Recovery of incompatible aid pursuant to the EFTA Surveillance Authority decision 148/04/COL regarding environmental tax measures

Reference is made to the letter dated 13 July 2006 from the EFTA Surveillance Authority (hereinafter the “Authority”) to the Norwegian Mission to the European Union. The letter was forwarded from the Norwegian Mission to the Norwegian Ministry of Finance by letter of 19 July 2006.

The Authority originally asked for more detailed information within 20 August 2006. This deadline was extended until 13 October 2006 upon request by the Norwegian Ministry of Government Administration and Reform.

In this letter, the Ministry of Finance will first inform the Authority in which stage of the process the Norwegian authorities are right now. Secondly, we will respond to the Authority’s request for more detailed information.

The recovery process has started

After several detailed interdepartmental discussions about the further proceedings, the Ministry of Government Administration and Reform issued a formal decision to recover the incompatible aid in line with the Authority’s decision 148/04/COL on 13 September 2006. Based on this decision the Ministry of Finance has recently asked the Directorate of Customs and Excise to start the recovery process, cf. letter of 6 October 2006 (enclosure).

In the last-mentioned letter, the Directorate of Customs and Excise is given some guidelines for how to proceed. It appears that it will be necessary to contact every potential recipient of incompatible aid for the period 6 February to 1 January 2003. The Authority’s proposal to contact all potential aid donors in order to fulfil the requirements laid down in the de minimis regulation seems impractical for Norway. Thus, we cannot see any other alternatives than contacting all the recipients in order to clarify to which extent they may have received other de minimis aid. We find it necessary to point out that this most likely will imply a far more time-consuming recovery process than our alternative suggestion for how to proceed, which we outlined in our letter to the Authority dated 7 March 2006.

For the Authority’s information, the recovery process is further described to the Storting in the proposal for State budget 2007, cf. St.prp. nr. 1 (2006-2007) Skatte-, avgifts- og tollvedtak, paragraph 3.7. The document is published on the internet:

http://www.statsbudsjettet.dep.no/upload/Statsbudsjett_2007/dokumenter/pdf/skatteprp.pdf

The Authority’s request for more detailed information

The following points 1-3 correspond to the Authority’s requests in the letter of 13 July 2006.

1. The Authority’s request for submitting a time plan

For the time being we are unfortunately not ready to give a detailed time plan. We have, however, asked the Directorate of Customs and Excise to draw up a time plan within 20 October 2006 and will forward the time plan to the Authority immediately thereafter.

Our aim is to complete the recovery process as soon as possible. The Government’s budget proposal for 2007 states that recovery decisions affecting the industry will be taken in the course of autumn 2006. The decisions must be handled in accordance with the national Public Administration Act. There will, of course, be some uncertainty attached to what kind of objections the industry might raise in conjunction with the decision-making (appeals etc.). This makes it difficult to draw up an exact time plan for when the recovery process may definitely be finalized.

2. The Authority’s request for information on how to apply the de minimis regulation.

The de minimis regulation will be applied by contacting all relevant undertakings (i.e. recipients of incompatible aid), asking for information about the total amount of de minimis aid received between the years 2000-2006. Based on the information given, the taxation authorities will decide whether the general conditions laid down in the regulation are fulfilled. For your information the Directorate of Customs and Excise will investigate the possibility to use electronic feedback forms for this purpose.

3. The Authority’s request to provide a table, which includes all aid recipients with the respective amounts to be recovered, including interest.

At this stage of the process we are not able to provide a table which includes all aid recipients with the respective amounts to be recovered, including interest. The Ministry of Finance will of course provide you with this information as soon as possible, and can inform you that we have specifically asked Directorate of Customs and Excise to set a date in the time plan for when this information may be available.

Yours sincerely,

Heidi Heggenes
Deputy Director General

Fredrik Robsahm
Senior Adviser

Enclosure