# C_2020027EN.01003801.xml

| 27.1.2020 | EN | Official Journal of the European Union | C 27/38 |
| --- | --- | --- | --- |

27.1.2020

EN

Official Journal of the European Union

C 27/38

---

Action brought on 31 October 2019 – Laird v Commission

(Case T-740/19)

(2020/C 27/46)

Language of the case: English

Parties

Applicant: Laird Ltd (London, United Kingdom) (represented by: C. Quigley, Barrister, and D. Gillespie, Solicitor)

Defendant: European Commission

Form of order sought

The applicant claims that the Court should:

| — | annul the Commission decision C(2019) 2526 final of 2 April 2019 on the State aid SA.44896; |
| --- | --- |

—

annul the Commission decision C(2019) 2526 final of 2 April 2019 on the State aid SA.44896;

| — | alternatively, annul Article 2 of the contested decision insofar as it applies to the applicant; |
| --- | --- |

—

alternatively, annul Article 2 of the contested decision insofar as it applies to the applicant;

| — | in the further alternative, annul Article 2 of the contested decision in respect of any aid granted in the period prior to 24 November 2017 in so far as it applies to the applicant; |
| --- | --- |

—

in the further alternative, annul Article 2 of the contested decision in respect of any aid granted in the period prior to 24 November 2017 in so far as it applies to the applicant;

| — | order the applicant’s costs to be paid by the Commission. |
| --- | --- |

—

order the applicant’s costs to be paid by the Commission.

Pleas in law and main arguments

In support of the action, the applicant relies on three pleas in law.

| 1. | First plea in law, alleging the illegality of Article 1 of the contested decision on the following grounds, in so far as it concerns a determination that the Group Financing Exemption (GFE) constitutes an (economic) advantage within the meaning of Article 107(1) TFEU, resulting, in particular, from:






  i. | the Commission’s failure to take into account: the historical background to the introduction of Controlled Foreign Companies (CFC) rules in the UK’s corporate tax system; limitations imposed on the UK through the application of EU law, in particular freedom of establishment; territoriality and other policy reasons for the structure of the CFC rules introduced in the Taxation (International and Other Provisions) Act 2010; and the scope of fiscal sovereignty of Member States, including the United Kingdom, in designing CFC rules. |
| --- | --- | --- |

1.

First plea in law, alleging the illegality of Article 1 of the contested decision on the following grounds, in so far as it concerns a determination that the Group Financing Exemption (GFE) constitutes an (economic) advantage within the meaning of Article 107(1) TFEU, resulting, in particular, from:

i.

the Commission’s failure to take into account: the historical background to the introduction of Controlled Foreign Companies (CFC) rules in the UK’s corporate tax system; limitations imposed on the UK through the application of EU law, in particular freedom of establishment; territoriality and other policy reasons for the structure of the CFC rules introduced in the Taxation (International and Other Provisions) Act 2010; and the scope of fiscal sovereignty of Member States, including the United Kingdom, in designing CFC rules.

| ii. | the Commission’s assertion that the optional character of Chapter 9 of Part 9A of the Taxation (International and Other Provisions) Act 2010 claim constitutes favourable treatment giving rise to an advantage. |
| --- | --- |

ii.

the Commission’s assertion that the optional character of Chapter 9 of Part 9A of the Taxation (International and Other Provisions) Act 2010 claim constitutes favourable treatment giving rise to an advantage.

| 2. | Second plea in law, alleging the illegality of Article 1 of the contested decision on the following grounds, in so far as it concerns a determination that the GFE constitutes a selective advantage within the meaning of Article 107(1) TFEU, resulting, in particular, from the following facts:






  i. | As regards the relevant reference framework:






  a. | the Commission’s wrong identification of the reference framework as being composed solely of the CFC rules and/or solely Chapter 5 of Part 9A of the Taxation (International and Other Provisions) Act; |
| --- | --- | --- | --- |

2.

Second plea in law, alleging the illegality of Article 1 of the contested decision on the following grounds, in so far as it concerns a determination that the GFE constitutes a selective advantage within the meaning of Article 107(1) TFEU, resulting, in particular, from the following facts:

i.

As regards the relevant reference framework:

a.

the Commission’s wrong identification of the reference framework as being composed solely of the CFC rules and/or solely Chapter 5 of Part 9A of the Taxation (International and Other Provisions) Act;

| b. | the Commission’s wrong determination of the objective of the reference system as being solely to tax profits arising from UK activities and assets that have been artificially diverted from the UK without due regard to whether the relevant targeted transactions actually give rise to risk of erosion of the UK tax base. |
| --- | --- |

b.

the Commission’s wrong determination of the objective of the reference system as being solely to tax profits arising from UK activities and assets that have been artificially diverted from the UK without due regard to whether the relevant targeted transactions actually give rise to risk of erosion of the UK tax base.

| ii. | As regards the determination of a derogation from the reference framework:






  a. | the Commission’s wrong assessment of the relevance and importance of significant people functions; |
| --- | --- | --- |

ii.

As regards the determination of a derogation from the reference framework:

a.

the Commission’s wrong assessment of the relevance and importance of significant people functions;

| b. | the Commission’s wrong assessment of the comparability of qualifying loan relationships with loans (i) to UK-resident related parties and (ii) to third parties; |
| --- | --- |

b.

the Commission’s wrong assessment of the comparability of qualifying loan relationships with loans (i) to UK-resident related parties and (ii) to third parties;

| c. | the Commission’s unlawful reliance on Council Directive (EU) 2016/1164; (1) |
| --- | --- |

c.

the Commission’s unlawful reliance on Council Directive (EU) 2016/1164; (1)

| d. | the fact that the Commission’s assessment of the comparable risks to infringement of freedom of establishment for exempted and non-exempted categories of CFC was mistaken. |
| --- | --- |

d.

the fact that the Commission’s assessment of the comparable risks to infringement of freedom of establishment for exempted and non-exempted categories of CFC was mistaken.

| iii. | As regards the justification for the alleged derogation:






  a. | the Commission’s wrong decision that the justification relating to the need for the system to be manageable and administrable did not extend to significant people functions; |
| --- | --- | --- |

iii.

As regards the justification for the alleged derogation:

a.

the Commission’s wrong decision that the justification relating to the need for the system to be manageable and administrable did not extend to significant people functions;

| b. | the Commission’s wrong decision that the GFE was not justified by reference to compliance with freedom of establishment. |
| --- | --- |

b.

the Commission’s wrong decision that the GFE was not justified by reference to compliance with freedom of establishment.

| 3. | Third plea in law, alleging the illegality of Article 2 of the contested decision on the grounds of breach of legitimate expectation and infringement of the principles of legal certainty and proportionality. Alternatively, it is argued that recovery should not be ordered in respect of any aid granted through the GFE prior to 24 November 2017, when the Commission published its opening decision. |
| --- | --- |

3.

Third plea in law, alleging the illegality of Article 2 of the contested decision on the grounds of breach of legitimate expectation and infringement of the principles of legal certainty and proportionality. Alternatively, it is argued that recovery should not be ordered in respect of any aid granted through the GFE prior to 24 November 2017, when the Commission published its opening decision.

---

(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).

---