COUNCIL DECISION No 940/2014/EU
of 17 December 2014
concerning the dock dues in the French outermost regions
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty on the Functioning of the European Union, and in particular Article 349 thereof,
Having regard to the proposal from the European Commission,
After transmission of the draft legislative act to the national parliaments,
Having regard to the opinion of the European Parliament
Acting in accordance with a special legislative procedure,
Whereas:
(1)
The provisions of the Treaty, which apply to the outermost regions of the Union, of which the French overseas departments form part, do not authorise, in principle, any difference in taxation between local products and those from metropolitan France or the other Member States. However, Article 349 of the Treaty envisages the possibility of introducing specific measures for those regions because of the existence of permanent handicaps affecting the economic and social situation of the outermost regions.
(2)
Such specific measures must take account of the special characteristics and constraints of those regions, without undermining the integrity and the coherence of the Union legal order, including the internal market and common policies. The permanence and combination of handicaps suffered by the outermost regions of the Union as referred to in Article 349 of the Treaty (remoteness, raw-material and energy dependence, the obligation to build up larger stocks, the small size of the local market combined with a low level of export activity, etc.) increase production costs and, therefore, the cost price of goods produced locally, so that without specific measures they would be less competitive than those produced elsewhere, even taking into account the cost of transporting such goods to the French overseas departments. That would make it harder to maintain local production. For this reason, specific measures need to be taken in order to strengthen local industry by making it more competitive. Until 31 December 2014, Council Decision 2004/162/EC (1) authorises France, in order to restore the competitiveness of products produced locally, to apply exemptions or reductions to the dock dues for certain products produced in the outermost regions of Guadeloupe, French Guiana, Martinique, Réunion and, from 1 January 2014, Mayotte. The Annex to that Decision contains the list of products to which the tax exemptions or reductions may be applied. The difference between the taxation of products produced locally and that of other products may not exceed 10, 20 or 30 percentage points, depending on the product.
(3)
France has requested that a system similar to that contained in Decision 2004/162/EC be maintained beyond 1 January 2015. France points out that the handicaps listed above are permanent, that the taxation arrangements established by Decision 2004/162/EC have made it possible to maintain and, in some cases, develop local production, and that those arrangements have not constituted an advantage for the beneficiary companies since, overall, imports of products subject to differentiated taxation have continued to increase.
(4)
For each of the outermost regions concerned (Guadeloupe, French Guiana, Martinique, Mayotte and Réunion), France has sent the Commission five series of lists of products for which it proposes applying differentiated taxation of 10, 20 or 30 percentage points, depending on whether or not the products are produced locally. The French outermost region of Saint Martin is not affected.
(5)
This Decision implements the provisions of Article 349 of the Treaty and authorises France to apply differentiated taxation to the products for which it has been proven: firstly, that local production exists; secondly, that significant importation of goods (including from metropolitan France and other Member States) exists which could jeopardise the continuation of local production; and thirdly, that additional costs exist which increase the cost price of local production in comparison with products produced elsewhere, compromising the competitiveness of products produced locally. The authorised tax differential should not exceed the proven additional costs. Applying those principles would allow the provisions of Article 349 of the Treaty to be implemented without going beyond what is necessary and without creating an unjustified advantage for local production so as not to undermine the integrity and the coherence of the Union legal order, including safeguarding undistorted competition in the internal market and State aid policies.
(6)
In order to simplify the obligations of small enterprises, tax exemptions or reductions should affect all operators whose annual turnover is at least EUR 300 000. Operators whose annual turnover is under that threshold should not be subject to dock dues; however, to balance this, they cannot deduct the amount of that tax borne upstream.
(7)
Similarly, coherence with Union law means ruling out the application of a tax differential for food products benefiting from aid under Chapter III of Regulation (EU) No 228/2013 of the European Parliament and of the Council (2). That provision prevents the effect of the financial aid to agriculture granted under the specific supply arrangements from being cancelled out or reduced by higher taxation of subsidised products by means of dock dues.
