The Netherlands Ordered to Scrap Tax Breaks for Its Seaports

The European Commission has required the Netherlands to abolish an exemption from corporate tax for its six seaports so as to align the regime with EU state aid rules.

The Commission has also proposed in two separate decisions that Belgium and France align their taxation of ports with state aid rules.

“Ports are key infrastructure for economic growth and regional development. I will soon present a proposal to facilitate unproblematic investments in ports that can create jobs, to exempt them from scrutiny under EU state aid rules. At the same time, the Commission’s decisions today (January 21st) regarding the Netherlands, Belgium and France 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,” Commissioner Margrethe Vestager, in charge of competition policy, stated.

The Dutch Finance Ministry voiced its disappointment with the EU decision to remove the exemptions for its seaports, including the Europe’s largest port, namely Rotterdam.

As explained, the decision puts Dutch seaports at a disadvantage and the EU Commission should undertake structural measures to ensure fair competition between EU seaports.

The Commission asked the Netherlands in May 2013 to abolish provisions exempting certain public companies, including port operators, from corporate tax, fearing that they may result in undue advantages over their competitors. In July 2014, the Commission opened an in-depth investigation.

On 4 June 2015, the Netherlands adopted a law making public undertakings subject to corporate tax as of 1 January 2016. However, the law maintained a tax exemption for six publicly-owned Dutch seaports, namely Groningen Seaports, Havenbedrijf Amsterdam, Havenbedrijf Rotterdam, Havenschap Moerdijk, Port of Den Helder and Zeeland Seaports.

The Netherlands now has two months to take the necessary steps to remove the exemption in order to ensure that from 1 January 2017 the six ports are subject to the same corporate taxation rules.

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

The Commission said that in both Belgium and France, the existing regimes provide the ports with a selective advantage that may breach EU state aid rules.