The EU Court of Justice holds that a selective measure should be determined on the basis of its effects and not on the basis of the legally defined regulatory techniques (German exemption for companies in difficulty)

Article published on StateAidHub: http://stateaidhub.eu, republished in e-Competitions with the courtesy of the author. The original title of this article appears below the e-Competitions title. Authors are welcome to write an alternative article on this case/text, provided they have no relationships with a party or related third party. Article will need e-Competitions Board approval before publication.

The Definition of the Reference Tax System is still a Puzzle A selective measure should be determined on the basis of its effects, not on the basis of the legally defined regulatory techniques. Introduction A tax measure is selective in the meaning of Article 107(1) TFEU when it basically deviates from the normal tax system. In the case of a tax reduction or a tax exemption the normal system is fairly easy to define. It is the rate from which the reduction is derived or the tax from which the exemption is drawn. That is why there are very few judgments on how to determine the normal or reference tax system. A notable exception is case C‑106/09 P, Commission v Gibraltar. Yet, the determination of the reference framework is of paramount importance. See, for example, the landmark

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Phedon Nicolaides, The EU Court of Justice holds that a selective measure should be determined on the basis of its effects and not on the basis of the legally defined regulatory techniques (German exemption for companies in difficulty), 28 June 2018, e-Competitions Bulletin June 2018, Art. N° 88439

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