# C_2020045EN.01003601.xml

| 10.2.2020 | EN | Official Journal of the European Union | C 45/36 |
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10.2.2020

EN

Official Journal of the European Union

C 45/36

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Action brought on 8 November 2019 – Rio Tinto European Holdings and Others v Commission

(Case T-762/19)

(2020/C 45/36)

Language of the case: English

Parties

Applicants: Rio Tinto European Holdings Ltd (London, United Kingdom), Rio Tinto International Holdings Ltd (London) and Rio Tinto Simfer UK Ltd (London) (represented by: N. Niejahr and B. Hoorelbeke, lawyers, A. Stratakis and P. O’Gara, Solicitors)

Defendant: European Commission

Form of order sought

The applicants claim that the Court should:

| — | annul Commission Decision (EU) 2019/1352 of 2 April 2019 on the State aid SA.44896 implemented by the United Kingdom concerning CFC Group Financing (OJ 2019 L 216, p. 1), in so far as it holds that the alleged aid measure constitutes aid in the sense of Article 107(1) TFEU and orders its recovery with interest, including from the applicants; |
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annul Commission Decision (EU) 2019/1352 of 2 April 2019 on the State aid SA.44896 implemented by the United Kingdom concerning CFC Group Financing (OJ 2019 L 216, p. 1), in so far as it holds that the alleged aid measure constitutes aid in the sense of Article 107(1) TFEU and orders its recovery with interest, including from the applicants;

| — | in the alternative, annul Articles 2, 3 and 4 of the contested decision to the extent that it orders the recovery of incompatible aid with interest, including from the applicants; |
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in the alternative, annul Articles 2, 3 and 4 of the contested decision to the extent that it orders the recovery of incompatible aid with interest, including from the applicants;

| — | order the Commission to bear its own costs and the applicants’ costs in connection with these proceedings. |
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order the Commission to bear its own costs and the applicants’ costs in connection with these proceedings.

Pleas in law and main arguments

In support of the action, the applicants rely on five pleas in law:

| 1. | First plea in law, alleging that the Commission has violated Article 107(1) TFEU by holding that the alleged aid measure provides a selective advantage:






  a) | to the companies making use of the 75 % exemption for low- risk qualifying loan relationships, because the Commission has:






  — | wrongly identified the UK CFC Regime as the reference system; |
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1.

First plea in law, alleging that the Commission has violated Article 107(1) TFEU by holding that the alleged aid measure provides a selective advantage:

a)

to the companies making use of the 75 % exemption for low- risk qualifying loan relationships, because the Commission has:

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wrongly identified the UK CFC Regime as the reference system;

| — | erred in law by concluding that the 75 % exemption constitutes a derogation from the reference tax system, on the basis that:






  (i) | the finding of a derogation is based erroneously on the regulatory technique; |
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erred in law by concluding that the 75 % exemption constitutes a derogation from the reference tax system, on the basis that:

(i)

the finding of a derogation is based erroneously on the regulatory technique;

| (ii) | the significant people functions test is not the central test for the UK CFC Regime; and |
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(ii)

the significant people functions test is not the central test for the UK CFC Regime; and

| (iii) | qualifying and non-qualifying loan relationships are not in the same legal and factual situation and, in any event, erred in law in applying, by analogy or placing undue reliance upon the terms of Council Directive (EU) 2016/1164; (1) |
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(iii)

qualifying and non-qualifying loan relationships are not in the same legal and factual situation and, in any event, erred in law in applying, by analogy or placing undue reliance upon the terms of Council Directive (EU) 2016/1164; (1)

| — | erred in fact and in law by concluding that the 75 % exemption is not justified by the nature and the overall structure of the tax system in the same way as the Group Financing Exemption that applies to non-trading finance profits falling within section 371EC of the Taxation (International and Other Provisions) Act 2010. |
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erred in fact and in law by concluding that the 75 % exemption is not justified by the nature and the overall structure of the tax system in the same way as the Group Financing Exemption that applies to non-trading finance profits falling within section 371EC of the Taxation (International and Other Provisions) Act 2010.

