking. On the other hand, if that economic activity is inseparable from the exercise of its prerogatives as a public authority, all the activities carried out by that entity remain activities connected with the exercise of those prerogatives

Judgment of the Court of 12 July 2012, Compass-Datenbank, C 138/11, ECLI:EU:C:2012:449, paragraph 38. Judgment of the General Court of 12 September 2013, Germany v Commission, T-347/09, ECLI:EU:T:2013:418, paragraph 29. Judgment of the Court of 26 March 2009, Selex Sistemi Integrati v Commission, C-113/07, ECLI:EU:C:2009:191, paragraphs 71 to 80. Judgment of the General Court of 20 September 2019, Havenbedrijf Antwerpen and Maatschappij van de Brugse Zeehaven v Commission, T-696/17, ECLI:EU:T:2019:652, paragraph 86. Judgment of the General Court of 30 April 2019, UPF v Commission, T-747/17, ECLI:EU:T:2019:271, paragraph 82.

.

(121) The Commission notes that neither Italy nor any of the interested parties have come up with evidence to show that the economic activities carried out by the ports are inseparable from their prerogatives as a public authority. The mere possibility of an economic link between those activities, in that the economic activities of the ports make it possible to finance, in whole or in part, their non-economic activities, is not sufficient to establish that those activities are inseparable within the meaning of the case-law

Judgment of the General Court of 20 September 2019, Havenbedrijf Antwerpen and Maatschappij van de Brugse Zeehaven v Commission, T-696/17, ECLI:EU:T:2019:652, paragraph 87. Judgment of the General Court of 30 April 2019, UPF v Commission, T-747/17, ECLI:EU:T:2019:271, paragraph 84.

.

(122) The Commission also notes that in the present case, the economic activities of PSA are not made compulsory by their non-economic activities in the public interest and that, in their absence, the non-economic activities are not necessarily deprived of their usefulness

Judgment of the Court of 12 July 2012, Compass-Datenbank, C 138/11, ECLI:EU:C:2012:449, paragraph 41. Judgment of the General Court of 12 September 2013, Germany v Commission, T-347/09, ECLI:EU:T:2013:418, paragraph 41. Judgment of the General Court of 20 September 2019, Havenbedrijf Antwerpen and Maatschappij van de Brugse Zeehaven v Commission, T-696/17, ECLI:EU:T:2019:652, paragraph 89. Judgment of the General Court of 30 April 2019, UPF v Commission, T-747/17, ECLI:EU:T:2019:271, paragraph 82.

.

(123) The Commission also observes that neither Italy nor the interested parties have demonstrated that the economic activities of the ports are ancillary to their non-economic activities carried out / exercised in the public interest.

Judgment of the General Court of 20 September 2019, Havenbedrijf Antwerpen and Maatschappij van de Brugse Zeehaven v Commission, T-696/17, ECLI:EU:T:2019:652, paragraph 90. Judgment of the General Court of 30 April 2019, UPF v Commission, T-747/17, ECLI:EU:T:2019:271, paragraph 87.

On the contrary, port fees (namely dues on goods unloaded and loaded and anchorage fees) and concession fees represent the majority of the operative revenues of PSA, as the related activities constitute the core business of PSA

Relazione sull’attività delle autorità di sistema portuale, Anno 2017, Ministero delle Infrastrutture e dei Trasporti, published on 16 September 2019 http://www.mit.gov.it/node/11420.

.

(124) The Commission therefore concludes that the economic activities of PSA are not inseparable from their non-economic activities carried out / exercised in the public interest, within the meaning of the case-law

Judgment of the General Court of 20 September 2019, Havenbedrijf Antwerpen and Maatschappij van de Brugse Zeehaven v Commission, T-696/17, ECLI:EU:T:2019:652, paragraph 89. Judgment of the General Court of 30 April 2019, UPF v Commission, T-747/17, ECLI:EU:T:2019:271, paragraph 84.

