(Case T-75/03)

State aid – Tax measures adopted by a regional or local authority – Reductions on the rate of income tax for natural and legal persons having their tax residence in the Azores – Decision declaring aid schemes incompatible with the common market and requiring recovery of aid paid out – Actions for annulment – Individual concern – Admissibility – Definition of State aid – Selective nature – Adverse effect on competition – Effect on trade between Member States – Equal treatment – Legitimate expectations – Legal certainty

4. State aid – Prohibition – Exceptions – Discretion of the Commission – Judicial review – Limits (Art. 87(3) EC) (see para. 100)

6. State aid – Recovery of unlawful aid – Aid granted in breach of the rules of procedure laid down in Article 88(3) EC – Possible legitimate expectation on the part of the beneficiaries – Legal certainty – Protection – Conditions and limits (Art. 88(3) EC) (see paras 124-126)

Re:

APPLICATION for annulment of the final part of Article 1, as well as Articles 2, 3 and 4 of Commission Decision 2003/442/EC of 11 December 2002 on the part of the scheme adapting the national tax system to the specific characteristics of the Autonomous Region of the Azores which concerns reductions in the rates of income and corporation tax (OJ 2003 L 150, p. 52).

Operative part

The Court:

1.Dismisses the action;

2.Orders Banco Comercial dos Açores, SA to bear its own costs as well as the costs of the Commission of the European Communities;

3.Orders Banco Espírito Santo dos Açores, SA to bear its own costs.