| b) | to the companies making use of the matched interest exemption, because the Commission has:






  — | wrongly identified the UK CFC rules as the reference system; |
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b)

to the companies making use of the matched interest exemption, because the Commission has:

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wrongly identified the UK CFC rules as the reference system;

| — | erred in law by concluding that the matched interest exemption constitutes a derogation from the reference tax system, on the basis that:






  (i) | the finding of a derogation is based erroneously on the regulatory technique and the significant people functions test is not the central test for the UK CFC rules; |
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erred in law by concluding that the matched interest exemption constitutes a derogation from the reference tax system, on the basis that:

(i)

the finding of a derogation is based erroneously on the regulatory technique and the significant people functions test is not the central test for the UK CFC rules;

| (ii) | taxpayers qualifying for the matched interest exemption are not in the same legal and factual situation as taxpayers who do not so qualify. |
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(ii)

taxpayers qualifying for the matched interest exemption are not in the same legal and factual situation as taxpayers who do not so qualify.

| — | has erred in fact and in law by concluding that the matched interest exemption is not justified by the nature and the overall structure of the tax system. |
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has erred in fact and in law by concluding that the matched interest exemption is not justified by the nature and the overall structure of the tax system.

| 2. | Second plea in law, alleging that the Commission has violated Article 107(1) TFEU by failing to demonstrate that the alleged aid measure was liable to affect trade between Member States and threatened to distort competition. |
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2.

Second plea in law, alleging that the Commission has violated Article 107(1) TFEU by failing to demonstrate that the alleged aid measure was liable to affect trade between Member States and threatened to distort competition.

| 3. | Third plea in law, alleging, alternatively, the Commission violated Article 49 TFEU by qualifying the alleged aid measure as incompatible State aid that does not breach the freedom of establishment as guaranteed by Article 49 TFEU. |
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3.

Third plea in law, alleging, alternatively, the Commission violated Article 49 TFEU by qualifying the alleged aid measure as incompatible State aid that does not breach the freedom of establishment as guaranteed by Article 49 TFEU.

| 4. | Fourth plea in law, alleging that the Commission has violated the fundamental principle of equal treatment/non-discrimination by:






  — | treating non-trading finance profits derived from qualifying loans in the same way as non-trading finance profits derived from non-qualifying loans; and |
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4.

Fourth plea in law, alleging that the Commission has violated the fundamental principle of equal treatment/non-discrimination by:

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treating non-trading finance profits derived from qualifying loans in the same way as non-trading finance profits derived from non-qualifying loans; and

| — | treating the Group Financing Exemption differently depending on whether the non-trading finance profits fall within sections 371EB or 371EC of the Taxation (International and Other Provisions) Act 2010. |
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treating the Group Financing Exemption differently depending on whether the non-trading finance profits fall within sections 371EB or 371EC of the Taxation (International and Other Provisions) Act 2010.

| 5. | Fifth plea in law, alleging, in the alternative, that, even if the alleged aid measure falls within the ambit of Article 107(1) TFEU, the Commission has violated Article 16(1) of the Council Regulation (EU) 2015/1589, (2) by ordering the recovery of amounts of alleged incompatible aid from the beneficiaries of the alleged aid measure, because such recovery infringes general principles of EU law, namely the principle of legitimate expectations and legal certainty. |
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5.

Fifth plea in law, alleging, in the alternative, that, even if the alleged aid measure falls within the ambit of Article 107(1) TFEU, the Commission has violated Article 16(1) of the Council Regulation (EU) 2015/1589, (2) by ordering the recovery of amounts of alleged incompatible aid from the beneficiaries of the alleged aid measure, because such recovery infringes general principles of EU law, namely the principle of legitimate expectations and legal certainty.

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(1)  Council Directive (EU) 2016/1164 of 12 July 2016 laying down rules against tax avoidance practices that directly affect the functioning of the internal market (OJ 2016 L 193, p. 1).

(2)  Council Regulation (EU) 2015/1589 of 13 July 2015 laying down detailed rules for the application of Article 108 of the Treaty on the Functioning of the European Union (OJ 2015 L 248, p. 9).

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