The Excess Profit Exemption System · Joined Cases T-131/16 and T-263/16 Belgium v Commission · Annotation by François-Guillaume de Lichtervelde Journal Artikel Annotation on the judgment of the General Court (Seventh Chamber, Extended Composition) of 14 February 2019 in Joined Cases T‑131/16 Belgium v Commission and T-263/16 Magnetrol v Commission François-Guillaume de Lichtervelde European State Aid Law Quarterly, Jahrgang 18 (2019), Ausgabe 3, Seite 382 - 390 As the first State aid case involving tax rulings to reach the General Court, the judgment regarding the Belgian ‘excess profit exemption’ regime was highly anticipated. Instead of investigating separately the tax rulings granting the exemption, the Commission had intended to frame the case at the higher level and went after an ‘aid scheme’. The Court did not follow this qualification and set aside the Commission’s Decision. While the judgment inflicted a blow to the enforcer’s approach, the Court did not take a position on the most sensitive questions raised by this case. The boundaries of EU State aid control with respect to tax rulings thus still remain unclear. However, the judgment established that Belgium enjoyed a margin of discretion in adopting the rulings that granted the excess profit exemption. This finding, which was fatal to the Commission’s scheme-based theory, may now support the Commission’s case that the rulings are ‘selective’ and could therefore amount to State aid. In that sense, the judgment may ultimately have done more harm than good to Belgium’s case against the Commission’s investigation. Keywords: Excess Profit Exemption; Tax Rulings; Aid Scheme; Individual Aid; Belgium; Discretion; Selectivity.
Latest Developments on the Interpretation of the Concept of Selectivity in the Field of Corporate Taxation Journal Artikel Lorenzo Panci European State Aid Law Quarterly, Jahrgang 17 (2018), Ausgabe 3, Seite 353 - 367 The notion of material selectivity is key to defining the reach of State aid control. I will argue that the ECJ progressively endorsed an increasingly extensive interpretation of the selectivity requirement (which culminated in the Gibraltar judgment), making it easier for the European Commission to demonstrate its fulfilment. One of the consequences of this evolution was that State aid control became easier to use to pursue policy objectives. This was especially true in the context of taxation, despite the lack of harmonisation in this field. However, at the outset of the Gibraltar judgment, the General Court appeared to have taken a position that preserves the policy choices made at national level and this was possible by interpreting the selectivity condition as more difficult to fulfil. On the other hand, it appears that the Commission reacted to the Gibraltar judgment by using State aid control to pursue its policy objectives, in particular to contrast harmful tax competition among MS. Will the European Court of Justice endorse the approach taken by the Commission? Keywords: Selectivity; Gibraltar; Tax Rulings; Tax Competition.
The NOx Case - Still Trying to Fit in a System ∙ C-279/08 P ∙ Annotation by Philipp Werner Journal Artikel Annotation on the Judgments of the Court of Justice of the European Union (Third Chamber) of 8 September 2011 in Case C-279/08 P Commission v Netherlands Philipp Werner, Lucia Stoican European State Aid Law Quarterly, Jahrgang 17 (2018), Ausgabe 1, Seite 101 - 109 The NOx case demonstrates that selectivity continues to be the lynchpin in the assessment of State aid measures. Even though the case has not provided much guidance, it has shown tendencies that were confirmed in later case law: a wide interpretation of selectivity; uncertainty about the application of the selectivity criterion by the Commission, the GC and the CJEU; and divergent views of the CJEU and the GC. For the sake of legal clarity, the CJEU should have clarified which factors it deemed pertinent to determine the ‘similarity’ of undertakings subject to the NOx scheme. This would have provided clarity for the determination of the correct ‘reference framework’ in future cases, which in turn would have made it easier to identify ‘comparable’ market situations. We are focusing in this note on two of the conditions for the existence of State aid under Article 107(1) TFEU, namely selectivity and State resources. Keywords: Material Selectivity; State Resources; Comparability; Reference Framework; NOx Emissions.
Finding Selectivity or the Art of Comparison ∙ Joined Cases C-78 to 80/08 ∙ Annotation by José Luis Buendía Sierra Journal Artikel Annotation on the Judgment of the Court of Justice of the European Union (First Chamber) of 8 September 2011 in Joined Cases C-78 to 80/08, Paint Graphos José Luis Buendía Sierra European State Aid Law Quarterly, Jahrgang 17 (2018), Ausgabe 1, Seite 85 - 92 This case note examines the analysis of ‘Selectivity’ undertaken by the ECJ and AG Jääskinen in Paint Graphos and subsequent case law. In that case, the ECJ set out some clear limits on the notion of selectivity: Selectivity is ultimately about finding a material discrimination between similar situations and not merely about a formal exception to an alleged general rule. Hence, the Commission can no longer assume the presence of selectivity without, first, defining correctly the reference system ‘strictu sensu’ or universe of situations that are similar, both from a legal and factual perspective. The Commission would also need to prove that the measure gives an advantage to the beneficiaries compared with other undertakings in the same situation. It is only at this stage that we could speak of ‘prima facie’ selectivity. Keywords: Selectivity; Fiscal Aid; Comparability; Reference System; Burden of Proof.
