Selectivity. The aid measure must be selective in that it favours ‘certain undertakings or the production of certain goods’. The proposed scheme only covers certain cooperatives as speci- fied in the draft Section 10-50 of the Tax Act. These cooperative societies are entitled to a deduction of up to 15 % in the part of their income deriving from trade with their members. Thus, the tax base of these undertakings is reduced, and thereby also their income tax. This tax rule deviates from the normal rules on income tax payable by undertakings in Norway. On this basis, the proposed scheme appears to be selective in that it favours certain undertakings. However, the Norwegian authorities argue, in essence, that the tax benefit for the cooperatives is justified by the nature or general scheme of the Norwegian tax system (4). In particular, the Norwegian authorities claim that the proposed scheme implies that ‘the general system of equity financing for corporations by receiving non-taxable deposits is made applicable also to the coopera- tive societies’ (5). According to Section 3.4 of the Authority's Guidelines on busi- ness taxation (6), certain differential measures whose economic rationale makes them necessary to the smooth functioning and effectiveness of the tax system might not constitute State aid. In such cases, the measure would no longer be considered selec- tive (7). Against this background, the Authority has to examine whether the logic underlying the tax exemption could justify a differen- tiation between the cooperatives covered by the proposed scheme and other undertakings. As the exemption constitutes a derogation from the income tax, this tax will be the general system against which the logic of the derogation must be measured. In other words, the Authority will examine whether the logic of the tax exemption for cooperatives is in line with the objectives of the income tax itself. According to the proposed scheme, certain cooperatives will be entitled to a deduction in their income whereas companies which are organised as limited companies etc. will not be entitled to the same tax deduction. Thus, if a cooperative and a limited company use their own income to add to their equity capital, the cooperative covered by he proposed scheme will benefit from a tax deduction which is not open to the limited company.
(1) It has been recognized that structural disadvantages may, in certain specific situations, be offset by aid measures. Cf. Case T-157/01, Danske Busvogn...
Selectivity. In order for a measure to involve State aid it must be selective, in that it favours ‘certain undertakings or the production of certain goods’. The contested contract is made between the Icelandic Defence Agency and Vodafone (Og fjarskipti). Thus, Vodafone is the only potential beneficiary. Other telecommunication companies have not concluded similar contracts with the Icelandic State. Accordingly, the alleged advantage under assessment in this Decision would be a selective advantage, as it only concerns one particular undertaking.
Selectivity. As outlined above, the HFF is according to Article 7 of Act No 121/1997 exempted from paying a guarantee premium pursuant to Article 6 of the Act. The main rule according to Act No 121/1997 is that every entity enjoying a State guarantee is subject to the guarantee premium provided for in Article 6. Those exempted are obligations that are subject to the higher risk premium pursuant to Article 4 of the Act, the HFF, the Central Bank of the Iceland and the Student Loan Fund. Consequently, under Article 7 of the Act, it is only the HFF and the two other public institutions that are exempt from paying a premium to the State for being granted State guarantees. The aid measure therefore appears to be selective.
(1) The Minister of Social Affairs was to determine the level of the interest margin having obtained the proposal of the State Housing Board. On the basis of that Article, the Minister decided by Regulation No 540/1993 of 28 December 1993, amending Regulation No 467/1991, to charge an interest margin of up to 0,25 %. By Regulation of 11 October 1994, the Minister raised the ceiling of the interest margin to 0,35 %. The State Guarantees Act links the payment of a premium to the existence of a guarantee issued by the State. Moreover, it seems to be intended to (partly) compensate the State for the risk it undertakes by being the guarantor. On that basis, the Authority does not view the Act on State guarantees as a tax measure. The Authority has therefore not found it necessary to discuss whether the exemption pertaining to HFF would have been within the logic or nature of a tax system.
Selectivity. In order to determine whether a measure is selective, the question is whether the undertaking(s) in question are in a legal and factual situation that is comparable to other undertakings in light of the objective of the measure (42).
Selectivity. (40) Article 61(1) of the EEA Agreement requires that a measure, in order to be defined as state aid, favours ‘certain undertakings or the production of certain goods’. The Authority has previously found that even if an aid mea sure concerns a whole economic sector, it does not prevent it from being covered by Article 61(1) of the EEA Agreement (39). The Authority maintained that position in its recently adopted Guidelines on the notion of state aid (‘NoA Guidelines’) (40).
(41) According to the Authority’s current understanding of the facts, the guarantees in question are granted to Landsvirkjun only. Thus, the measure is selective within the meaning of Article 61(1) of the EEA Agreement.
Selectivity. Further, to constitute State aid within the meaning of Article 61(1) of the EEA Agreement, the measure must be selective in that it favours ‘certain undertakings or the production of certain goods’. It has first to be assessed whether the VAT Compensation constitutes a selective measure for being a derogation from the general VAT System. If confirmative, it has to be assessed whether the derogation nevertheless is justified due to the nature or general scheme of the tax system in question. The EFTA Court and European Court of Justice has held that any measure intended partially or wholly to exempt firms in a particular sector from the charges arising from the normal application of the general system, without there being any justification for this exemption on the basis of the nature and logic of the general system, constitutes State aid (1). A specific tax measure can only be justified by the internal logic of the tax system if it is consistent with it (2). Only if the measure is justified by the nature or logic of the general system does it constitute a general measure (3) and does not fall under Article 61(1) of the EEA Agreement. Hence, if the VAT Compensation is a derogation which can not be justified due to the nature or general scheme of the system, the measure would be regarded as selective. The VAT is an indirect tax on the consumption of goods and services. As a rule, VAT is calculated at all stages of the supply chain and on the import of goods and services from abroad. The final consumer, who is not registered for VAT, absorbs VAT as part of the purchase price. Although in principle all sales or goods and services are liable to VAT, some supplies are exempt (i.e. without a credit for input tax) which means that such supplies fall entirely outside the scope of the VAT Act. Businesses that only have such supplies cannot register for VAT and are not entitled to deduct VAT (4). The scope of the VAT Compensation Act is positively defined in that only legal persons falling within Article 2 of the VAT Compensation Act can be compensated for input tax on purchases. The advantage granted under the VAT Compensation Act for undertakings refunded for their input tax implies a relief from the obligation that follows from the general VAT system. These undertakings are placed in a more favourable financial position than others providing the same services or goods but which are not listed under the VAT Compensation Act (5). The fact that the number of undertaki...