European law: France Télécom and the aid

France Telecom has received in each year from 1994 to 2002 was incompatible with the common market, state aid. With this decision, the Court confirmed the judgment of the European Union Gerichts1. The decision by which the Commission has found that aid and ordered its recovery, or otherwise.This case is related to the development that has taken the legal form of France Telecom as part of the liberalization of the telecommunications sector. imageFrance Telecom, which is now a French stock corporation, is sui generis.

In 1998, France Telecom has been transformed into a public company, whose capital was at the material time to the present dispute over half held directly or indirectly by the state. In deviation from the business tax system in favour of France Télécom two successive tax regimes were established, namely a transitional arrangement that from 1 January 1991 to 31 December 1993 was, and then a final rule, the first from the January 1994 was applicable.

imageThe last scheme was repealed with effect from 31st December 2002. Under the transitional arrangements, (1991-1993) France Telecom could be subject only to the state taxes and fees.

Accordingly, they had to pay particular neither corporate nor local taxes such as business tax. In return for this exemption, they had to pay a flat tax, which is set annually by law.According to the final rule (1994-2002) (‘the tax scheme) was for France Telecom from 1 January 1994, the tax rules governing the right of the direct local taxes were exempted.

The above two schemes were examined by the Commission, on the 2nd August 2004 issued Entscheidung2, as according to the transitional arrangements did not constitute State aid. In contrast, the Commission considered that the 1994 applicable to 2002 tax scheme for state aid must be the difference between the taxes that would have France Telecom under the terms of the general law.

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This implemented unlawfully new aid was also found to be incompatible with the common market. Therefore, its recovery by the French authorities was arranged. The decision of the amount to be recovered was determined not exactly, but it was made clear are that the amount of capital from 798 to 1140 million euros, must. In addition, interest from the provision of the aid for the beneficiary to return obtaining aid.

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