zoomIllustration. Image Courtesy: Pixabay under CC0 Creative Commons license The European Commission has proposed that Italy and Spain align their taxation of ports with State aid rules.“Ports are key infrastructure for economic growth and regional development. That is why EU State aid rules provide ample room for Member States to support and invest in ports,” Commissioner Margrethe Vestager, in charge of competition policy, said.“At the same time, to ensure fair competition across the EU, ports generating profits from economic activities should pay taxes in the same way as other companies – no more, no less.”Cross-border competition plays an important role in the ports sector and the Commission is committed to ensuring a level playing field in this economic sector.A corporate tax exemption for ports that earn profits from economic activities can provide them with a competitive advantage when they operate on the internal market and therefore involves State aid, which may not be compatible with EU rules.In Italy, ports are fully exempt from corporate income tax, while in Spain, ports are exempt from corporate income tax on their main sources of revenue, such as port fees or income from rental or concession contracts. In the Basque Country, ports are fully exempt from corporate tax.In April 2018, the Commission informed Italy and Spain of its concerns regarding their regimes for the taxation of ports. The Commission takes the preliminary view that, in both Italy and Spain, the existing tax regimes provide the ports with a selective advantage that may breach EU State aid rules.The Commission has therefore invited Italy and Spain to adapt their legislation in order to ensure that ports, as from January 1, 2020, will pay corporate tax in the same way as other companies in Italy and Spain, respectively. Each country now has two months to react.The decision follows recent Commission decisions requiring the Netherlands, Belgium and France to abolish exemptions from corporate tax for their ports.