Summary;Judgment — ECLI:EU:C:2019:833
Date: 2019-10-03
Language of the case: French
Court formation: Eighth Chamber
Subject matter: General provisions;Provisions governing the Institutions
Procedure: Reference for a preliminary ruling
Origin: Belgium

Summary C-632/18 — 1 
Case C-632/18 
Summary of the request for a preliminary ruling pursuant to Article 98(1) of 
the Rules of Procedure of the Court of Justice 
Date lodged: 
10 October 2018 
Referring court: 
Conseil d’État (Belgium) 
Date of the decision to refer: 
28 September 2018 
Applicant: 
Société coopérative à responsabilité limitée ‘Fonds du logement de 
la Région de Bruxelles-Capitale’ 
Opposing party: 
Institut des Comptes nationaux 
  
I. Background and subject-matter of the dispute 
1 To ensure the proper functioning of the economic and monetary union, the 
European Union has adopted legal instruments providing the framework for 
Member States’ fiscal policy, and in particular a statistical tool called the 
‘European system of national and regional accounts’ (‘the ESA’), which is 
intended to provide comparable information on the structure of the economies of 
the Member States and on their development. A first ESA, called ‘the ESC 95’, 
was established by Council Regulation (EC) No 2223/96 of 25 June 1996 on the 
European system of national and regional accounts in the Community. 
2 A new ESA, called ‘the ESA 2010’, was established by Regulation (EU) 
No 549/2013 of the European Parliament and of the Council of 21 May 2013 on 
the European system of national and regional accounts in the European Union. 
3 In Belgium, the Institut des Comptes nationaux (National Accounts Institute, ‘the 
ICN’) is responsible for compiling the statistical data required by the ESA and for 
classifying, for that purpose, the various economic players in the categories laid 
EN 
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down by the Regulation into sectors (the main sectors being households, 
government, corporations (financial and non-financial), non-profit institutions 
serving households (NPISHs) and the rest of the world) and subsectors. 
4 The applicant is a company governed by private law first established by an 
initiative of the Ligue des familles nombreuses (League of Large Families) dating 
back to 1929. It promotes access to property, and more generally to housing, 
essentially by offering mortgage loans, construction/renovation-for-sale works, 
rental assistance or even regional instalment loans for the purpose of providing a 
rent guarantee to middle-income and low-income households. The tasks it 
performs are recognised as being in the public interest by the Région de 
Bruxelles-Capitale (Brussels-Capital Region) and they are governed primarily by 
the Code bruxellois du Logement (Brussels Housing Code) and its implementing 
decrees. 
5 Initially, the ICN had classified the applicant under the ESA 95 in the ‘financial 
corporations’ sector (code S.12). Subsequently, by decision of 30 March 2015, the 
ICN classified the applicant under the ESA 2010 in the ‘general government’ 
sector (code S.13), ‘state government (excluding social security funds)’ subsector 
(code S.1312). 
6 To that end, the ICN followed the logic of diagram 20.1 of the ESA 2010 
(paragraph 20.17) in order to examine in turn the autonomy, control and 
market/non-market character of the applicant. 
7 On the issue of autonomy, the ICN found that the applicant submits its annual 
accounts to the Centrale des Bilans de la Banque nationale de Belgique (Financial 
Statements Centre, National Bank of Belgium), is an independent legal entity, is 
able to incur liabilities and owns assets. It concluded on that basis that the 
applicant has decision-making autonomy, with the result that it may be regarded 
as being a separate institutional unit within the meaning of the ESA 2010 
(paragraph 2.12). 
8 On the issue of control, the ICN observes that the ESA 2010 defines ‘control’ as 
the ability to determine the general policy of a unit (paragraph 20.309). The ICN 
points out that the applicant is close to fully financed by the Region, either 
directly through grants or interest-free loans or indirectly by the grant of a 
guarantee on its loans. In return for that public financing, the applicant is involved 
in the Region’s housing policy, in particular through the management contract 
concluded with the Region and the Brussels Housing Code. The ICN concludes 
that the applicant’s general policy is determined by the Region, which has, 
moreover, established control mechanisms to ensure that the applicant complies 
with that policy. The applicant is therefore controlled by government within the 
meaning of the ESA, in particular in the light of the ESA 2010 indicators 
(paragraph 20.139, points (g) and (i)). 
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9 Finally, with regard to the market character of the applicant, the ICN notes, first of 
all, that the applicant is a unit whose activities are financial in nature. The 
quantitative criterion of the market/non-market test is therefore not a decisive 
factor in determining the market/non-market character of its activities (ESA, 
paragraph 20.34). Amongst those units engaging in activities of a financial nature, 
some have the characteristics of captive financial institutions. Analysis of the 
classification of a unit with the characteristics of captive financial institutions is 
neither an exception to nor a derogation from the ESA decision-making process. 
Indeed, in accordance with diagram 20.1 set out in paragraph 20.17 of the ESA, 
the aim, in relation to this type of institutional unit and for others, is to determine 
whether or not they are under public control and whether or not they engage in 
market activities. If a unit controlled by government meets the characteristics of 
captive financial units, it will be regarded as being non-market and must be 
classified in the general government sector. Where a unit under public control has 
the characteristics of captive financial institutions, it is not regarded as being a 
financial intermediary and analysis of its risk exposure is not relevant. 
10 Captive financial institutions are characterised by a lack of ‘independence’ vis-à-
vis government. Such dependence goes beyond the definition of control within the 
meaning of the ESA, which is concerned with the general policy of a unit. At 
issue here is the leeway afforded in the day-to-day management of its activities. 
That lack of independence must be manifested through constraints imposed on the 
assets and liabilities of the unit, with the result that that unit behaves not as a 
normal commercial unit seeking to maximise the return on its investment but 
rather as a unit pursuing public policy objectives. 
11 In the ICN’s view, the constraints imposed on the applicant’s assets are proven. Its 
principal activity — which consists in granting mortgage loans — is heavily 
regulated by decrees which lay down, inter alia, the conditions governing the 
property in respect of which the loan is taken out, the income of the recipients and 
the loan itself (maximum amount, interest rate, repayment arrangements). 
Furthermore, the interest rate of the loans granted by the applicant is fixed by the 
Government. 
12 The ICN therefore concludes that the applicant is a separate institutional unit 
controlled by regional government, that its activities are financial in nature and 
that it has the characteristics of captive financial institutions. Accordingly, as a 
non-market public unit, the applicant must be classified in the regional 
government sector (S.1312). 
13 The applicant is therefore covered by the financial and accounting rules of the 
Brussels Region applicable inter alia to the bodies set out under code 1312 (‘state 
government’) of the ESA. 
14 The applicant takes the view that those rules limit its freedom of action. More 
fundamentally, it disputes its ‘government’ classification and therefore brought an 
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action for annulment of the ICN’s decision of 30 March 2015 before the Conseil 
d’État (Council of State). 
II. Legal context 
A. EU law 
Regulation (EU) No 549/2013 of the European Parliament and of the Council of 
21 May 2013 on the European system of national and regional accounts in the 
European Union 
CHAPTER 1 
GENERAL FEATURES AND BASIC PRINCIPLES 
GENERAL FEATURES 
1.01  The European System of Accounts (hereinafter referred to as the ESA 2010 
or the ESA) is an internationally compatible accounting framework for a 
systematic and detailed description of a total economy (that is, a region, country 
or group of countries), its components and its relations with other total economies. 
… 
Classification by sector 
1.34 Sector accounts are created by allocating units to sectors and this enables 
transactions and balancing items of the accounts to be presented by sector. The 
presentation by sector reveals many key measures for economic and fiscal policy 
purposes. The main sectors are households, government, corporations (financial 
and non-financial), non-profit institutions serving households (NPISHs) and the 
rest of the world. 
The distinction between market and non-market activity is an important one. An 
entity controlled by government, which is shown to be a market corporation, is 
classified in the corporation sector, outside the general government sector. Thus, 
the deficit and debt levels of the corporation will not be part of the general 
government deficit and debt. 
1.35  It is important that clear and robust criteria for allocating entities to sectors 
are set out. 
The public sector consists of all institutional units resident in the economy that are 
controlled by government. The private sector consists of all other resident units. 
Table 1.1 sets out the criteria used to distinguish between [the] public and private 
sector, and in the public sector between the government sector and public 
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corporations sector, and in the private sector between the NPISH sector and the 
private corporations sector. 
Table 1.1 
Criteria Controlled by government 
(public sector) 
Privately controlled 
(private sector) 
Non-market output Central government NPISH 
Market output Public corporations Private corporations 
 
