# C_2012039EN.01001701.xml

| 11.2.2012 | EN | Official Journal of the European Union | C 39/17 |
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11.2.2012

EN

Official Journal of the European Union

C 39/17

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Action brought on 2 December 2011 — CB v Commission

(Case T-619/11)

(2012/C 39/34)

Language of the case: German

Parties

Applicant: CB (Germany) (represented by: T. Hackemann and H. Horstkotte, lawyers)

Defendant(s): European Commission

Form of order sought

The applicant claims that the Court should:

| — | annul the decision of the European Commission of 26 January 2011, C(2011) 275, as corrected by C(2011) 2608, in the procedure on State aid C 7/2010 (ex CP 250/2009 and NN 5/2010) implemented by Germany ‘KStG, Sanierungsklausel’ (‘Law on corporation tax, provision enabling the fiscal carry forward of losses to allow for the restructuring of companies in difficulty’); |
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annul the decision of the European Commission of 26 January 2011, C(2011) 275, as corrected by C(2011) 2608, in the procedure on State aid C 7/2010 (ex CP 250/2009 and NN 5/2010) implemented by Germany ‘KStG, Sanierungsklausel’ (‘Law on corporation tax, provision enabling the fiscal carry forward of losses to allow for the restructuring of companies in difficulty’);

| — | in the alternative, annul the decision at least in so far as it does not provide for an exception to the recovery order, based on the principle of the protection of legitimate expectations, in favour of undertakings like the applicant; |
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in the alternative, annul the decision at least in so far as it does not provide for an exception to the recovery order, based on the principle of the protection of legitimate expectations, in favour of undertakings like the applicant;

| — | order the defendant to pay the costs. |
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order the defendant to pay the costs.

Pleas in law and main arguments

In support of the action, the applicant relies in essence on the following pleas in law:

| 1. | First plea in law, alleging infringement of Article 107(1) TFEU: the deduction of losses is not an aid granted through State resources
  With regard to this plea, the applicant submits that Paragraph 8c(1) of the German Körperschaftsteuergesetz (KStG) (Law on corporation tax) infringes the principle of net profit or loss and the ability-to-pay principle and that the provision enabling the fiscal carry forward of losses to allow for the restructuring of companies in difficulty merely prevents an unconstitutional intervention in the assets of taxable persons in cases covered by that provision. For that reason the applicant takes the view that the Community law definition of State aid is not fulfilled. |
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1.

First plea in law, alleging infringement of Article 107(1) TFEU: the deduction of losses is not an aid granted through State resources

With regard to this plea, the applicant submits that Paragraph 8c(1) of the German Körperschaftsteuergesetz (KStG) (Law on corporation tax) infringes the principle of net profit or loss and the ability-to-pay principle and that the provision enabling the fiscal carry forward of losses to allow for the restructuring of companies in difficulty merely prevents an unconstitutional intervention in the assets of taxable persons in cases covered by that provision. For that reason the applicant takes the view that the Community law definition of State aid is not fulfilled.

| 2. | Second plea in law, alleging infringement of Article 107(1) TFEU: Absence of selectivity in the absence of an exception to the relevant reference system
  The applicant submits in that regard, that the relevant reference system is the general rules on the deduction of losses for corporations (Paragraph 10d of the German Law on Income Tax in conjunction with Paragraph 8(1) of the KStG and Paragraph 10a of the German Law on Trade Tax) and that Paragraph 8c of the KStG is merely an exception to that relevant reference system, which is in turn limited inter alia by the provision enabling the fiscal carry forward of losses to allow for the restructuring of companies in difficulty. |
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2.

Second plea in law, alleging infringement of Article 107(1) TFEU: Absence of selectivity in the absence of an exception to the relevant reference system

The applicant submits in that regard, that the relevant reference system is the general rules on the deduction of losses for corporations (Paragraph 10d of the German Law on Income Tax in conjunction with Paragraph 8(1) of the KStG and Paragraph 10a of the German Law on Trade Tax) and that Paragraph 8c of the KStG is merely an exception to that relevant reference system, which is in turn limited inter alia by the provision enabling the fiscal carry forward of losses to allow for the restructuring of companies in difficulty.

| 3. | Third plea in law, alleging infringement of Article 107(1) TFEU: Absence of selectivity as there is no differentiation between economic operators who are in a comparable factual and legal position as regards the objective pursued
  The applicant submits in this connection inter alia that the provision enabling the fiscal carry forward of losses to allow for the restructuring of companies in difficulty benefits all taxable undertakings and does not favour either particular areas of business and sectors or undertakings of a particular size. |
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3.

Third plea in law, alleging infringement of Article 107(1) TFEU: Absence of selectivity as there is no differentiation between economic operators who are in a comparable factual and legal position as regards the objective pursued

The applicant submits in this connection inter alia that the provision enabling the fiscal carry forward of losses to allow for the restructuring of companies in difficulty benefits all taxable undertakings and does not favour either particular areas of business and sectors or undertakings of a particular size.

| 4. | Fourth plea in law, alleging infringement of Article 107(1) TFEU: Absence of selectivity due to justification on the basis of the nature and general scheme of the tax system
  The applicant submits in that regard, that the provision enabling the fiscal carry forward of losses to allow for the restructuring of companies in difficulty is based on tax system specific reasons which comply with principles of constitutional law, such as taxation according to ability to pay, the prevention of excessive taxation and respect for the principle of proportionality. |
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4.

Fourth plea in law, alleging infringement of Article 107(1) TFEU: Absence of selectivity due to justification on the basis of the nature and general scheme of the tax system

The applicant submits in that regard, that the provision enabling the fiscal carry forward of losses to allow for the restructuring of companies in difficulty is based on tax system specific reasons which comply with principles of constitutional law, such as taxation according to ability to pay, the prevention of excessive taxation and respect for the principle of proportionality.

| 5. | Fifth plea in law, alleging infringement of Article 107(1) TFEU: Manifest errors of assessment on the basis of insufficient consideration of the position under German tax law
  The applicant submits in that regard, that the Commission failed to have regard to the provisions of German tax law on deduction of losses. |
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5.

Fifth plea in law, alleging infringement of Article 107(1) TFEU: Manifest errors of assessment on the basis of insufficient consideration of the position under German tax law

The applicant submits in that regard, that the Commission failed to have regard to the provisions of German tax law on deduction of losses.

| 6. | Sixth plea in law, alleging that there is a legitimate expectation under EU law
  The applicant submits in this connection that the tax privileges in question upon acquisitions of interests together with deductions of losses were raised by the Commission for the first time in a formal investigation procedure and that this is an extraordinary situation as the question whether a measure may constitute State aid could only arise on the basis of a legal simplification of a provision (Paragraph 8(4) of the KStG) which is undisputedly in conformity with the provisions on State aid. The relevance to State aid of that simplification of the law was not discernible to either the German legislature or undertakings which had been competently advised. |
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6.

Sixth plea in law, alleging that there is a legitimate expectation under EU law

The applicant submits in this connection that the tax privileges in question upon acquisitions of interests together with deductions of losses were raised by the Commission for the first time in a formal investigation procedure and that this is an extraordinary situation as the question whether a measure may constitute State aid could only arise on the basis of a legal simplification of a provision (Paragraph 8(4) of the KStG) which is undisputedly in conformity with the provisions on State aid. The relevance to State aid of that simplification of the law was not discernible to either the German legislature or undertakings which had been competently advised.

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