. As a consequence, the Commission takes the view that PSA should be regarded as undertakings if - and in so far as - they actually carry out one or more economic activities

Judgment of the Court of 12 July 2012, Compass-Datenbank, C 138/11, ECLI:EU:C:2012:449, paragraph 37. Judgment of the General Court of 30 April 2019, UPF v Commission, T-747/17, ECLI:EU:T:2019:271, paragraph 64.

.

4.1.1.8.

Legal monopoly not sufficient to consider activities of PSA as non-economic

(125) Italy and several interested parties claim that PSA have no competitors and that there is no market in which they would operate. In the absence of a market on which to offer their services, PSA could not be regarded as undertakings. Some of the interested parties also indicate that the management of ports is different from the management of airports.

(126) In this regard, the Commission notes that an entity which enjoys a legal monopoly may very well offer goods and services on a market and therefore be an undertaking within the meaning of Article 107 of the Treaty. The concept of economic activity is an objective one, which results from facts, in particular from the existence of a market for the services concerned

Judgment of the General Court of 20 September 2019, Havenbedrijf Antwerpen and Maatschappij van de Brugse Zeehaven v Commission, T-696/17, ECLI:EU:T:2019:652, paragraph 56.

.

(127) The Commission also recalls that the Union Courts held that the provision of airport facilities to airlines, subject to the payment of a fee, constitutes an economic activity

Judgment of the Court of 24 October 2002, Aéroports de Paris v Commission, C 82/01 P, ECLI:EU:C:2002:617, paragraph 78. Judgment of the Court of First Instance of 12 December 2000, Aéroports de Paris v Commission, T-128/98, ECLI:EU:T:2000:290,paragraph 121.

. The Commission considers that there is no fundamental difference between the granting of airport infrastructure access in exchange for airport charges and the granting of access to the port infrastructure in exchange for port rights

Judgment of the General Court of 20 September 2019, Havenbedrijf Antwerpen and Maatschappij van de Brugse Zeehaven v Commission, T-696/17, ECLI:EU:T:2019:652, paragraph 71. Judgment of the General Court of 30 April 2019, UPF v Commission, T-747/17, ECLI:EU:T:2019:271, paragraph 65.

, especially because airports also have a legal monopoly similar to the one enjoyed by the Italian PSA. PSA themselves operate the port infrastructure when they give access to the port infrastructure to ship-owners and vessel operators or rent it in return for remuneration

Judgment of the Court of 19 December 2012, Mitteldeutsche Flughafen and Flughafen Leipzig-Halle v Commission, C-288/11, ECLI:EU:C:2012:821. Judgment of the General Court of 20 September 2019, Havenbedrijf Antwerpen and Maatschappij van de Brugse Zeehaven v Commission, T-696/17, ECLI:EU:T:2019:652, paragraph 72.

.

(128) The Commission therefore concludes that the arguments presented by Italy and some of the interested parties are not sufficient to consider that the activities carried out by PSA are non-economic.

4.1.1.9.

Conclusion

(129) In the light of the above, the Commission concludes that PSA carry out economic activities and in relation to these, they qualify as undertakings within the meaning of Article 107(1) of the Treaty.

4.1.2.

The use of State resources and imputability to the State

(130) To qualify as State aid, Article 107(1) of the Treaty requires that the measure be granted by a Member State or through State resources in any form whatsoever. In the case at hand, the exemption from corporate tax is in particular based on Article 74 of TUIR, as interpreted and applied by the Italian authorities (see (50) to (52)). According to Article 74 TUIR, State bodies and administrations, and other territorial bodies, such as for example regions and municipalities, are not liable for corporate tax. In the view of the Italian authorities, PSA are public bodies entrusted solely with administrative functions and are therefore subject to the application of Article 74 TUIR. The measure is therefore imputable to the State.

