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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 article

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, Volume 17 (2018), Issue 3, Page 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.


Latest Developments on the Interpretation of the Concept of Selectivity in the Field of Corporate Taxation journal article

Lorenzo Panci

European State Aid Law Quarterly, Volume 17 (2018), Issue 3, Page 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 Case of the Spanish Tax Lease System · Case C-128/16 P Commission v Spain · Annotation by Phedon Nicolaides journal article

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, Volume 17 (2018), Issue 3, Page 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.


The NOx Case - Still Trying to Fit in a System  ∙ C-279/08 P ∙ Annotation  by Philipp Werner journal article

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, Volume 17 (2018), Issue 1, Page 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 article

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, Volume 17 (2018), Issue 1, Page 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.


Tax Rulings and State Aid Qualification: Should Reality Matter? journal article

Adrien Giraud, Sylvain Petit

European State Aid Law Quarterly, Volume 16 (2017), Issue 2, Page 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 article

Theodoros Iliopoulos

European State Aid Law Quarterly, Volume 16 (2017), Issue 2, Page 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.


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 article

Maarten Aalbers

European State Aid Law Quarterly, Volume 16 (2017), Issue 3, Page 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.


Refining the Derogation Test on Material Tax Selectivity: The Equality Test journal article

Begoña Pérez-Bernabeu

European State Aid Law Quarterly, Volume 16 (2017), Issue 4, Page 582 - 597

The research focuses on the problems that the ECJ has found in recent cases at applying the classic three step selectivity test in the area of taxation. The Court is confronted with the Member States’ attempt to circumvent the State aid rules by creating ad hoc general tax systems so there is no general system against which the tax measures can be assessed. In order to avoid this circumvention, the ECJ has shifted its case law on material tax selectivity towards a new “comparability test” (also called “equality test”) based on a non-formalistic approach which takes into account the underlying objectives of the tax measure. This “comparability test” encompasses an objectives-based approach which provides Member States a higher degree of freedom. However it seems to be rather vague because it involves the difficult task of distinguishing permissible goals from impermissible goals which irretrievably leads us to a case-by-case analysis which does not provide the desirable degree of legal certainty and predictability. The main conclusion of this research is that the criterion of material tax selectivity is not definitively formulated in the ECJ case law but, on the contrary, it is open to refinements in order to meet the challenges that current and future State aid cases may raise. Keywords: Material Selectivity; Tax; Derogation; Equality Test.


European Commission v World Duty Free Group, formerly Autogrill España SA, Banco Santander SA, Santusa Holding SL  ∙ Joined Cases C-20/15P and C-21/15 P ∙ Annotation by Adrien Giraud and Sylvain Petit journal article

Annotation on the Judgment of the Court of Justice of the European Union (Grand Chamber) of 21 December 2016 in Joined Cases C-20/15P and C-21/15P Commission v. World Duty Free Group

Adrien Giraud, Sylvain Petit

European State Aid Law Quarterly, Volume 16 (2017), Issue 2, Page 310 - 315

On 21 December 2016, in the Spanish fiscal aid cases, the Grand Chamber of the Court of Justice of the European Union struck down the General Court’s attempt of November 2014 to introduce an innovative interpretation of the notion of selectivity. Whereas the General Court had required the identification of a category of undertakings when a fiscal measure is potentially accessible to all undertakings, the Court of Justice adopted a rather conservative approach and merely restated its settled case-law. This case note analyses the law as restated by the Court and addresses some of the criticisms that have recently surfaced. Keywords: Fiscal Aid; Notion of Selectivity; Category of Undertaking; Discrimination; Burden of Proof.