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

Christopher McMahon

European State Aid Law Quarterly, Volume 23 (2024), Issue 1, Page 4 - 14

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


Selectivity and Proportionality: journal article

Can State Aid Control Learn from the Free Movement Rationale?

Christos Nikolaos Kalyka

European State Aid Law Quarterly, Volume 22 (2023), Issue 1, Page 42 - 54

This article reviews the interaction between EU State aid control and free movement law. A critical assessment of the case-law suggests that both regimes contribute to the attainment of similar goals: the establishment of an undistorted market. Their complementary interplay suggests that some principles from the case law on free movement can be used as an interpretative tool in relation to State aid, especially in the assessment of material selectivity. Accordingly, the extent to which State aid control can assess the competence of Member States to pursue national objectives is explored. National objectives can be pursued, provided the measures incorporating them are consistent with the objective pursued. The assessment of consistency in essence adopts elements of the principle of proportionality which is used under free movement law and therefore it does not prevent the ability of Member States to promote national interests, rather it assesses the coherence of the regulatory standard used for the promotion of the objective. Keywords: selectivity; proportionality; national objectives; consistency


The Fiat Case and a Judicial Epilogue in the Tax Rulings Saga · Joined Cases C-885/19 P, C-898/19 P Fiat Chrysler Finance Europe v Commission · Annotation by Theodoros G. Iliopoulos journal article

Annotation on the Judgment of the Court of Justice of 8 November 2022 in Joined Cases C-885/19 P and C-898/19 P Fiat Chrysler Finance Europe v Commission

Theodoros G. Iliopoulos

European State Aid Law Quarterly, Volume 22 (2023), Issue 2, Page 188 - 192

On 8 November 2022, the Court of Justice (appellate body) published its judgment in Joined Cases C‑885/19 P and C‑898/19 P that dealt with the tax ruling that Luxembourg had granted to the group Fiat Chrysler Finance Europe. The judgment annulled the Commission’s 2015 decision that found that the granting of this tax ruling constitutes illegal State aid and required Luxembourg to recover the incompatible and unlawful aid. With this judgment, the concept of ‘selectivity’ in State aid, at least with regards to tax measures, is delineated, and it is revealed to be narrower than it seemed. The arm’s length principle does not form part of State aid law, unless national law gives a concrete expression to it, and the Commission can only rely upon the principle of non-discrimination to assess the national rules that establish and determine the application of the arm’s length principle. This is the judicial epilogue of the Fiat case and of the saga of the tax rulings – unless the exact delineation of the powers of the Commission opens a new chapter in the future.


The Approaching Sunset of the Marketing Agreement Loophole · Case T‑79/21 Ryanair DAC and Others v European Commission · Annotation by Tamás Kende and Gábor Puskás journal article

Annotation on the Judgment of the General Court of the Court of Justice of the European Union (Ninth Chamber) of 14 June 2023 in Case T‑79/21 Ryanair DAC and Others v European Commission

Tamás Kende, Gábor Puskás

European State Aid Law Quarterly, Volume 22 (2023), Issue 3, Page 329 - 336

On 14 June 2023, the General Court of the Court of Justice of the European Union delivered its judgment on the latest Ryanair case involving Montpellier airport.1 The applicants had challenged the European Commission's decision that the State provides illegal State aid not only when it orders a service at a price other than the market price, but also when it has no real need for that service, no matter how much it pays for it. The scope of application of the ‘real need’ test and criteria of the Commission’s assessment of the real needs of state entities may become a new battleground, and soon.


The Court of Justice Allows Member States to Compensate the Undertaking of their Choice: a Critique journal article

Phedon Nicolaides

European State Aid Law Quarterly, Volume 22 (2023), Issue 4, Page 371 - 380

State aid that compensates for damage caused by natural disasters or exceptional occurrences can run into many millions. It has the potential to cause a serious distortion to competition in the internal EU market. Yet, Article 107(2)(b) declares that aid compatible with the internal market without any prior assessment of its positive and negative effects by the Commission. This immediately raises the question - why is that aid considered by the TFEU to be compatible with the internal market? A corollary question is whether compensatory aid can be granted only to some of the undertakings harmed by a natural disaster or exceptional occurrence. The Court of Justice has recently answered the latter question by ruling that compensatory aid for a limited number of beneficiaries is not excluded by Article 107(2)(b). This paper argues that the latter question cannot be answered without deriving a plausible answer to the former question. Given the structure and overall objective of Article 107, a plausible answer is that compensatory aid tends to restore rather than distort competition. Therefore, compensatory aid that is granted to a limited number of beneficiaries is likely to be discriminatory beyond the extent that is inherent in any State aid measure and to cause excessive distortion of competition. Keywords: Article 107(2)(b) TFEU, compensation for damage, selectivity, discrimination.


