Opinion of the Advocate General — ECLI:EU:C:2011:215
Date: 2011-04-07
Language of the case: English
Subject matter: State aids;Competition
Procedure: Action for annulment;Appeal - successful
Origin: Spain;United Kingdom

Summary of the Judgment 1. State aid – Definition – Grant by the public authorities of favourable tax treatment to certain undertakings – Included – Tax relief constituting a general measure applicable without distinction to all economic operators – Not included (Art. 87(1) EC) 2. State aid – Definition – Selective nature of the measure – Tax subject to the taxable person making a profit and capped according to certain criteria – None (Art. 87(1) EC) 3. State aid – Definition – Selective nature of the measure – Assessment based on taking account of the regulatory technique used – Not included (Art. 87(1) EC) 4. State aid – Definition – Selective nature of the measure – Tax scheme allowing a group of companies to avoid, by their nature, bases of assessment – Included (Art. 87(1) EC) 5. State aid – Examination by the Commission – Examination of an aid scheme taken in its entirety – Whether permissible (Arts 87 EC and 88 EC) 6. State aid – Examination by the Commission – Compatibility of the aid with the common market – Assessment following the notice relating to State aid in the field of taxation – Scope (Arts 87 EC and 88 EC; Commission Notice 98/C 384/03) 7. State aid – Prohibition – Derogations – Aid that may be considered compatible with the common market – Assessment under Article 87 EC – Account taken of previous practice – Not included (Art. 87(1) EC) 8. State aid – Definition – Differentiation between undertakings in relation to charges – Not included – Condition (Art. 87(1) EC) 9. State aid – Prohibition – Derogations – Duty of the Member State seeking a derogation to cooperate (Art. 87(2) EC) 10. European Union law – Principles – Rights of the defence – Whether applicable to administrative procedures initiated by the Commission – Examination of plans to grant aid – Scope (Art. 88(2) EC) 1. The definition of aid is more general than that of a subsidy, given that it includes not only positive benefits, such as subsidies themselves, but also State measures which, in various forms, mitigate the charges that are normally included in an undertaking’s budget and that thus, without being subsidies in the strict sense of the word, are similar in character and have the same effect. Consequently, a measure by which the public authorities grant certain undertakings favourable tax treatment which, although not involving the transfer of State resources, places the recipients in a more favourable financial position than other taxpayers amounts to State aid within the meaning of Article 87(1) EC. On the other hand, advantages resulting from a general measure applicable without distinction to all economic operators do not constitute State aid within the meaning of Article 87 EC. (see paras 71-73) 2. Article 87(1) EC requires it to be assessed whether, under a particular legal regime, a national measure is such as to favour ‘certain undertakings or the production of certain goods’ in comparison with others which, in the light of the objective pursued by that regime, are in a comparable factual and legal situation. A measure providing that payroll tax and business property occupation tax are payable only where the taxable person makes a profit and that the amount of tax is capped in respect of both those bases of assessment does not confer selective advantages, in so far as the requirement to make a profit and the capping of taxation of profits are per se general measures applicable without distinction to all economic operators and are therefore not such as to confer selective advantages. (see paras 75, 77, 80) 3. Article 87(1) EC does not distinguish between measures of State intervention by reference to their causes or their aims, but defines them in relation to their effects, and thus independently of the techniques used. Therefore, in the context of assessing the selectivity of a proposed tax reform, an approach, based solely on taking into account the regulatory technique used, does not allow the effects of the tax measure in question to be considered and excludes from the outset any possibility of classifying as a ‘selective advantage’ the fact that no tax liability is incurred by certain taxable persons. Those considerations apply above all with regard to a tax system which, instead of laying down general rules applying to all undertakings from which a derogation is made for certain undertakings, achieves the same result by adjusting and combining the tax rules in such a way that their very application results in a differentiated tax burden for different undertakings. (see paras 87-88, 93) 4. A different tax burden resulting from the application of a ‘general’ tax regime is not sufficient by itself to establish the selectivity of taxation for the purposes of Article 87(1) EC. Thus, the criteria forming the basis of assessment that are adopted by a tax system must also, in order that they may be recognised as conferring selective advantages, be such as to characterise the recipient undertakings, by virtue of the properties which are specific to them, as a privileged category, thus permitting such a regime to be described as favouring ‘certain’ undertakings or the production of ‘certain’ goods within the meaning of Article 87(1) EC. That is the case when the fact that certain companies, known as ‘offshore companies’, are not taxed is not a random consequence of the regime at issue, but the inevitable consequence of the fact that the bases of assessment are specifically designed so that offshore companies, which by their nature have no employees and do not occupy business premises, have no tax base under the bases of assessment adopted in the proposed tax reform. Thus, the fact that those companies, which constitute a group of companies with regard to the bases of assessment adopted in the proposed tax reform, avoid taxation precisely on account of the specific features characteristic of that group gives reason to conclude that those companies enjoy selective advantages. (see paras 103-107) 5. The Commission may, in the case of an aid scheme, confine itself to examining the general characteristics of the scheme in question, without being required to examine each particular case in which it applies, in order to determine whether that scheme comprises aid elements. (see para. 122) 6. The notice relating to State aid in the field of taxation, being an internal measure adopted by the administration, cannot be regarded as a rule of law. It forms rules of practice from which the Commission may not depart in an individual case without giving reasons that are compatible with the principle of equal treatment. (see para. 128) 7. The question whether a measure constitutes State aid must be assessed solely in the context of Article 87(1) EC and not in the light of an alleged earlier decision-making practice of the Commission. (see para. 136) 8. The definition of State aid does not cover State measures differentiating between undertakings that are, therefore, prima facie selective when that differentiation arises from the nature or the general scheme of the system of which they form part. It is for the Member State, which has introduced such a differentiation between undertakings in relation to charges, to show that it is actually justified by the nature and general scheme of the system in question. (see paras 145-146) 9. A Member State which seeks to be allowed to grant aid by way of derogation from the Treaty rules is under a duty to cooperate with the Commission. In accordance with that duty, it must in particular provide all the information necessary to enable the Commission to verify that the conditions for the derogation sought are fulfilled. (see para. 147) 10. Observance of the rights of the defence, during the formal investigation procedure under Article 88(2) EC, requires the Member State concerned to be placed in a position in which it may effectively make known its views on the truth and relevance of the facts and circumstances alleged and on the documents obtained by the Commission to support its claim that there has been infringement of Union law, and also on the observations submitted by interested third parties in accordance with Article 88(2) EC. In so far as the Member State has not been put in a position to comment on those observations, the Commission may not use them in its decision against that State. As regards interested parties, other than the Member State concerned, they have, in the procedure for reviewing State aid, only the opportunity of sending to the Commission all information intended for the guidance of the latter with regard to its future action. They cannot themselves seek to engage in an adversarial debate with the Commission in the same way as is offered to that Member State. (see paras 165, 181)