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The European Commission has told the French and Belgian governments they must end the corporation tax-exemption for their major ports, as it breaches state aid rules.

The EC’s competition commission said the French and Belgian policy of not levying corporation tax on profits at ports such as Antwerp, Marseilles, Le Havre and Dunkirk distorts competition in the sector.

An EC investigation found that Belgian ports were “subject to a different tax regime, with a different taxable base and tax rates, resulting in an overall lower level of taxation for ports compared with other companies in Belgium”. In France, ports are simply exempt from corporation tax.

Competition commissioner Margrethe Vestager said: “Ports are key infrastructure for economic growth and regional development. Recently, the commission has introduced new rules to save member states time and trouble when investing in ports and airports, whilst preserving competition.

“At the same time, the commission decisions for Belgium and France – as previously for the Netherlands – make clear that unjustified corporate tax exemptions for ports distort the level playing field and fair competition. They must be removed.”

The EC said France and Belgium have to begin applying corporation tax to their ports from 1 January 2018, giving them little over four months to adopt the new regime.

“The commission considers that the corporate tax exemptions granted to Belgian and French ports provide them with a selective advantage, in breach of EU state aid rules. In particular, the tax exemptions do not pursue a clear objective of public interest, such as the promotion of mobility or multimodal transport.

“The tax savings generated can be used by the port operators to fund any type of activity or to subsidise the prices charged by the ports to customers, to the detriment of competitors and fair competition,” it said in a statement.

Last year the EC ordered the Netherlands to end a similar practice across its publicly owned port sector – including Rotterdam, Europe’s largest port – and from the beginning of this year its ports have been required to pay corporation tax.

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