(8)
The objectives of supporting the social and economic development of the French overseas departments, already provided for in Decision 2004/162/EC, are confirmed by the requirements regarding the purpose of the dock dues. It is a legal obligation that the revenues from the dock dues are to be incorporated into the resources of the French overseas departments' economic and tax regime and allocated to an economic and social development strategy involving aid for promoting local activities.
(9)
It is necessary to extend the period of application of Decision 2004/162/EC by a further six months until 30 June 2015. That period would enable France to transpose this Decision into its national law.
(10)
The arrangements are to apply for five years and six months, until 31 December 2020, when the current guidelines on regional State aid will also cease to apply. However, the results of applying those arrangements will first have to be assessed. France should, therefore, present, by 31 December 2017, a report on the application of the taxation arrangements introduced, in order to check the impact of the measures taken and their contribution to the maintenance, promotion and development of local economic activities, in the light of the handicaps affecting the outermost regions. The report should check that the tax benefits granted by France to products produced locally do not go beyond what is strictly necessary and that those benefits are still necessary and proportional. The report should also contain an analysis of the impact of the arrangements introduced on prices in the French outermost regions. On the basis of that report, the Commission should submit a report to the Council and, if necessary, a proposal for adapting the provisions of this Decision in the light of the findings.
(11)
In order to avoid any kind of legal vacuum, it is necessary for this Decision to apply from 1 July 2015.
(12)
This Decision is without prejudice to the possible application of Articles 107 and 108 of the Treaty.
(13)
The purpose of this Decision is to establish the legal framework for the dock dues from 1 January 2015. Given this urgency, an exception should be made to the eight-week period laid down in Article 4 of Protocol No 1 on the role of national parliaments in the European Union annexed to the Treaty on European Union and to the Treaty on the Functioning of the European Union,
HAS ADOPTED THIS DECISION:
Article 1
1. By way of derogation from Articles 28, 30 and 110 of the Treaty, France is authorised, until 31 December 2020, to apply exemptions or reductions to dock dues in respect of the products listed in the Annex which are produced locally in Guadeloupe, French Guiana, Martinique, Mayotte and Réunion, as outermost regions within the meaning of Article 349 of the Treaty.
Those exemptions or reductions must be in keeping with the economic and social development strategy of the outermost regions concerned, taking account of its Union framework, and contribute to the promotion of local activities while not adversely affecting the conditions of trade to an extent contrary to the common interest.
2. With reference to the rate of taxation applied to similar products not originating in the outermost regions concerned, the application of the total exemptions or reductions referred to in paragraph 1 may not result in differences of more than:
(a)
10 percentage points for the products listed in part A of the Annex;
(b)
20 percentage points for the products listed in part B of the Annex;
(c)
30 percentage points for the products listed in part C of the Annex.
France shall undertake to ensure that the exemptions or reductions applied to the products listed in the Annex do not exceed the percentage strictly necessary to maintain, promote and develop local economic activities.
3. France shall apply the tax exemptions or reductions referred to in paragraphs 1 and 2 to operators whose annual turnover is at least EUR 300 000. Operators whose annual turnover is below that threshold shall not be subject to dock dues.
Article 2
The French authorities shall apply the same taxation arrangements as those applied to products produced locally to products that have benefited from the specific supply arrangements under Chapter III of Regulation (EU) No 228/2013.
Article 3
1. France shall immediately notify the Commission of the taxation arrangements referred to in Article 1.
2. France shall submit, by 31 December 2017, a report on the application of the tax arrangements referred to in Article 1 to the Commission, indicating the impact of the measures taken and their contribution to the maintenance, promotion and development of local economic activities, in the light of the handicaps affecting the outermost regions.
On the basis of that report, the Commission shall submit a report to the Council and, if necessary, a proposal for adapting the provisions of this Decision.
Article 4
In Article 1(1) of Decision 2004/162/EC, the date ‘31 December 2014’ is replaced by the date ‘30 June 2015’.
Article 5
Articles 1 to 3 shall apply from 1 July 2015.
Article 4 shall apply from 1 January 2015.
Article 6
This Decision is addressed to the French Republic.
Done at Brussels, 17 December 2014.