(131) Also, a loss of tax revenue is equivalent to consumption of State resources in the form of fiscal expenditure.

(132) Indeed, as held by the Union Courts, a measure by which the public authorities grant to certain undertakings a tax exemption which, although not involving a cash transfer of State resources, places the persons to whom the tax exemption applies in a more favourable financial situation than other taxpayers, fulfils the notion of State resources within the meaning of Article 107(1) of the Treaty

Judgment of the Court of 15 March 1994, Banco Exterior de España v Ayuntamiento de Valencia, C-387/92, ECLI:EU:C:1994:100, paragraph 14.

.

(133) Hence, by exempting PSA engaged in economic activities from corporate taxation, the Italian authorities forego revenue, which constitutes State resources. The Commission therefore takes the view that the measure at issue involves a loss of State resources and is therefore granted through State resources.

(134) As to the argument put forward by some interested parties that the exclusion of PSA from the obligation to pay corporate income tax would not entail any loss of tax revenue, as PSA are part of the State, it is recalled that the Union legal order is neutral with regard to the system of property ownership

(138) Hence, by exempting PSA engaged in economic activities from corporate taxation, the Italian authorities provide to them an advantage. The Commission therefore concludes that the measure at issue provides an advantage to PSA.

4.1.4.

Distortion of competition and effect on trade

(139) Under Article 107(1) of the Treaty, to be qualified as aid a measure must affect intra-Union trade and distort, or threaten to distort competition.

4.1.4.1.

Existence of competition and competitive markets

(140) The Commission recalls first of all that, in the context of the public consultation of interested parties on the draft Regulation in the ports sector, all stakeholders stressed the need for a stable and fair level playing field for competition between ports in the Union

See point 2.1 of the proposal for a Regulation on port services. Also see Communication from the Commission on a European Ports Policy, COM/2007/0616 final, point II.4.2.

.

(141) It is true that, in certain Member States, the operation of basic port infrastructure is legally reserved to certain entities. In that regard, operators from other Member States cannot operate basic port infrastructure in these Member States, so that that specific market can, at least to a certain extent, be seen as not liberalised or open to competition. However, this specific market is not the only market on which an advantage to port authorities could distort competition

See opinion of Advocate General Wahl in Judgment of the Court of 23 January 2019, Fallimento Traghetti del Mediterraneo, C-387/17, ECLI:EU:C:2018:712, paragraph 66: … the Court has, however, already held that such an absence of liberalisation does not necessarily exclude the possibility that the State aid is liable to affect trade between Member States and is capable of distorting or threatening to distort competition. See also the Judgment of the Court of 23 January 2019, Fallimento Traghetti del Mediterraneo, C-387/17, ECLI:EU:C:2019:51, paragraph 38 and following.

.

(142) Firstly, logistics and transport companies willing to transport goods can use different ways to do so, involving the use of other (foreign or domestic) ports managed by other port authorities or even no port at all. Ports from different Member States can share the same hinterland so that port authorities compete to provide transport services to operators willing to serve that hinterland. This can for example be the case for port operators in the North West of Italy and in the South of France. The services offered by PSA (granting access to ports) are thus, at least to a certain extent, in competition with those offered by other port authorities and by other providers of transport services in Italy and other Member States. More generally, the Commission notes that, as ports are to a large extent involved in the international transport of goods and passengers, any advantage to Italian PSA is also by nature liable to affect competition and intra-Union trade.

(143) In that regard, the fact that PSA are the only entities entitled to operate their own port infrastructure (and offer access to port infrastructure) does not put into question the existence of a broader competitive market, where transport services (access to port infrastructure) provided by PSA are in competition with services offered by other transport operators established in Italy and by other ports or transport providers in other Member States

In that regard the conditions laid down in paragraph 188 of the Commission Notice on the notion of State aid are not fulfilled. Commission Notice on the notion of State aid as referred to in Article 107(1) of the Treaty on the Functioning of the European Union (OJ C 262, 19.7.2016, p. 1–50).

