The Spanish shipbuilding sector wins the battle against the European Commission on the old ‘Tax Lease’

The General Court of the European Union annuls the European commission’s decision on the old “tax Lease” confirming that it did not constitute state aid, exempts the investors from reimbursing the fiscal benefits obtained and adjudging the costs to the Commission.

The Court backs the arguments of the private Spanish shipyards represented by PYMAR against the decision.

Almudena López del Pozo, PYMAR’s CEO, admits being satisfied by the ruling of the Court of Luxembourg and affirms that “PYMAR will study all legal options to indemnify all damages and impairs suffered by the Spanish private shipbuilding sector”.

 

Madrid, 18 December 2015

The General Court of the EU has sentenced yesterday morning  against the European Commission and in favor of the appeals presented by the Kingdom of Spain, PYMAR – the company which integrates the main Spanish private shipyards- and LICO. The sentence annuls the European Commission decision of 17 July 2013, resulted from the procedure initiated on June 2011 and which affected 273 transactions for a total amount of Euro 8,727,997,332, which culminated considering the old “tax lease system” applied in Spain during the years 2007 and 2011 state aid incompatible with the internal market.

The Court determines that the so-called Spanish tax lease system did not constitute state aid, as defended by the Kingdom of Spain and PYMAR form the beginning. In particular, the Court considers that the system is not of a selective nature, given that all tax payers in Spain which developed an economic activity and invested in this type of operations could have been beneficiaries of the system.

As a consequence of this sentence, the recovery order of the alleged aids conferred through the referred system, a process already initiated by the Ministry of Finance and Public Administrations as requested by the competence services of the European Union, will be annulled. The sentence further allocates all legal costs on the Commission.

The commencement of the investigation procedure took place in a hard context of economic crisis, under the mandate of the then Competition Commissioner and Vice-president of the European Commission, Joaquín Almunia. It supposed the immediate paralysis of orders for new buildings in Spain and brought to a drastic halt the activity for the whole sector with devastating effects for the shipbuilding industry.

The competitors of the Spanish private shipyards, fundamentally the Dutch shipyards, authors and signatories of the denounces which resulted in the opening of the investigation procedure by the European Commission, witnessed a vertiginous growth of their order books, reaching an unprecedented contracting level which in 2013 was 80% higher than that of 2010. This transfer of orders from Spain to Holland specially affected the offshore vessel order book. According to information published by Clarksons, Spain went from an order book of 27 units in 2010 to a mere 8 units in 2014, whilst Holland, for the same period, rocketed its order book from 7 in 2010 to 55 in 2014.

Almudena Lopez del Pozo has expressed today her satisfaction by the sentence. “It has been proved before the European justice that all that was done in Spain with the old “tax lease” system was absolutely legal and according to law”. She considers that the result obtained yesterday is the result of an exemplary unity and coordination strategy of all the stakeholders of the sector and of an indefatigable legal work. In this sense, she has wished to underline that “the sentence favorable to Spain would not have been possible were it not by the cohesion shown before a discriminatory treatment imparted by the Commission and an arbitrary and unjust decision.”

López del Pozo reminded that “the Ministry of Industry, Energy and Tourism, the Ministry of Finance and Public Administrations, the Ministry of Foreign Affairs and Development, Galician Autonomous Goverment, the Asturian Principality, the Basque Country Government, European Parliamentary groups, trade unions and PYMAR, in representation of the private shipyards, went together to Brussels two and half years ago to prevent an erroneous decision of the Commission. That is the spirit that has allowed us justice to be made today”.

PYMAR’s CEO assures that “PYMAR will study all legal possibilities to repair all damages caused to the Spanish shipbuilding sector in terms of employment as well as economic and reputational terms, which were inflicted to the private shipyard sector”. She further expresses, that it is time that the European Commission puts the discriminatory treatment towards the Spanish private shipbuilding sector to an end. Regional association of the sector, Aclunaga and Foro Marítimo Vasco, presented more than two years ago a complaint against the Dutch “tax lease”. The European Commission has not yet opened, up today, the corresponding procedure.