Abstract

The Albanian local government has a financial autonomy that is guaranteed by the Constitution and other important legal acts. This implies the right to grant subsidies, loans, define rates of taxes, to sale land or to exercises other rights in the ambit of their financial authority. On the other hand, part of the Stabilization and Association Agreement (SAA) Albania has with the European Union, is the prohibition of state aid that distort competition. Article 71 of the SAA states that any state aid contrary to this agreement shall be assessed on the basis of criteria arising from the application of Article 87 of the EC Treaty and the interpretative instruments adopted by the EU institutions for the application of Article 87 of the EC Treaty. The right interpretation of the notion of state aid that distorts competition, as developed by the European Court of Justice and EU Commission’s documents, should be taken into consideration in order to avoid that, the local government, in exercising the financial authority would grant an aid that distort competition and infringe the Stabilization and Association Agreement.