Autonomous regions, taxation and EC state-aid rules

Abstract: Some autonomous regions in the EC wish to exercise or extend their devolved competences from central government to regulate taxation, particularly to reduce the rate of corporate tax imposed on companies established and operating in their region. These regions face not only
political and constitutional problems internally in respect of their relationship with central government or other national regions, but also a significant legal obstacle from Community law, namely the EC state-aid rules. This article has the following objectives: to set out the
conditions under which a tax measure, in particular a reduction in the tax rate, may be classified as a state aid under the EC Treaty rules; to examine the judgment of the European Court of Justice in the Azores case; and to explore the application of the judgment to other EU autonomous regions such as Gibraltar, the Basque Country and Scotland.

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