State aid: the Commission authorises the creation of urban tax-free zones in Italy

The European Commission has authorised, under EC Treaty state aid rules, the creation of urban tax-free zones in certain parts of Italy. The aim of the measure is to encourage the regeneration of particularly deprived areas.

In the 22 areas classed as urban tax-free zones, small and micro-enterprises starting up new business activity will be eligible for a range of tax exemptions. The Commission has concluded that the planned measures will not affect trading conditions to an extent contrary to the common interest and that the impact on trade will be very limited.

Competition Commissioner Neelie Kroes said: "The Italian measure will foster new business activity in deprived areas and thus boost local employment. In the longer term, the promotion of business activities will help engender positive development in vulnerable areas at both a social and economic level, without disproportionately affecting competition."

On 11 June 2009 Italy notified a plan to create 22 urban tax-free zones that are to grant a range of tax exemptions to small and micro-enterprises starting up new business activity. In particular, beneficiaries will be exempt from income tax ( imposte sui redditi ), regional tax on productive activities ( imposta regionale sulle attività produttive), municipal tax on real estate ( imposta comunale sugli immobili) , and contributions on salaries ( contributi sulle retribuzioni da lavoro dipendente ).

The Commission considers the upgrading of deprived urban areas to contribute to the Community objective of economic and social cohesion. The measure in question is in line with the Communication of 17 July 2006 on cohesion policy and cities.

Given the level of concentration of socio-economic difficulties (measured by a summary index) and the strict geographical targeting of the planned measures, the Commission considered them to be necessary and proportionate to achieve the aim of urban regeneration without causing a distortion of competition contrary to the common interest. The Commission also concluded that the effects on trade would be very limited, for the following reasons:

• the main aim of the measures is to combat social exclusion in particularly difficult areas;
  the scheme concerns micro and small enterprises only;


• the geographical scope of the measures is limited (they cover only 0.58% of the population);


• the areas were selected according to objective criteria such as unemployment rate, employment rate, the proportion of young people under 24 in the total population, and the level of training;


• the Italian authorities have undertaken to send the Comitato Interministerial per la Programmazione Economica the annual reports on the operation of urban tax-free zones.

The non-confidential version of the Decision will be made available under reference N 346/2009 in the State Aid Register on the DG Competition website once any confidentiality issues have been resolved.

[28 october 2009]

of Europa Press Release

Subjects (TAGS): Fiscal State Aid - Social Aid - Economic and Social Cohesion -