State aid: Commission approves €8.5 million Italian tax scheme to support agricultural cooperatives affected by the coronavirus outbreak

The European Commission has approved a €8.5 million Italian scheme to support agricultural cooperatives that have been particularly affected by the coronavirus outbreak. The scheme was approved under the State aid Temporary Framework. Agricultural cooperatives have been significantly hit by the restrictive measures imposed by the government to limit the spread of the coronavirus, due to the structure of their supply chain that relies heavily on small local retailers as well as on cooperative members. The support will take the form of a favourable tax regime for revaluation of assets by agricultural cooperatives. In accordance with the generally applicable tax rules, companies in Italy may revaluate business assets as part of their 2019 financial accounts. Such revaluation involves the payment of a substitute tax of 12% on the value increase. Building on the above regime, the approved scheme allows agricultural cooperatives and their consortia to offset up to 70% of their pre-existing losses to reduce the base of calculation of the substitute tax. Accordingly, such agricultural cooperatives may benefit from a partial or total exemption from the substitute tax. The purpose of the measure is to to ease liquidity constraints of agricultural cooperatives, to facilitate their access to finance and to mitigate the liquidity shortages that they are still facing as a result of the current crisis. The Commission found that the Italian scheme is in line with the conditions set out in the Temporary Framework. In particular, (i) the amount of aid will not exceed €100,000 per company active in the primary production of agriculture products, €120,000 per company active in the aquaculture sector, and €800,000 per company active in all other sectors; and (ii) the scheme is limited in time until 30 June 2021. The Commission concluded that the measure is necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a Member State, in line with Article 107(3)(b) TFEU and the conditions set out in the Temporary Framework. On this basis, the Commission approved the measure under EU State aid rules. More information on the Temporary Framework and other actions taken by the Commission to address the economic impact of the coronavirus pandemic can be found here. The non-confidential version of the decision will be made available under the case numbers SA.58418 in the State aid register on the Commission’s competition website.