State Aid Reform 2005/09 : Regional Fiscal Autonomy and Effective Recovery

In 2005 the European Commission conducted an extensive review of the State Aid regulations as part of its State Aid Action Plan. The review also affects fiscal State Aid. In this paper, the author addresses two issues that should have been included in that review.First, the author reflects on the Commission's approach to regional tax autonomy as reflected in its Gibraltar decision. The main issue here is how to determine the borderline between fiscal autonomy and state aid control of regional tax regimes.Second, the author addresses the recovery of fiscal state aid. Under EU rules, tax incentives granted in violation of EU state aid provisions should normally be recovered from taxpayers except for special circumstances. Both the issue of fiscal autonomy and recovery of state aid have first been addressed by the author in his PhD Thesis 'Assessment and Recovery of Tax Incentives in the EC and the WTO: a View on State Aids, Trade Subsidies and Direct Taxation' (Intersentia Publishers, 2003). This paper provides an update on recent developments