The Definition of the Reference Tax System is still a Puzzle · Case C‑203/16 P Heitkamp BauHolding v European Commission · Annotation by Phedon Nicolaides Journal Artikel Annotation on the Judgment of the Court (Second Chamber) of 28 June 2018 in Case C‑203/16 P Dirk Andres (acting as liquidator in the insolvency of Heitkamp BauHolding GmbH) v European Commission. Phedon Nicolaides European State Aid Law Quarterly, Jahrgang 17 (2018), Ausgabe 3, Seite 419 - 427 A tax measure is selectivity if it deviates from the reference tax system and if it cannot be justified by the logic or internal economy of the reference system. In order to determine whether a tax measure deviates from the reference system, only its effects are taken into account, not the regulatory technique used by the Member State in question Keywords: Selectivity; Reference tax system; Regulatory techniques.
The Case of the Spanish Tax Lease System · Case C-128/16 P Commission v Spain · Annotation by Phedon Nicolaides Journal Artikel Annotation on the Judgment of the Court (Second Chamber) of 25 July 2018 in Case C-128/16 P European Commission v Kingdom of Spain and Others. Phedon Nicolaides European State Aid Law Quarterly, Jahrgang 17 (2018), Ausgabe 3, Seite 412 - 418 A tax measure can be selective in relation to both direct and indirect beneficiaries. A beneficiary that passes on all benefits to third parties may still derive a selective advantage. The selectivity of such advantages have to be determined on the basis of their effects, not the form of the tax. Keywords: Selectivity; Direct beneficiaries; Indirect beneficiaries; Passing on advantage.
Tax Rulings and State Aid Qualification: Should Reality Matter? Journal Artikel Adrien Giraud, Sylvain Petit European State Aid Law Quarterly, Jahrgang 16 (2017), Ausgabe 2, Seite 233 - 242 In its decisional practice developing tax ruling, the European Commission uses a theoretical reasoning that can in some instances appear somewhat disconnected from the facts of the cases. Indeed, all these cases boil down to one single determination (whether the concerned transfer prices were – or not – set at market levels) and the satisfaction of all the conditions for the existence of State aid derive directly from this (rather theoretical) question alone. Little to no account taken of important factual elements (such as for example the context of international fiscal competition) and several conclusions appear to be presumed rather than demonstrated (for example the distortion of competition). One therefore remains with the general impression that State aid law remains into a sort of exception to the rest of competition law: an area of law where reality does not (really) matter. Keywords: Tax Ruling; Selectivity; Advantage; Distortion of Competition; Counterfactual.
The State Aid Cases of Starbucks and Fiat: New Routes for the Concept of Selectivity? Journal Artikel Theodoros Iliopoulos European State Aid Law Quarterly, Jahrgang 16 (2017), Ausgabe 2, Seite 263 - 271 The European Commission’s decisions in the State aid cases of Starbucks and Fiat are the first decisions in the series of the tax rulings investigations. These decisions have been criticised as excessively widening the scope of the concept of selectivity. This article, however, argues that the Commission did not overreach itself. The Commission applied a well-established methodology and integrated certain new elements into it, like the arm’s length principle, in order to respond to novel issues. This stance does not indicate a tendency towards widening the concept of selectivity; it rather signifies the Commission’s disposition to focus on the effects of the aid measures and to conduct its assessments with less formalism. Keywords: Fiat; Starbucks; Concept of Selectivity; Transfer Price Rulings; Arm’s Length Principle.
Airport Selection – New Tools or Loopholes Opened? Journal Artikel C-524/14 P European Commission v Hansestadt Lübeck (successor in law to Flughafen Lübeck GmbH) Hans Arno Petzold European State Aid Law Quarterly, Jahrgang 16 (2017), Ausgabe 2, Seite 285 - 287
Commission and Kingdom of Spain v. Government of Gibraltar and United Kingdom ∙ Joined cases C-106/09P and C 107/09P ∙ Annotation by Maarten Aalbers Journal Artikel Maarten Aalbers European State Aid Law Quarterly, Jahrgang 16 (2017), Ausgabe 3, Seite 495 - 499 The material selectivity test resembles a non–discrimination analysis, under which the Commission can assess whether undertakings, which operate under comparable legal and factual situations, are treated unequally by general measures. The Commission has to establish whether measures confer “an advantage of general application” and if so, whether this advantage effectively results in unequal treatment. This contribution, celebrating the 15th jubilee of ESTAL, highlights the effect-based approach of the Gibraltar-judgment, as was commentated by Rossi-Maccanico (EStAL 2012/2), and places developments in case law on the notion of material selectivity in the context of this landmark judgment. Keywords: Material Selectivity; Non-Discrimination; Gibraltar Case-Law; Effect-Based Approach.