The governments of Miguel Albuquerque and António Costa have again challenged the European Commission’s decision that Portugal illegally granted aid at the level of IRC reductions to the Madeira Free Trade Zone.
According to the newspaper ‘Público,’ after Portugal lost two actions in the General Court of the European Union, the executives of Madeira and the country have now decided to appeal to the EU Court of Justice.
Earlier last month, it was reported that the General Court of the European Union (TGUE) ruled on the appeal Portuguese in the case of state aid to the Madeira Free Trade Zone (ZFM), which had been filed by the Regional Government, according to a judgment released on the 21st of June.
The Regional Government had appealed against the decision of the European Commission that, in 2020, declared as irregular the IRC discounts given, between 2007 and 2013, to companies based in the International Business Centre of Madeira (IBC), considering that, despite having benefited from tax benefits, these companies did not create jobs in the region.
The Court agreed with Brussels, and, the Court found that the Commission was right to conclude that the IRC reduction scheme applied to ZFM companies infringed Community rules.
This means that if the decision of the Court of Justice of the EU goes in the same direction as those instances, the amount that Portugal will have to recover from the companies concerned is estimated at more than 800 million euros, according to estimates of the Ministry of Finance published by the media.
After the decision of the General Court of the EU, the regional government reacted in a statement, stating that “the decision of the ECG does not surprise, nor does it bring anything new, since it is the same court of first instance that rejected, a few months ago, the appeal filed by the Portuguese State, against the decision of the European Commission on aid to the Free Trade Zone of Madeira.”
In any case, the government of Miguel Albuquerque already warned that the Region would litigate the decision, being certain that the process has not ended and that the Madeiran executive “will continue to assert the importance that the free zone has represented for the attraction and diversification of foreign investment and as a factor of development of the region and the country, so that at no time will it dispense with defending the IBC in any instance, national or European.” He went on to say that the Autonomous Region of Madeira does not agree with the European Commission on this matter. “This is not the understanding of the Autonomous Region of Madeira, nor of the Portuguese State, which defends the legitimacy and legality in the application of the tax benefits that were in force in Regime III.”
The letter also said that the Region “is focused on ensuring the maintenance of the aid instruments and demonstrating the importance that it has for the regional and national economy, so that, in view of the meaning of the judgment known today, it will take all the necessary steps to legally react against this decision, appealing it to the EU Court of Justice, just as the Government of the Republic has already done.”
“The autonomous litigation proceedings filed by the companies themselves [targeted in the return of support], before the TGUE and the Portuguese courts are at their beginning and, therefore, far from a final outcome, which will probably take a few years,” confirmed Miguel Albuquerque.
Samantha Gannon
info at madeira-weekly.com
