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Parliamentary questions
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17 April 2019
Question for written answer E-001975-19
to the Commission
Rule 130
Nuno Melo (PPE)

 Subject:  Madeira free-trade zone 2
 Answer in writing 

The Commission takes the view that Madeira’s free-trade zone (FTZ) may be incompatible with Article 107 of the Treaty on the Functioning of the European Union (TFEU). This is not the first time that the Commission has used competition policy for tax purposes and specifically as a means to end tax competition and to attempt to harmonise tax.

The FTZ exists to compensate Madeira for its remote location and the resulting economic and competitive disadvantages by seeking to attract and retain in Madeira companies which would otherwise be located elsewhere. If the FTZ did not exist, the companies would not have their head office there and, consequently, would not be taxed there and the state would not receive that income. The FTZ has to exist for the state to receive those resources.

Since the FTZ serves to remedy the structural disadvantages of this outermost region by promoting its economic development, how can the region not be considered directly compatible with the internal market within the meaning of Article 107(3) TFEU?

How can this state aid be considered incompatible with the internal market, given the loss of state earnings that this inevitably implies as, without that aid, there would be no profits to tax?

Original language of question: PT 
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