EU orders Spain to recover shipyard state aid
Shipyard
(BRUSSELS) - Spain must recover state aid given to its struggling shipyards in the form of tax breaks, the EU said Wednesday, stoking fears for the future of the industry in a country ravaged by recession and soaring unemployment.
Groups financing ship purchases "have benefited unlawfully from tax advantages which they must now repay to the Spanish state," European Union Competition Commissioner Joaquin Almunia said.
The repayment covers the period 2007-2011, rather than going back to 2005 as initially planned, and could easily be worth hundreds of millions of euros although no official figure was given.
Under a scheme launched in 2002, Madrid offered financiers special tax breaks for funding the purchase of Spanish ships, thereby stoking demand.
A lengthy investigation was launched, however, following a series of complaints by shipbuilders in other EU countries, who argued that such tax benefits in effect cut Spanish ship prices by 20-30 percent.
The European Commission declined to quantify the amount needing to be clawed back, saying it was for Spain to fix the sums after case-by-case assessments.
The head of industry body Pymar, Alvaro Platero, said in Madrid that his group -- representing 19 Spanish yards -- would "keep up the fight for the for the shipbuilding sector and the 87,000 families who depend on it."
The Commission ruling was "unjust and discriminatory," compared to related rulings on similar French tax breaks in the sector, Platero said.
His organisation had warned on Tuesday that confirmation of the EU move would mean "the end" of the private shipbuilding industry in Spain.
"The effects on the sector would be ... the disappearance of Spain's shipyards," it said.
Meanwhile Spanish Industry Minister Jose Manuel Soria told parliament in Madrid that "the government reserves the right to appeal this decision" at the European court level.
The Commission said the repayment decision applies only to the financing groups involved, and not to shipping companies nor the shipyards.
Almunia argued that the industry has shown resilience in the decades since a sea-change in its global make-up saw traditional shipbuilding in Europe virtually destroyed as yards in Asia and elsewhere came to the fore.
He said the industry in Spain had demonstrated its competitiveness and capacity for innovation and entrepreneurship -- "which is considerable and goes back to the 1970s."
"Ship owners are familiar with the quality of the Spanish shipbuilding sector," he said.
"There will be investors -- they have to be sought out and convinced ... (but) I'm convinced that the prospects are good."