Council Decision (EU) 2020/1792 of 16 November 2020 on the AIEM tax applicable in the Canary Islands

Article 1

1.   By way of derogation from Articles 28, 30 and 110 TFEU, the Spanish authorities shall be authorised until 31 December 2027 to lay down, in respect of the products falling within the categories listed in Annex I that are produced locally in the Canary Islands, total exemptions from or partial reductions in the tax known as ‘ Arbitrio sobre las Importaciones y Entregas de Mercancías en las islas Canarias ’ (‘AIEM tax’). Those exemptions or reductions shall form part of the strategy for economic and social development of the Canary Islands and contribute to the promotion of local activities. 2.   Application of the total exemptions or of the partial reductions referred to in paragraph 1 shall not lead to differences in excess of 15 % for the products falling within the categories listed in Annex I. The Spanish authorities shall ensure that the exemptions or reductions applied to the products do not exceed the percentage strictly necessary to maintain, promote and develop local activities. The authorised tax differential shall not exceed the proven additional costs. 3.   The fiscal advantage shall apply subject to a limit of EUR 150 million per annum, except in duly justifiable cases.

Article 2

1.   The Spanish authorities shall select the products referred to in Article 1(1) taking into account the following criteria: (a) local production exists and its share of the local market accounts for at least 5 %; (b) significant importation of goods (including from mainland Spain and other Member States) exists which could jeopardise the continuation of local production, and its share of the local market accounts for at least 10 %; (c) additional costs exist which increase the costs of local production in comparison with products produced elsewhere, compromising the competitiveness of products produced locally. 2.   The Spanish authorities may derogate from the market share thresholds referred to in points (a) and (b) of paragraph 1 in duly justified circumstances, which include: (a) labour-intensive production; (b) production which is otherwise of strategic importance for local development; (c) production subject to periodical fluctuations; (d) production located in particularly disadvantaged areas; (e) production of medical products and personal protective equipment required to address health crises.

Article 3

By 1 January 2021, the Spanish authorities shall communicate to the Commission the initial list of products to which exemptions or reductions are applied to. Those products shall fall within the product categories set out in Annex I. Amendments to this list of products may be made by the Spanish authorities, provided that the Commission is notified of all the relevant information.

Article 4

By 30 September 2025 at the latest, the Spanish authorities shall submit a monitoring report to the Commission to enable it to assess whether the conditions justifying the authorisation set out in Article 1 continue to be fulfilled. The monitoring report shall contain the information set out in Annex II.

Article 5

This Decision shall apply from 1 January 2021.

Article 6

This Decision is addressed to the Kingdom of Spain.

LIST OF PRODUCTS REFERRED TO IN ARTICLE 1(1) ACCORDING TO THE PRODUCT CATEGORIES OF THE HARMONISED SYSTEM HEADINGS

ANNEX ISupplementary provisions

ANNEX I LIST OF PRODUCTS REFERRED TO IN ARTICLE 1(1) ACCORDING TO THE PRODUCT CATEGORIES OF THE HARMONISED SYSTEM HEADINGS Agriculture, livestock farming, forestry and fisheries 0203 0204 0207 0407 0603 0701 0703 0706 0708 0810 Mining and quarrying 2516 6801 6802 6810 Building materials 2523 3816 3824 6809 7006 7007 7008 7009 7010 Chemicals 2804 2807 2811 2828 2853 3102 3105 3208 3209 3212 3213 3214 3304 3401 3402 3406 3814 3917 3920 3923 3925 4012         Metal-working industries 7308 7309 7604 7608 7610 8415 8424 8907 9403 9404 9406 Food and beverage industry 0210 0305 0403 0406 0901 1101 1102 1601 1602 1702 1704 1806 1901 1902 1904 1905 2002 2005 2006 2007 2008 2009 2103 2105 2106 2201 2202 2203 2204 2208 2309                 Tobacco 2402 Textiles, leather and footwear 6109 6112 Paper 4808 4811 4818 4819 4821 4823 Graphic arts 4909 4910 4911

