European court declares Basque "fiscal vacations" illegal state aid
La Rioja suit against 10-year tax breaks upheld in Luxembourg
The European Court of Justice on Thursday declared illegal a system of so-called "fiscal vacations" applied by Basque provincial councils to start-up businesses during the 1990s. The system allowed new firms a 10-year tax break if they invested more than 480,810 euros and created at least 10 jobs.
Following a complaint by the regional government of La Rioja, the Luxembourg court ruled on the side of the Basque County's neighbor and the European Commission, which in 2001 declared the system to be state aid and against continental regulations. The court ordered Álava, Guipúzcoa and Vizcaya provinces to recover the lost tax revenues.
