Articles
08/06/2021
Marine, Transport & Logistics

How to “pick up” a State Aid

Here we are again on the subject of port towage, but this time from a new perspective, the one of applicable State aid provisions.

As is known, port towage is not included among the activities that can benefit from State aid measures (both in terms of tax relief and social security reduction) under Law No. 30/98, i.e. the law establishing the so-called “International Register”.

This is said in the light of the principles set out in Communication C (2004) 43 of the European Commission – “Community guidelines on State aid to maritime transport” (hereinafter “Guidelines”) whose point 3.1 [1]specifies that State aid schemes – including the one provided for by Law 30/98 – are only applicable to “maritime transport” activities, i.e. transport of goods and persons by sea.

Consequently, registration in the Italian “International Register” (with the resulting tax and social security benefits) is currently only admissible for tugboats used for maritime “towing transport” (or “towage on the high seas”) of other vessels, provided that more than 50% of the towage activity carried out by such tugboats actually constitutes maritime “towing transport”.

Port towage does not constitute “maritime transport” and is therefore not eligible for State aid under the Guidelines.

Moreover, having regard to our legal system, it is now clear that the notion of “port towage” (an activity reserved under Article 101 [2] of the Code of Navigation for concessionaires) was “extended” following the introduction in 2016 of paragraph 1-quater to Article 14 of the Italian Port Law (Law No. 84/94) [3]. Such paragraph assimilates ports and “other berthing places” to “mooring facilities at which operations of embarkation or disembarkation of goods and passengers take place” [4], by including – inter alia – piers, buoys and off-shore platforms, as they are similar to port facilities.

In the light of the above, therefore, in our opinion a tugboat company which registers its tugboat in the “International Register”:

(i) will only be able to maintain such registration – and benefit from the benefits deriving therefrom – if, during the reference year, it has demonstrated that more than 50% of the towage activity carried out by that tug has been classified as “towing transport” (as defined above);

(ii) will in any case benefit from the facilitative measures granted by the “International Registry” only to the extent provided for by the applicable legislation and in any event only with reference to the “towing transport” activity effectively carried out. For the remaining part of towage activities, i.e. “port towage” (including assistance activities at one of the “other berthing places” referred to in Article 14, paragraph 1c, of the Harbour Law), the company will not be eligible for benefiting from the above-mentioned facilitative measures [5];

(iii) will have to cancel such registration – and will have to consider itself obliged to return the amount received – if the aforementioned threshold of 50%, for the purposes of aid eligibility, is not exceeded at the end of the reference year.

It would therefore seem clear that – in the event that the tugboats registered in the “International Register” carry out both assistance to offshore platforms (therefore considered as “port towage” in the light of Article 14, c. 1-quater, of Law No. 84/94) and operations on the high seas – the respective shipowning companies shall adopt a specific accounting separation scheme in order to allow transparent monitoring of individual revenues, expenses and losses related to eligible and non-eligible activities for aid purposes.

The above in order to avoid confusion between the activities of “port towage” and maritime “towing transport” (or “towage on the high seas”), which prevents the identification of the only part of the activity that may legitimately be eligible for aid.

In this perspective, Circular Prot. No. 7960, dated 19 March 2019, of the then Ministry of Infrastructure and Transport, punctually established:

(i) the importance of verifying, also in the individual local contexts, that the activity effectively carried out during the year by the tugboats registered in the “International Register” consisted of «maritime transport» activities for more than 50%; and that

(ii) the registration of the vessel in the “International Register” may be suspended if the 50% threshold is not exceeded.

In our opinion, the above considerations are therefore also relevant to the protection of competition. It is indeed necessary to prevent – especially in those local contexts where the outgoing concessionaire provides “port towage” and “maritime transport” services also at “other berthing places” (i.e. Off-shore platforms and piers) – a concessionaire from being allowed to receive State aid that is not due (or to a greater extent than allowed), thus putting itself in a position of unlawful advantage over its competitors – prospective concessionaires – when tendering for a new concession.

 

This article is for information purposes only and is not, and cannot be intended as, a professional opinion on the topics dealt with. For further information please contact Emanuele Rinaldi.

 

 

[1] Article 3.1 of the Guidelines provides – inter alia – that: «”Towage” is covered by the scope of the Guidelines only if more than 50 % of the towage activity effectively carried out by a tug during a given year constitutes “maritime transport”. Waiting time may be proportionally assimilated to that part of total activity effectively carried out by a tug which constitutes “maritime transport”. It should be emphasised that towage activities which are carried out inter alia in ports, or which consist in assisting a self-propelled vessel to reach port do not constitute “maritime transport” for the purposes of this communication. No derogation from the flag link is possible in the case of towage».
[2] See Article 101 of the Code of Navigation, according to which: “Towing services in ports and other places of berthing or transit of ships assigned to maritime navigation cannot be provided without a concession, granted by the head of the department, according to the rules of the regulation”.
[3] See also article “First reflections on the implementation of the new guidelines on the award of concessions for port towage” in this edition of our Shipping&Transport Bulletin.
[4] Paragraph 1-quater, of Article 14, of Law No. 84/94 was introduced by Law no. 230/2016: “For the purposes of the provision of the technical-and-nautical services referred to in paragraph 1-bis, ports or other places of berthing or transit of ships mean also the mooring facilities at which operations of embarkation or disembarkation of goods and passengers take place, such as quays, piers, wharves, platforms, buoys, towers, temporary storage vessels or floats and mooring points, in any way constructed also within water surfaces outside the port protection works”.
[5] In this respect, again in the event of a towage service provided at “other berthing places”, it should be clarified that, as expressly provided for by the 2004 Commission Guidelines, section 3.1., for the sole purpose of demonstrating that the 50% threshold for aid eligibility has been exceeded, “waiting time may be proportionally assimilated to the part of the total activity effectively carried out by a tug which constitutes «maritime transport». Therefore, if the same tug also carries out “port towage” activities, any waiting time (relating to the latter activity) cannot be taken into account for the purposes of the above percentage calculation.

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