Opinion of the Advocate General — ECLI:EU:C:2017:912
Date: 2017-11-29
Language of the case: Bulgarian
Subject matter: State aids;Competition
Procedure: Reference for a preliminary ruling
Origin: Bulgaria

summary of the findings of fact on which it is based, contrary to Article 94 of the Rules of Procedure, and even distorts, in its fourth question, the facts in the main proceedings. It must be noted that the order for reference contains a rather detailed summary of the facts in the main proceedings. As for the alleged distortion of the facts, this in fact covers a discussion on the legal classification of ZPT’s places of business, which is a matter in respect of which the national court alone has jurisdiction and which does not affect the answers to be given to the questions addressed to the Court. 27 Second, while the wording of the first question does not replicate precisely the national provisions at issue nor the issue raised by their interaction with Regulation No 1998/2006, the decision to refer does, by contrast, include all necessary explanations in this respect. 28 Third, it is true that the second question, which asks whether State aid in favour of exported goods is compatible with competition in the internal market, is imprecise in its wording. However, in order to provide a useful answer, it is for the Court, if necessary, to reformulate the questions referred to it (see, inter alia, judgment of 17 December 2015, Szemerey, C‑330/14, EU:C:2015:826, paragraph 30). 29 In that regard, the referring court seeks to ascertain, by the second question, to what extent the principle of the free movement of goods precludes aid, even de minimis aid, in favour of exports. As it is settled case-law that secondary law must be interpreted, so far as possible, in a manner which is compatible with the primary law of the European Union, the principle of free movement of goods may have a bearing on the interpretation of Article 1(1)(d) of Regulation No 1998/2006, which is the subject of the other questions. 30 Fourth, the Varhoven administrativen sad (Supreme Administrative Court) rightly points out that the referring court does not expressly set out, in the third part of the third question, the reasons for its uncertainty as to the validity of Article 1(1)(d) of Regulation No 1998/2006 in the light of Article 35 TFEU. However, those reasons can easily be deduced from the other questions submitted for a preliminary ruling. It is clearly useful for the national court to know whether the provision of secondary law which it asks the Court to interpret, in order to assess the lawfulness of the national provisions at issue,is invalid in the light of Article 35 TFEU. 31 In the fifth place, the Varhoven administrativen sad (Supreme Administrative Court) considers that it cannot be a defendant in proceedings seeking reparation for harm arising from its alleged infringement of EU law without disregarding the principle of the separation of powers, the requirement of judicial independence and impartiality and respect for the judicial powers and hierarchy established by the Bulgarian Constitution. 32 It should be recalled that, under the second paragraph of Article 23 of the Statute of the Court of Justice of the European Union and Article 96(1)(a) of the Rules of Procedure, the parties to the main proceedings are in particular authorised to submit observations to the Court in preliminary-ruling proceedings. The status of party in the dispute in the main proceedings, by reason of which the Varhoven administrativen sad (Supreme Administrative Court) was invited to submit its observations in the context of the present proceedings, is a matter for the national court alone in the light of the rules of national law. In any event, there is no requirement for the parties to the dispute in the main proceedings to submit observations to the Court in the context of preliminary-ruling proceedings. 33 In those circumstances, the request for a preliminary ruling is admissible. Substance Consideration of the third part of the third question 34 By the third part of the third question, the referring court asks, in essence, whether Article 1(1)(d) of Regulation No 1998/2006 is invalid in the light of Article 35 TFEU. 35 Under Article 107(1) TFEU, ‘any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the internal market’. Article 108(3) TFEU provides that ‘the Commission shall be informed, in sufficient time to enable it to submit its comments, of any plans to grant or alter aid’. 36 However, in accordance with Article 109 TFEU, the Council of the European Union is authorised to make any appropriate regulations, in particular for determining the conditions in which Article 108(3) TFEU is to apply and the categories of aid exempt from the procedure under that provision (see, to that effect, judgment of 21 July 2016, Dilly’s Wellnesshotel, C‑493/14, EU:C:2016:577, paragraph 33). Thus, Regulation No 994/98 empowered the Commission to set, by way of regulation, a ceiling below which aid is not subject to the procedure of notification to the Commission laid down in Article 108 TFEU. 37 By Regulation No 1998/2006, the Commission set the ceiling below which aid is deemed not significantly to affect trade between the Member States, and need not, therefore, be notified to it, at EUR 200 000 over a period of three years. That regulation, however, excludes from that regime certain categories of aid, in particular, in accordance with Article 1(1)(d) thereof, ‘aid to export-related activities towards third countries or Member States, namely aid directly linked to the quantities exported, to the establishment and operation of a distribution network or to other current expenditure linked to the export activity’. 