. Users of port infrastructure are free to use other ports (in Italy or abroad) and other ways of transport, so that PSA provide services in competition with other operators in the broad market of transport services and in the narrower market of port services (other Union ports grant access to the Union market and thus to Italy, sometimes in combination with road, rail or waterway)

Port competition can also involve rivalry among port authorities in view of offering the best facilities (both material and non-material) to all actors involved in the supply chains of the various trades (e.g. stevedoring companies, shipping companies, shippers and multimodal operators). Notteboom T., de Langen P. (2015) Container Port Competition in Europe. In: Lee CY., Meng Q. (eds) Handbook of Ocean Container Transport Logistics. International Series in Operations Research & Management Science, vol 220.

.

(144) Also, concessionaires willing to provide port services can do so in other ports managed by other port authorities. PSA compete to attract these operators (concessionaires carrying out port services). The level of fees charged by the PSA in exchange for land and infrastructure (port equipment) being made available to concessionaires also plays a role in the choice made by concessionaires to establish themselves in one port rather than another

On port authority level, the battle is mainly focused on offering the best basic infrastructural (docks, quays) and infostructural (IT) facilities, the best logistic/distribution facilities and the lowest port user costs. Notteboom T., de Langen P. (2015) Container Port Competition in Europe. In: Lee CY., Meng Q. (eds) Handbook of Ocean Container Transport Logistics. International Series in Operations Research & Management Science, vol 220.

. The existence of competition and cross-border effects in this market is acknowledged by the case-law

Judgment of the General Court of 20 September 2019, Havenbedrijf Antwerpen and Maatschappij van de Brugse Zeehaven v Commission, T-696/17, ECLI:EU:T:2019:652, paragraph 99. Judgment of the General Court of 30 April 2019, UPF v Commission, T-747/17, ECLI:EU:T:2019:271, paragraph 103.

.

(145) Moreover, undertakings willing to establish themselves close to a port can also settle outside the port (and not necessarily on land owned or managed by port authorities), so that PSA are in competition with other operators renting out land outside ports.

(146) In conclusion, the Commission considers that PSA may compete with one another and with other ports in Europe and that the tax exemption for PSA is therefore also likely to affect competition and trade between Member States.

4.1.4.2.

Distortion of competition

(147) A measure granted by the State is considered to distort or threaten to distort competition when it is liable to improve the competitive position of the recipient compared to other undertakings with which it competes

Judgment of the Court of 17 September 1980, Philip Morris Holland BV v Commission of the European Communities, Case 730/79, ECLI:EU:C:1980:209, paragraph 11. Judgment of the Court of First Instance of 15 June 2000, Alzetta and Others v Commission, Joined cases T-298/97, T-312/97, T-313/97, T-315/97, T-600/97 to 607/97, T-1/98, T-3/98 to T-6/98 and T-23/98, ECLI:EU:T:2000:151, paragraph 80.

. A distortion of competition within the meaning of Article 107(1) of the Treaty is generally found to exist when the State grants a financial advantage to an undertaking in a sector where there is, or could be, competition

Judgment of the Court of 24 July 2003, Altmark Trans GmbH and Regierungspräsidium Magdeburg, C-280/00, ECLI:EU:C:2003:415, paragraphs 78 and 79.

. Public support is

liable to distort competition even if it does not help the recipient undertaking expand and gain market share. It is enough that the aid allows it to maintain a stronger competitive position than it would have had, if the aid had not been provided. In this context, for aid to be considered to distort competition, it is normally sufficient that the aid gives the beneficiary an advantage by relieving it of expenses it would otherwise have had to bear in the course of its day-to-day business operations

Judgment of the Court of 3 March 2005, Heiser, C-172/03, ECLI:EU:C:2005:130, paragraph 55.

.

