The European Commission has opened a formal investigation under EC Treaty State Aid rules into a tax exemption by the Netherlands for the delivery of natural gas used in installations for the production of ceramic products.

On 24 April 2008, the Netherlands notified its intention to introduce an exemption for ceramic products from the energy tax on natural gas.

The Netherlands takes the view that the selective character of the exemption is justified by the nature and logic of the Dutch tax system and therefore does not constitute state aid. In support of this, they refer, on the one hand, to the unique position of the Dutch ceramic industry using, what they see as, more energy intensive wet clay as a raw material and, on the other hand, to the perceived disadvantaged tax position of Dutch producers vis-à-vis competing ceramic producers in surrounding countries.

As the proposed tax exemption only deals with natural gas used by the Dutch ceramic industry, the Commission is of the preliminary view that this measure confers a selective advantage on the ceramic industry and would therefore constitute state aid. Such operating aid can be authorised only in exceptional circumstances, e.g. when it is related to environmental protection.

The Commission now needs to assess whether such aid is compatible with the Single Market.

Further information is available at http://europa.eu/rapid/pressReleasesAction.do?reference=IP/09/242&format=HTML&aged=0&language=en&guiLanguage=en.