The European Commission has required Belgium and France to abolish the corporate tax exemptions granted to their ports, so as to align their tax regime with EU state aid rules. Profits by port operators must be taxed under normal national corporate tax laws to avoid distortions of competition.

The commission has also requested information from and continues to assess the functioning and taxation of ports in member states to ensure fair competition in the EU port sector.

“Recently, the commission introduced new rules to save member states time and trouble when investing in ports and airports, while preserving competition,” said competition commissioner Margrethe Vestager. “At the same time, the commission decisions for Belgium and France – as previously for the Netherlands – make clear that unjustified corporate tax exemptions for ports distort the level playing field and fair competition. They must be removed.”

In Belgium, a number of sea and inland waterway ports (notably the ports of Antwerp, Bruges, Brussels, Charleroi, Ghent, Liège, Namur and Ostend, as well as along the canals in Hainaut Province and Flanders) are exempt under Belgian law from the general corporate income tax regime. These ports are subject to a different tax regime, with a different taxable base and tax rates, resulting in an overall lower level of taxation for Belgian ports as compared to other companies in Belgium.

Most French ports, notably the 11 grands ports maritimes of Bordeaux, Dunkerque, La Rochelle, Le Havre, Marseille, Nantes-Saint-Nazaire, and Rouen as well as Guadeloupe, Guyane, Martinique, and Réunion, the port autonome de Paris, and ports operated by chambers of industry and commerce, are fully exempt from corporate income tax under French law.

The commission considers that the corporate tax exemptions granted to Belgian and French ports provide them with a selective advantage, in breach of EU state aid rules. In particular, the tax exemptions do not pursue a clear objective of public interest, such as the promotion of mobility or multimodal transport. The tax savings generated can be used by the port operators to fund any type of activity or to subsidize the prices charged by the ports to customers, to the detriment of competitors and fair competition.

The two commission decisions make clear that if port operators generate profits from economic activities these should be taxed under the normal national tax laws to avoid distortions of competition.

Belgium and France now have until the end of 2017 to take the necessary steps to remove the tax exemption in order to ensure that, from January 1, 2018, all ports are subject to the same corporate taxation rules as other companies.

Since the corporate tax exemption for ports already existed before the accession of France and Belgium to the EU, these measures are considered as existing aid and the commission cannot ask Belgium and France to recover the aid already granted.