The Court of Justice of the European Union (EU) today dismissed Portugal’s appeal against a European Commission decision that found the country had violated competition rules with the Madeira Free Trade Zone aid scheme.
According to a ruling published today, the Court of Justice of the EU (CJEU) has ruled that all of Portugal’s claims are “partly inadmissible and partly unfounded” and has dismissed the appeal.
Portugal lodged the appeal against a decision taken by the General Court, considering that that court “misinterpreted the requirement relating to the origin of the profits to which the reduction in Corporation Tax (IRC) applies”.
The national authorities argued that the court “erred in law in finding that the [European] Commission was right to consider that the requirement according to which the CIT reductions provided for […] could only relate to profits resulting from activities ‘effectively and materially carried out in Madeira'”.
Portugal also claimed that, “in substance, the General Court misinterpreted the requirement relating to the creation or maintenance of jobs”: “It considers, firstly, that the General Court should not have held that the Commission did not in any way impose on the Portuguese authorities to use the methods of defining jobs in ‘full-time equivalents’, in ‘annual work units’, but merely stated that these methods ‘constituted appropriate methods for calculating the number of jobs’,” the Portuguese authorities argued in their request for an appeal, which was denied by the CJEU.
In December 2020, the European Commission concluded (as part of an investigation into the Madeira Free Trade Zone that had been ongoing since 2018) that Portugal had violated European legislation, in particular the competition rules of the political-economic bloc, with the aid scheme implemented in that archipelago.
The European Commission concluded that Portugal had unlawfully implemented the aid scheme, deeming it “incompatible with the European internal market” and declared that the country “should proceed to recover the incompatible aid granted under” the scheme in question.