(148) As the measure at issue constitutes an aid scheme, which applies to PSA of different size, geographical location, and activities, it is not necessary to demonstrate individually that that measure results for each PSA in a distortion of competition and an effect on trade in order to establish that the measure examined is State aid

Judgment of the General Court of 30 April 2019, UPF v Commission, T-747/17, ECLI:EU:T:2019:271, paragraph 102.

.

(149) The corporate tax exemption grants an advantage to the PSA, which is liable to improve their competitive position. In particular, the price of services provided by PSA (authorisation and concession fees, dues on goods unloaded and loaded, and anchorage dues) is one of the factors influencing the relative competitiveness of different ports in Europe

The price of transport services provided by the ports often represents a large share of the total transport cost. See Europe’s Seaports 2030: challenges ahead, European Commission memo of 23 May 2013: The costs and quality of port services are a major factor for European business. Port costs may account for a significant part of the total costs in the logistics chain. Handling cargo, port dues and port nautical services can account for between 40%-60% of the total door-to-door logistic costs for business using short sea shipping to transport goods. (underscored by the Commission). Cf. footnote 72.

.

(150) Italy has argued that PSA only have limited influence on the setting of the fees for their activities. However, the criteria for determining authorisation and concession fees established by public decree only define the minimum fee and therefore leave a margin of discretion for the PSA to set the level of their fees (see 4.1.1.5). In any event, even the existence of fees exclusively fixed at central level – without any margin of discretion for individual PSA to influence the level of the fees fixed centrally – would not rule out a distortion of competition because undertakings can also compete on non-price parameters (quality of service, etc.) and because the advantage conferred to PSA by the tax exemption at stake can also help them to reinforce the quality of their offer and to attract ship-owners and vessel operators.

(151) Hence, the Commission concludes that by exempting PSA engaged in economic activities from corporate taxation, the Italian authorities provide to them an advantage that has the potential to affect competition. The Commission therefore takes the view that the measure at issue distorts or threatens to distort competition.

4.1.4.3.

Effect on trade

(152) Public support to undertakings only constitutes State aid under Article 107(1) of the Treaty insofar as it affects trade between Member States. It is not necessary to establish that the aid has an actual effect on trade between Member States but only that the aid is liable to affect such trade

Judgment of the Court of 14 January 2015, Eventech, C-518/13, ECLI:EU:C:2015:9, paragraph 65. Judgment of the Court of 8 May 2013, Libert and Others, Joined Cases C-197/11 and C-203/11, ECLI:EU:C:2013:288, paragraph 76.

. In particular, the Union courts have ruled that where State financial aid strengthens the position of an undertaking as compared with other undertakings competing in intra-Union trade, the latter must be regarded as affected by the aid

Judgment of the Court of 14 January 2015, Eventech, C-518/13, ECLI:EU:C:2015:9, paragraph 66. Judgment of the Court of 8 May 2013, Libert and Others, Joined Cases C-197/11 and C-203/11, ECLI:EU:C:2013:288, paragraph 77. Judgment of the Court of First Instance of 4 April 2001, Regione autonoma Friuli-Venezia Giulia v Commission, T-288/97, ECLI:EU:T:2001:115, paragraph 41.

.

(153) This case-law can be applied in the present case as the corporate tax exemption strengthens the position of PSA. This allows the latter to lower their fees and make the port infrastructure they manage more attractive for ship-owners and vessel operators, especially from other Member States.

(154) In the present case, Italian ports are involved in intra-Union trade so that an advantage to the concerned PSA affects intra-Union trade. Italian ports are actively involved in intra-Union trade and several Italian ports are among the most important Union-wide ports in terms of container traffic and cargo tonnage. On the basis of publicly available information, it appears that among the top 15 container ports in Europe in 2019, there are two Italian ports, namely Genoa and Gioia Tauro.