Spanish Goodwill – A Textbook on Material Selectivity Awaiting a Second Edition journal article

Andreas Bartosch

European State Aid Law Quarterly, Volume 21 (2022), Issue 1, Page 65 - 71

The Spanish Goodwill saga which has covered more than a decade of fluctuating litigation before the EU Courts has certainly made many of the different shades of the notion of material selectivity visible, some of which it moulded, some of which it re-affirmed. In this it will certainly go down in State aid history as a remarkable piece of jurisprudence. What it has not managed, glady so, is to end the magical mystery material selectivity surrounds itself with. And the latter is very much a blessing to our future debates and discussions.Keywords: Spanish Goodwill; material selectivity; taxMilestones Preview: this article is based on a chapter in the upcoming second edition of the book 'Milestones in State Aid Case Law' (Lexxion 2022).



Andres: The Unfinished Business of a Seemingly Selective Non-Advantage· Case C-203/16 P Dirk Andres v European Commission · Annotation by Raymond Luja journal article

Annotation on the Judgment of the Court (Second Chamber) of 28 June 2018 in Case C-203/16 P Dirk Andres v European Commission

Raymond Luja

European State Aid Law Quarterly, Volume 20 (2021), Issue 4, Page 578 - 584

The Andres judgement has often been seen as a Milestone on selectivity, but in essence it is not. It rather deals with the absence of an advantage. In this contribution the author revisits Andres and concludes that, from a transactional perspective set forth in Sigma Alimentos Exterior, the outcome could well have been different. He also points out that Andres opened up a loophole to the state aid regime that could be exploited by providing targeted relief to over-inclusive anti-abuse measures. He concludes that it is primarily up to national legislators and domestic courts to guard against disproportional tax measures. Milestones Preview: this annotation is based on a chapter of the upcoming second edition of the book 'Milestones in State Aid Case Law' (Lexxion 2022).


Digital Service Taxes under State Aid Scrutiny journal article

Federico Fichera

European State Aid Law Quarterly, Volume 20 (2021), Issue 4, Page 479 - 491

Digital companies, on which contemporary economies are largely based, rely heavily on intangible assets and data processing. They are also able to carry out their activity without a physical presence in the market, which creates a separation between the country where these companies make their profits and the country in which those profits are taxed. It has thus become important to develop an efficient strategy to tax these operators. In 2018, the European Union made an attempt to do so and the Commission introduced a proposal for a directive on the introduction of a Digital Service Tax (DST). Due to lack of the required unanimity in Council, such a proposal was not adopted. In the meantime, however, some Member States have introduced their own national DSTs, clearly inspired by the Commission's proposal. This paper investigates whether such fiscal measures constitute State aid and, in light of recent case-law, it concludes that this is probably not the case. However, in consideration of the peculiarities of such taxes, it is argued that they might still be found to trigger Article 107(1) TFEU in accordance with said jurisprudence. From a broader perspective, it is also argued that the approach used by the CJEU when ruling on fiscal aid should be less formalistic and should give more consideration to the potential effect that these could have on competition within the Internal Market. Keywords: Digital Service Tax; digital taxation; Fiscal State aid; GAFA; selectivity.


Belgian Ports Carry Out Economic Activities and Should Be Liable to Corporate Tax · Case T-696/17 Belgian Sea Ports · Annotation by Jessica Bracker and Schéhérazade Oozeerally journal article

Annotation on the Judgment of the General Court of 20 September 2019 in Case T-696/17 Havenbedrijf Antwerpen NV and Maatschappij van de Brugse Zeehaven NV v European Commission

Jessica Bracker, Schéhérazade Oozeerally

European State Aid Law Quarterly, Volume 19 (2020), Issue 2, Page 212 - 219

The Case T-696/17 Belgian Sea Ports relates to an action for annulment introduced by the port authorities of Antwerp and Bruges against the European Commission Decision 2017/2115 which found that Belgian port operators had benefited from incompatible State aid through an exemption from corporate tax. This case is of interest in that it sheds light on the difficulties of establishing that an entity is not an ‘undertaking’ in circumstances where the latter performs mixed activities which are both economic and non-economic in nature. Moreover, it provides yet another confirmation that the application of the ‘three step’ analysis for the assessment of selectivity is not always a straightforward exercise. Lastly, it confirms that an aid beneficiary cannot rely on an unlawful aid received by a third party to allege a breach of the principle of equal treatment.