38 Article 35 TFEU prohibits quantitative restrictions on exports between Member States, as well as all measures having equivalent effect. 39 Three preliminary comments have to be made on the assessment of whether Article 1(1)(d) of Regulation No 1998/2006 is compatible with those provisions. 40 In the first place, the prohibition of quantitative restrictions on exports and of measures having equivalent effect applies both to the authorities of the European Union and to the Member States, with the result that a provision of secondary law can be challenged on that basis, including by means of a question submitted for a preliminary ruling on the issue of validity (see, to that effect, judgment of 17 May 1984, DenkavitNetherland, 15/83, EU:C:1984:183, paragraph 15). 41 In the second place, whereas Article 1(1)(d) of Regulation No 1998/2006 covers exports to third countries or to Member States, Article 35 TFEU applies only to the movement of goods between Member States. Consequently, in so far as it relates to exports to third countries, Article 1(1)(d) of that regulation cannot be contrary to Article 35 TFEU. 42 In the third place, Article 1(1)(d) of Regulation No 1998/2006 does not, in itself, establish quantitative restrictions on exports. It is necessary, by contrast, to determine whether that provision may be classified as a ‘measure having equivalent effect to a quantitative restriction on exports’. 43 In that regard, the Court has held that a national measure applicable to all traders active in the national territory which has a greater effect on goods leaving the market of the exporting Member State than on the marketing of goods in the domestic market of that Member State is covered by the prohibition laid down by Article 35 TFEU (see judgment of 21 June 2016, New Valmar, C‑15/15, EU:C:2016:464, paragraph 36 and the case-law cited). 44 It follows from that definition that classification as a ‘measure having equivalent effect to a quantitative restriction on exports’ presupposes the existence of restrictive effects on trade (judgment of 21 June 2016, New Valmar, C‑15/15, EU:C:2016:464, paragraph 42). Those effects may be of merely minor importance (judgment of 1 April 2008, Government of the French Community and Walloon Government, C‑212/06, EU:C:2008:178, paragraph 52), provided that they are not too uncertain or too indirect (judgment of 21 June 2016, New Valmar, C‑15/15, EU:C:2016:464, paragraph 45 and the case-law cited). 45 The prohibition of aid linked to exports to Member States laid down in Article 1(1)(d) of Regulation No 1998/2006, even if it does not exceed the de minimis threshold, has no effect on trade in itself, since it merely requires the Member States to refrain from granting a certain type of aid. Consequently, that provision cannot amount to a measure having an effect equivalent to a quantitative restriction on exports, prohibited by Article 35 TFEU. 46 However, the main effect of the fundamental rules of the internal market and of the general aid scheme which forms part of it is that the exclusion of export aid from the scope of Regulation No 1998/2006 is justified in the light of the actual purpose of Article 107 TFEU. According to that article, State aid is, indeed, incompatible with the internal market ‘in so far as it affects trade between Member States’. Export aid, even of a modest amount, is, by definition, one of the forms of aid which may affect trade between Member States, both directly by conferring a competitive advantage on the products exported and indirectly by inciting the other Member States to take symmetric countermeasures intended to counterbalance that competitive advantage. As the Commission argued during the hearing, allowing such aid would be particularly detrimental to the functioning of the internal market. 47 It follows that Article 35 TFEU cannot justify a measure contrary to Article 107 TFEU. The reasons for which the Court held that the provisions of the FEU Treaty on State aid cannot be used to frustrate the Treaty rules on the free movement of goods also justify the reciprocal assertion, namely that those provisions and those rules have a common purpose, namely to ensure the free movement of goods between Member States under normal conditions of competition (judgments of 5 June 1986, Commission v Italy, 103/84, EU:C:1986:229, paragraph 19, and of 20 March 1990, Du Pont de Nemours Italiana, C‑21/88, EU:C:1990:121, paragraphs 19 to 21). 