Top 15 container ports in Europe in 2019: TEU volumes and growth rates. T. Notteboom, 21.2.2020. https://www.porteconomics.eu/2020/02/21/top-15-container-ports-in-europe-in-2019-teu-volumes-and-growth-rates .

(155) By relieving those PSA of a tax liability they would otherwise have had to bear and which competing undertakings have to carry, the exemption from corporate income tax frees up financial resources for those undertakings to invest in their business operations, which in turn affects the conditions under which they can offer their products and services on the market, thereby distorting competition in the internal market. Consequently, the tax exemption of PSA affects intra-Union trade.

(156) As to the argument made by Italy that the majority of Italian ports are far from competing, even potentially, within European markets, but are mainly in competition with ports in Northern Africa, the Commission notes that the Italian authorities have not put forward any element to substantiate this view.

Publicly available information demonstrates that PSA in Italy are in competition with ports in other Mediterranean countries like Spain, France, Malta and Greece. Ministero delle Infrastrutture e dei Trasporti, Piano Strategico Nazionale della Portualità e della Logistica (2014) https://mit.gov.it/mit/mop_all.php?p_id=23291, pages 23, 91 and and 152. Panaro, Buonfanti, Murgia, Ripoli, Porti e Mediterraneo, Assoporti e SRM (2011) https://www.assoporti.it/media/3047/porti_e_mediterraneo_def.pdf, page 3. Arianna Buonfanti, Lo shipping e la portualità nel Mediterraneo: opportunità e sfide per l’Italia, Rivista di Economia e Politica dei Trasporti (2013), n° 3, articolo 1, ISSN 2282-6599, page 6 and page 12.

(157) Therefore, by exempting PSA engaged in economic activities from corporate taxation, the Italian authorities provide to them an advantage that has the potential to affect intra-Union trade.

4.1.5.

Selectivity of the measure

(158) To be considered State aid, a measure must be selective

Judgment of the Court of 15 December 2005, Italy v. Commission, C-66/02, ECLI:EU:C:2005:768, paragraph 94.

, in the sense that it must favour only certain undertakings or the production of certain goods. According to established case-law

Commission Notice on the notion of State aid as referred to in Article 107(1) of the Treaty on the Functioning of the European Union, OJ C 262, 19.7.2016, paragraph 128.

, the assessment of the material selectivity of a tax measure consists of three stages: first it is necessary to identify and examine the common or normal regime (reference framework) applicable in the Member State concerned. Second, it is in relation to this common or normal tax regime that it is necessary to assess and determine if any advantage granted by the tax measure at issue may be selective. This has to be done by demonstrating that the measure derogates from that common regime inasmuch as it differentiates between economic operators that, in the light of the objective pursued by that regime, are in a comparable factual and legal situation. Third, if such derogation exists, it is necessary to examine whether it results from the nature or general scheme of the taxation system of which it forms part and could hence be justified by the nature or logic of the system. In this context, it is for the Member State to show that the differentiated tax treatment derives directly from the basic or guiding principles of that system

Judgment of the Court of 6 September 2006, Portugal v. Commission, C-88/03, ECLI:EU:C:2006:511, paragraph 81.

.

4.1.5.1.

Reference framework

(159) To assess the selectivity of a tax measure, it is necessary to begin by defining the appropriate reference framework and then determining whether the measure in question gives rise to discrimination under that framework. A reference framework is composed of a consistent set of rules that generally apply - on the basis of objective criteria - to all undertakings falling within its scope as defined by its objective.

(160) In the present case, the Commission considers the reference framework to be the Italian system for corporate income tax, as laid down in the Italian Consolidated Tax Act TUIR (see 38-43) including the definition of taxable persons and taxable income, which results from Article 72 in combination with Article 73 TUIR.

(161) Article 72 TUIR sets the principle that corporate income tax applies to all income in cash or in kind.

(162) Article 73(1) TUIR subjects to corporate income tax all types of companies, including mutual insurance companies, as well as cooperatives, public and private entities other than companies, and trusts whether they have as exclusive or principal object the exercise of commercial activities or not.

