Polish State aid: the European Commission has approved the support to the shipbuilding sector and has opened an in-depth investigation into a tax scheme for shipyards

On 15 January 2018, the European Commission approved, under the EU State aid rules, the Polish aid to small and medium enterprises in the shipbuilding sector operating in the Pomorskie and Zachodniopomorskie regions, in order to encourage new investment and benefit regional development in Poland. The investment granted amount to around 18 million euro.

On the basis of the Guidelines on regional State aid for 2014-2020, that allow Member States to support economic development of certain disadvantaged areas within the European Union and to promote regional cohesion in the Single Market, the Commission found that the investment will foster new investment to modernise the shipbuilding sector. Moreover, the aid is limited to the minimum necessary and, therefore, the Commission concluded that the positive effects of the aid outweigh any distortion of competition eventually brought about by it.

On the same day, the Commission opened an in-depth investigation into the Polish tax scheme for shipyards, since it is concerned that the scheme would give some shipyards a selective advantage over competitors.

In September 2016, Poland adopted a law giving shipyards operating in Poland the possibility to pay a 1% flat-rate tax on sales from the building and conversion of ships, instead of paying the generally applicable corporate or personal income tax. Moreover, the payment of the flat-rate tax is postponed until the building or conversion of a ship is completed. The measure has been notified by Poland to the Commission in December 2016.

According to the Commission, the proposed flat-rate sales tax may constitute a so-called operating aid, which relieves shipyards from costs they would otherwise have to bear in their day-to-day activities using public funds. Operating aid is not generally allowed under EU State aid rules, because it distorts competition on the merits without serving any objective of common EU interest. Other categories of aid, such as aid for research, development and innovation or regional aid, are allowed under EU State aid rules since they are considered to be more effective and to have less distortive effects on competition than operating aid.

The proposed flat-rate sales tax does not appear to belong to any of these categories and the Commission is concerned that the aid would harm shipyards in the EU, which are not eligible under the Polish tax scheme.

The Commission will investigate further to determine whether its initial concerns are confirmed.


Davide Scavuzzo