48 Therefore, the answer to the third part of the third question is that consideration thereof has not disclosed any factor of such a kind as to affect the validity of Article 1(1)(d) of Regulation No 1998/2006. The first and second questions, the first two parts of the third question and the fourth question 49 By the first and second questions, the first two parts of the third question and the fourth question, the referring court asks, in essence, whether Article 1(1)(d) of Regulation No 1998/2006 must be interpreted as precluding provisions of national law, such as those at issue in the main proceedings, which exclude investments in assets used for export-related activities from the benefit of tax relief constituting de minimis aid. 50 It must be noted, in the first place, that Article 1(1)(d) of Regulation No 1998/2006 must be placed back in the overall context of that regulation, the purpose of which is to allow derogations, for State aid of a limited amount, from the rule that all aid must, prior to implementation, be notified to the Commission. 51 The purpose of Article 1(1)(d) of Regulation No 1998/2006 is to limit the possible scope of that derogation by excluding export aid from it. That prohibition thus amounts to a return to the principle of prohibition of State aid laid down by the Treaty. It cannot, therefore, be interpreted strictly. 52 It should be noted, in the second place, that Regulation No 1998/2006 did not in any way have the purpose, and in addition could not lawfully have had the effect, either of obliging the Member States to grant certain aid or of compelling them to use all the possibilities of derogation for which it provides. 53 The questions raised by the national court must be answered in the light of those reservations. 54 Articles 184 and 188 of the Law on corporation tax grant a tax reduction of an amount below the ceiling set by Regulation No 1998/2006 to undertakings engaged in manufacturing activities in a municipality identified as presenting a significantly higher unemployment rate than the national average, on condition that they invest in that municipality the amount of the tax reduction within a period of four years starting from the beginning of the year in respect of which the tax is deducted. Under Article 182(2)(7) of that law, the tax relief does not apply ‘to investment in assets used in activities relating to exports’. The Republic of Bulgaria thus intended to comply with Article 1(1)(d) of Regulation No 1998/2006, which excludes aid benefiting exports from the benefit of the de minimis rule. 55 Article 1(1)(d) of Regulation No 1998/2006 does not exclude all aid which may have an impact on exports, but only that which has as its direct purpose, by its very form, the promotion of sales in another State. Aid ‘directly linked to the quantities exported’, aid relating to the establishment and operation of a distribution network or aid relating to other current expenditure linked to the export activity are the only forms of aid that are regarded as such. 56 It follows that investment aid, on condition of it not being, in one form or another, determined, in principle and in its amount, by the quantity of the goods exported, is not included within ‘aid to export-related activities’ within the meaning of Article 1(1)(d) of Regulation No 1998/2006 and does not therefore come within the scope of application of that provision, even if the investments thus supported facilitate the development of goods intended for export. 57 In the opposite case – that is to say, where investment aid is determined by the quantity of goods exported and by whether it subsequently comes within the scope of application of Article 1(1)(d) of Regulation No 1998/2006 – it is excluded from the benefit of the de minimis rule.Thus interpreted, Article 1(1)(d) of Regulation No 1998/2006 does not preclude provisions of national law such as those of Article 182(2)(7) of the Law on corporation tax, provided that they are interpreted by the national courts, as their wording allows, as involving the same exclusion. 58 Therefore, the answer to the first and second questions, the first two parts of the third question and the fourth question is that Article 1(1)(d) of Regulation No 1998/2006 must be interpreted as not precluding provisions of national law, such as those at issue in the main proceedings, which exclude investments in assets used for export-related activities from the benefit of tax relief constituting de minimis aid. Costs 59 Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable. On those grounds, the Court (First Chamber) hereby rules: 1. Consideration of the third part of the third question has not disclosed any factor of such a kind as to affect the validity of Article 1(1)(d) of Commission Regulation (EC) No 1998/2006 of 15 December 2006 on the application of Articles [107 and 108 TFEU] to de minimis aid. 2. Article 1(1)(d) of Regulation No 1998/2006 must be interpreted as not precluding provisions of national law, such as those at issue in the main proceedings, which exclude investments in assets used for export-related activities from the benefit of tax relief constituting de minimis aid. [Signatures] * Language of the case: Bulgarian.