(163) Article 75 sets the principle that corporate tax shall be levied on the total net income and that different rules apply for the definition of the taxable income on the one hand for companies and public or private entities that have as exclusive or principal purpose the pursuit of commercial activities (Articles 81 to 141 TUIR)

(169) The Italian authorities also consider that PSA do not fall under Article 73 TUIR, but rather under Article 74 TUIR. According to the Italian authorities, Article 74 TUIR foresees that public bodies entrusted solely with administrative functions (see recitals (51) and (52)) are not liable to corporate tax. In the view of the Italian authorities, Article 74 TUIR therefore cannot be interpreted as a derogation from Article 73 TUIR. Instead, Article 73 and Article 74 TUIR have different and parallel scopes. According to the Italian authorities, they establish two different ordinary tax regimes applicable to specific categories of entities, defined in a general and abstract manner, that are not in a comparable factual and legal situation. Therefore, Italy claims that the corporate income tax exemption is not selective, as Article 74 TUIR applies to PSA as well as to the State, to various public bodies and to other entities belonging to the public administration on the basis of objective, general and abstract criteria. All these entities covered by Article 74 TUIR would be in the same factual and legal situation.

(170) The Commission notes that Article 74 exempts the State and other public bodies from corporate tax to the extent that their activities relate to the exercise of functions of public authority. Conversely, the commercial activities of these bodies are in principle subject to corporate tax. If Article 74 TUIR – or its interpretation by the administration – were such as to result in the non-payment of corporate tax by PSA in all cases (including when they perform activities considered as economic under State aid rules), this would introduce a discrimination between undertakings engaging in economic activities within the meaning of Article 107 TFEU. In that case, Article 74 TUIR as interpreted by the Italian authorities would give rise to advantages to a specific category of undertakings

Judgment of the Court of 15 November 2011, Commission and Kingdom of Spain v Government of Gibraltar and United Kingdom of Great Britain and Northern Ireland, Joined cases C-106/09 P and C-107/09 P, E CLI:EU:C:2011:732, paragraphs 101 to 104; Judgment of the General Court of 20 September 2019, Havenbedrijf Antwerpen and Maatschappij van de Brugse Zeehaven v Commission, T-696/17, ECLI:EU:T:2019:652, paragraphs 132 to 133 and 194 to 195.

, namely PSA, while they are in a comparable legal and factual situation to other undertakings (when it comes to the income they draw from their economic activities)

Judgment of the Court of 8 September 2011, Paint Graphos and Others, Joined cases C-78/08 to C-80/08, ECLI:EU:C:2011:550, paragraph 54; Judgment of the General Court of 20 September 2019, Port autonome du Centre and de l'Ouest and Others v Commission, T-673/17, ECLI:EU:T:2019:643, paragraph 178.

.

(171) Indeed, the Commission considers that PSA are not guided by specific operating principles which clearly distinguish them from other economic operators subject to corporate tax

Judgment of the Court of 8 September 2011, Paint Graphos and Others, Joined cases C-78/08 to C-80/08, ECLI:EU:C:2011:550, paragraph 55.

. In particular, the fact that PSA do not pursue a profit-making activity is insufficient to consider that they are in a different situation to other operators subject to corporate tax

Judgment of the Court of 10 January 2006, Cassa di Risparmio di Firenze and Others, C-222/04, ECLI:EU:C:2006:8, paragraph 123.

. None of the arguments invoked by Italy to demonstrate that PSA are not undertakings and not engaged in economic activities (see 3.2) is relevant and consistent with regard to the objective of the corporate tax system, which is to tax the income of companies and other legal entities

Judgment of the Court of 8 September 2011, Paint Graphos and Others, Joined cases C-78/08 to C-80/08, ECLI:EU:C:2011:550, paragraph 54; Judgment of the General Court of 20 September 2019, Port autonome du Centre and de l'Ouest and Others v Commission, T-673/17, ECLI:EU:T:2019:643, paragraph 178 to 180.

