In recent years, the European Commission has ordered EU Member States to recover millions of euros granted to companies addicted to State support, such as certain national airlines and companies transporting passengers by sea, among many other large loss-making companies. By ensuring that the rescue of banks by the States is subject to harsh conditions, the European Commission has also created an incentive for banks to repay that the support back to the States as soon as they return to profitability, allowing States to obtain a good return on their investment. Currently, the European Commission is also investigating to what extent some Member States have been giving large multinational companies selective tax-breaks that further erode the tax base of other States where such companies do business. Should those tax-breaks be found illegal, this could lead to a more balanced distribution of badly needed tax income within the European Union. There are many other examples of ways in which the strict enforcement of State aid control rules in the European Union may be a tool for helping States to reduce their burgeoning deficits. But is this a legitimate goal of State aid control and what are the possible drawbacks of such approach? Let’s discuss!