INFORMATION TO BE INCLUDED IN THE MONITORING REPORT REFERRED TO IN ARTICLE 4

ANNEX IISupplementary provisions

ANNEX II INFORMATION TO BE INCLUDED IN THE MONITORING REPORT REFERRED TO IN ARTICLE 4 1.    Estimated additional costs. The Spanish authorities shall send a summary report containing sufficient data to evaluate whether the additional costs, which increase the cost price of local production in comparison with products produced elsewhere, exist. The information provided in the summary report shall include at least the following information, where such information is available: costs of inputs; costs of over-stocks; equipment costs; additional labour costs; and financial costs. That data must be provided by, at least, a reference to the product categories of the Harmonised System Headings, according to the four digits of the Combined Nomenclature. That report shall contain the summary results of detailed ad hoc studies on additional costs that Spain shall continue conducting periodically. 2.    Other subsidies. The Spanish authorities shall send a list of all other aid and support measures addressing the additional operating costs of economic operators linked to the outermost region status of the Canary Islands. 3.    Impact on public budget. The Spanish authorities shall complete Table 1 providing the estimated total amount (in EUR) of tax collected or not collected under the AIEM regime. Table 1 Year  ( *1 ) 2019 2020 2021 2022 2023 2024 Notes  ( *2 ) Foregone tax revenue  ( 1 )               Tax receipts – imports  ( 2 )               Tax receipts – local production  ( 3 )               Notes to Table 1: 4.    Impact on overall economic performance. The Spanish authorities shall complete Table 2 providing any data demonstrating the impact of the reduced taxes on the socioeconomic development of the region. The indicators required in Table 2 shall refer to the performance of the supported sectors compared to the general performance of the regional economy. If some of the indicators are not available, alternative reporting data shall be included on the overall socioeconomic performance of the region. Table 2 Year  ( *3 ) 2019 2020 2021 2022 2023 2024 Notes  ( *4 ) Regional gross value added               — In the supported sectors  ( 4 )               Overall regional employment               — In the supported sectors  ( 4 )               Number of active enterprises               — In the supported sectors  ( 4 )               Price level index – mainland               Price level index – region               Notes to Table 2: 5.    Specifications of the regime. The Spanish authorities shall complete Tables 3 and 4 for each product (CN4, CN6, CN8 or TARIC10 as applicable) and by year (from 2019 to 2024). The list includes only the products benefitting from differentiated tax rates. Table 3 Identification of products and rates applied Supported products – CN code (4, 6, 8 or 10 digits) Year CN4 approved category  ( 5 ) Code specifications  ( 6 ) External tax rate  ( 7 ) Internal tax rate  ( 8 ) Tax differential applied  ( 9 ) Notes  ( (**) )   2019               2020               2021               2022               2023               2024             Notes to Table 3: Table 4 Market share of supported products Supported products – CN code (4, 6, 8 or 10 digits)  ( *5 ) Year Volume  ( 10 ) Value (in EUR)  ( 11 ) Notes  ( *7 )     local production unit imports Market share  ( *6 ) local production imports Market share  ( *6 )     2019                   2020                   2021                   2022                   2023                   2024                 Notes to Table 4: 6.    Irregularities. The Spanish authorities shall provide information on any investigations on administrative irregularities, in particular, on evasion from taxes or smuggling, in the context of the application of the authorisation. They shall provide detailed information, including, at least, information on the nature of the case, value and time period.   7.    Complaints. The Spanish authorities shall provide information on whether the local, regional, or national authorities have received any complaints concerning the application of the authorisation, either by beneficiaries or by non-beneficiaries.   ( 1 )    ‘Foregone tax revenue’: the total amount (in EUR) of tax not collected because of the tax differentials applied to local production (exemptions/reductions). At product level, it is calculated by multiplying the value of production sold on the local market (i.e. deducting exports) by the tax differential applied. The indicator is then calculated by summing up product-level estimates. ( 2 )    ‘Tax receipts – imports’: the total amount (in EUR) of the tax levied on the imports of taxable products. ( 3 )    ‘Tax receipts – local production’: the total amount (in EUR) of the tax levied on the taxable local products. ( *1 )   The information might not be available for all the years listed. ( *2 )   Provide comments and clarifications as deemed relevant. ( 4 )    ‘supported sectors’: intended as the economic sectors (NACE definition or the like) where the production is prevalently (by production volume) benefitting from tax exemptions/reduction. ( *3 )   The information might not be available for all the years listed. ( *4 )   Provide comments and clarifications as deemed relevant. ( 5 )    ‘CN4 approved category’: the CN4 category approved in this Decision. ( 6 )    ‘Code specification’: in the event a different treatment is extended to different 10-digit codes or based on other ad hoc specifications of the CN/TARIC definitions. ( 7 )    ‘External tax rate’: the tax rate applied to imports. ( 8 )    ‘Internal tax rate’: the tax rate applied to local production. ( 9 )    ‘Tax differential applied’: the difference between external and internal rate. ( (**) )   Provide comments and clarifications as deemed relevant. ( *5 )   The first column should be identical to the previous table to allow data matching. ( 10 )    ‘Volume’: in the column ‘unit’ specify the unit of measurement (tons, hl, pieces, etc.). ( 11 )    ‘Value’: for import, it coincides with the taxable amount. ( *6 )    ‘Market share’: the market share shall be calculated deducting the exports of local products. ( *7 )   Provide comments and clarifications as deemed relevant.