.

(172) Therefore, even if Article 74 TUIR constituted the legal basis for non-payment of corporate tax by the PSA, this tax exemption would be prima facie selective with respect to the economic activities of the PSA

Judgment of the Court of 15 November 2011, Commission and Kingdom of Spain v Government of Gibraltar and United Kingdom of Great Britain and Northern Ireland, Joined cases C-106/09 P and C-107/09 P, E CLI:EU:C:2011:732, paragraph 101; Judgment of the General Court of 20 September 2019, Port autonome du Centre and de l'Ouest and Others v Commission, T-673/17, ECLI:EU:T:2019:643, paragraphs 191.

.

4.1.5.3.

Justification by the logic of the system

(173) Given that the Commission considers that the tax exemption at issue is prima facie selective, it will have to determine, in accordance with the case-law of Union Courts, whether this exemption is justified by the nature or general scheme of the system of which it forms part. Thus, a measure which constitutes an exception to the application of the general tax system may be justified where the Member State concerned can show that the measure results directly from the basic or guiding principles of its tax system.

(174) No such arguments have been provided by the Italian authorities nor by the interested parties. The Commission has also not been able to identify such justification. Hence, the Commission considers the measure as not being justified by the logic of the tax system. The Commission thus concludes that the measure is selective.

4.1.5.4.

Conclusion

(175) Therefore, the Commission concludes that the corporate tax exemption of Italian PSA derogates without valid justification from the principle of the Italian corporate tax system according to which corporate tax applies to all types of income generated by companies or by public or private entities other than companies. Even if it were considered that it is in line with the Italian corporate tax system that PSA are exempted from corporate tax, because according to the Italian authorities they exclusively fulfil public functions, this would amount to a situation where certain undertakings or the production of certain goods is favoured within the meaning of Article 107 TFEU

Judgment of the Court of 15 November 2011, Commission and Kingdom of Spain v Government of Gibraltar and United Kingdom of Great Britain and Northern Ireland, Joined cases C-106/09 P and C-107/09 P, ECLI:EU:C:2011:732, paragraph 101.

. Therefore, the Commission concludes that the non-subjection of economic activities of PSA to corporate income tax involves a selective advantage.

(176) Furthermore, the Commission concludes that such more favourable treatment granted by the State to undertakings and imputable to the State is capable of distorting the competition and affect intra-Union trade. Therefore, the Commission concludes that the tax exemption granted to PSA constitutes State aid within the meaning of Article 107(1) of the Treaty

In a similar case, concerning a three-year exemption from corporate tax granted to certain Italian public enterprises set up by local authorities, the Commission adopted a negative decision with recovery in 2002, which was confirmed by Judgment of the Court of 21 December 2011, A2A v Commission, C-318/09 P, ECLI:EU:C:2011:856.

.

1. COMPATIBILITY

(177) State aid measures can be considered compatible with the internal market on the basis of the exceptions laid down in Article 93, Article 106(2), Article 107(2) and Article 107(3) of the Treaty.

5.1.

(191) As a result of the foregoing, the Commission considers that the measure cannot be considered compatible with the internal market on the basis of Article 107(2) and 107(3) of the Treaty.

5.3.

Article 2

Italy shall remove the corporate tax exemption referred to in Article 1. The measure by which Italy fulfils its obligations shall be adopted within 2 months of the date of notification of this Decision. This measure shall apply as of the start of the fiscal year following its adoption and at the latest in 2022.

Article 3

Italy shall inform the Commission, within 2 months of the date of notification of this Decision, of the measures taken to comply with it.

Article 4

This decision is addressed to the Italian Republic.

Done at Brussels, 4 December 2020.

For the Commission

Margrethe Vestager

Member of the Commission