State aid and tax: Where do we stand ?

Law & Economics workshop organised by Concurrences Review in partnership with Baker McKenzie and MAPP.

Nina F. Niejahr

Where do we stand? The case law has come a long way. Thus far we have seen five recovery decisions being adopted; four individual cases, and the Belgian Excess Profit Tax Ruling System case, all of which have been appealed to the General Court.

Five cases currently remain under investigation: three individual ruling cases and two schemes, counting in the Gibraltar tax ruling and the UK case on Controlled Foreign Companies (CFC). Interestingly, the CFC case is the longest running of the open investigations, as it started back in 2013.

Gert-Jan Koopman

While direct taxation falls within the competences of EU Member States under the Treaty provisions, the competences must be exercised with full regard to EU law. Thus, the exclusive competence that Member States enjoy is not unlimited. This is where State Aid rules are relevant: Member States cannot use direct taxation to grant a selective advantage.

It is important to note that back in the early 2000s, then Commissioner Monti undertook to look into harmful tax competition from the perspective of State aid. In 2005-2006 the Commission took a series of decisions on tax planning schemes that established a number of important principles that still guide the enforcement of State aid rules. In this regard, two important decisions are the Belgian Coordination Centers case and the Finance Companies case implemented by Luxembourg.

These cases were at the time obviously contested by companies and Member States, which led to very helpful jurisprudence, such as the Forum 187 judgement (C-182/03 and C-217/03) in which the Court of Justice confirmed the very fundamental principle that multinationals must abide by the same rules as standalone companies for the purposes of determining the corporate tax base.

Photos © Emilie Gomez

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