The EU General Court on Wednesday rejected an appeal by Millennium BCP Participações and BCP África, upholding Brussels’ ruling that state aid was illegal in the Madeira Free Trade Zone (MFZ), Euractiv reports.
In a statement, the court rejected the companies’ claims, saying that the European Commission had correctly concluded that the state aid they received was illegal.
Court officials pointed out that both companies had failed to fulfil the requirement to create or retain jobs and did not fall under any exception to this condition of state aid.
On the other hand, the judgement rejected the claim that Brussels had breached the principle of protecting legitimate expectations and concluded that there had been no breach of the principle of legal certainty.
According to the judgement, the companies were authorised to operate in the MFZ in 1998 in the case of the pre-Millennium BCP company and in 1996 in the case of the pre-BCP Africa company.
Both companies ceased to be subject to Regime III on December 31, 2020 and their licences to operate in the MFZ were maintained until mid-2021. Neither company had any employees during the Regime III period.
GCUE has already rejected a number of Portuguese appeals against state aid in the MFZ. The Regional Aid III scheme was designed to attract investment and job creation in Madeira.
To ensure that the aid scheme would overcome the structural weaknesses of companies in these regions, the Commission’s approval decisions made it clear that aid should be granted to companies that generate economic activity and real jobs in the Madeira region.
In 2018, Brussels launched a formal investigation into Scheme III of this state aid to MFZs, as it had doubts about the application of tax incentives to income from activities actually and substantially carried out in Madeira and the link between the amount of aid and the creation or maintenance of real jobs in the region.
In 2020, he declared the aid scheme incompatible with the common market on the grounds that Portugal had applied it illegally. He demanded the immediate and effective recovery of aid from beneficiaries, the cancellation of the scheme and the cancellation of all outstanding aid payments. Portugal was given eight months to comply with the judgement.
According to the Court of Auditors’ opinion on the general public account (CGE) for 2023, published in October, the amount of contributions already paid by tax authorities to free zone companies found to have received illegal state aid is €525 million, but only €66 million has been paid.
