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Judgment By Formula: Regulatory Form and the Differentiation of Fiscal Measures and Non-Fiscal Measures in EU State Aid Law

Christopher McMahon

DOI https://doi.org/10.21552/estal/2024/1/3

Keywords: Effects, objectives, selectivity, fiscal measures, taxation, Article 107(1) TFEU, formalism

The State aid rules apply to a wide range of interventions on the internal market that take a variety of different forms. This poses challenges for the case law on the identification of aid within the meaning of Article 107(1) TFEU as it seeks to adapt the standards it applies to different circumstances while avoiding formalism. Criticisms in the academic literature of the application of the prohibition on aid to fiscal measures are frequently premised on the assumption that the rules should apply in a different way to such measures on account of their relationship with the sovereignty of Member States in the field of taxation. The manner in which the law on the application of the State aid rules to fiscal measures remains unsettled. This article examines a substantial doctrinal obstacle to any form of differentiation in the standards used to identify fiscal and non-fiscal measures in the form of two related maxims which recur throughout the case law. The first holds that aid is defined in relation to its effects. The second is that regulatory technique is irrelevant to the classification of a measure as aid. This article will chart the development of these established formulae in the case law and explain their relationship to one another, arguing that they represent a significant, but not absolute impediment to the articulation of distinct standards to identify aid in the form of fiscal measures.
Keywords: Effects; Objectives; Selectivity; Fiscal Measures; Taxation; Article 107(1) TFEU; Formalism

Dr Christopher McMahon is an Adjunct Assistant Professor at the School of Law, Trinity College Dublin. Email: <cmcmaho1@tcd.ie>. This paper draws on elements of a PhD thesis submitted to the School of Law, Trinity College Dublin. See C McMahon, ‘Changed Utterly: Conceptual Stretching and the Impact of the Tax Cases on EU State Aid Law’ (PhD thesis, Trinity College Dublin 2023) <http://www.tara.tcd.ie/handle/2262/102617> accessed 13 January 2024. I am grateful to Caoimhín MacMaoláin, Alan Eustace, Philip Gavin, Adam Elebert, Imelda Maher and Delia Ferri for their comments. The usual disclaimer applies.


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