7.11.2006 Official Journal of the European Union L 307/219 COMMISSION DECISION of 4 July 2006 on State Aid No C 30/2004 (ex NN 34/2004) implemented by Portugal exempting from corporation tax on capital gains certain operations/transactions by public undertakings (notified under document number C(2006) 2950) (Only the Portuguese version is authentic) (Text with EEA relevance) (2006/748/EC) THE COMMISSION OF THE EUROPEAN COMMUNITIES, Having regard to the Treaty establishing the European Commu- nity, and in particular the first subparagraph of Article 88(2) thereof, Having regard to the Agreement on the European Economic Area, and in particular Article 62(1)(a) thereof, Having called on interested parties to submit their comments pursuant to the article cited above (1), Whereas: L PROCEDURE (1) Following information relating to alleged tax exemptions on capital gains granted by the Portuguese authorities to certain public undertakings under Article 25 of the Portuguese Tax Relief Regulations, Estatuto dos Beneficios Fiscais (hereinafter referred to as ‘EBF) (), the Commission asked the Portuguese authorities for detailed information by letter dated 14 March 2001. (2) The Portuguese authorities replied by letter of 25 April 2001. A second request for information was sent on 28 October 2003 and a reply was received on 30 January 2004. The Portuguese authorities submitted further information by letter of 8 September 2004. (3) By letter dated 6 October 2004 the Commission informed Portugal that it had decided to initiate the procedure laid down in Article 88(2) of the EC Treaty on the aid measure in question (}). In this decision, published in the Official Journal of the European Union (*), the Commission invited interested parties to submit their comments on the measure. (4) By letter received by the Commission on 21 December 2005, the Portuguese authorities submitted their com- ments. (5) No interested parties submitted any comment. () OJ C 256, 15.10.2005, p. 26. (%) Decree-Law 215/89 of 1 July 1989. () C(2004) 2637, 6.10.2004. () See footnote 1. ®) L. DETAILED DESCRIPTION OF THE AID SCHEME The tax exemptions are provided for in Article 25 of the EBF, entitled Mais-valias no dmbito do processo de privatizagdo (capital gains as part of the privatisation process) which corresponds to Article 32-C in the original version of 2000 before the amendment of the EBF by Decree-Law 198/2001 of 3 July 2001. For the purposes of establishing the profit liable for corporation tax in the case of wholly publicly owned companies and companies controlled by them, Article 25 EBF provides for the exclusion from the taxable amount of capital gains from privatisation and restructuring operations carried out in accordance with the strategic guidelines for the performance of the State’s shareholder function and recognised as such by order of the Finance Minister. Article 25 of the Portuguese EBF entered into force on 1 January 2000 pursuant to Article 103 of Law 3-B/2000 of 4 April 2000. II. GROUNDS FOR INITIATING THE PROCEDURE The decision to initiate the formal investigation procedure stated that Article 25 EBF seemed to constitute a state aid scheme within the meaning of Article 87(1) of the EC Treaty. The scheme appeared to be an operating aid and, on the basis of the information available, was incompatible since it did not seem to be directed to any eligible investments or expense items. Furthermore, none of the exemptions provided for in Article 87(2) and (3) of the EC Treaty appeared applicable. Indeed, it constituted unjustified aid that gave public undertakings an advantage over their private competitors. IV. COMMENTS FROM PORTUGAL By letter received by the Commission on 21 December 2005 Portugal confirmed the information already provided during the Commission’s preliminary assessment.