1.36 Control is defined as the ability to determine the general policy or 
programme of an institutional unit. Further details in relation to the definition of 
control are given in paragraphs 2.35 to 2.39. 
1.37 Differentiating between market and non-market, and so, for public sector 
entities, classifying them into the general government sector or the corporations 
sector, is decided by the following rule: 
An activity shall be considered as a market activity when the corresponding goods 
and services are traded under the following conditions: 
(1) sellers act to maximise their profits in the long term, and do so by selling 
goods and services freely on the market to whoever is prepared to pay the asking 
price; 
(2) buyers act to maximise their utility given their limited resources, by buying 
according to which products best meet their needs at the offered price; 
(3) effective markets exist where sellers and buyers have access to, and 
information on, the market. An effective market can operate even if these 
conditions are not met perfectly. 
… 
Institutional units and sectors 
1.57  Institutional units are economic entities that are capable of owning goods 
and assets, of incurring liabilities and of engaging in economic activities and 
transactions with other units in their own right. For the purposes of the ESA 2010 
system, the institutional units are grouped together into five mutually exclusive 
domestic institutional sectors: 
(a)  non-financial corporations; 
(b)  financial corporations; 
(c)  general government; 
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(d)  households; 
(e)  non-profit institutions serving households. 
The five sectors together make up the total domestic economy. Each sector is also 
divided into subsectors. The ESA 2010 system enables a complete set of flow 
accounts and balance sheets to be compiled for each sector, and subsector, as well 
as for the total economy. Non-resident units can interact with these five domestic 
sectors, and the interactions are shown between the five domestic sectors and a 
sixth institutional sector: the rest of the world sector. 
… 
CHAPTER 2 
UNITS AND GROUPINGS OF UNITS 
… 
THE INSTITUTIONAL UNITS 
2.12  Definition: an institutional unit is an economic entity characterised by 
decision-making autonomy in the exercise of its principal function. A resident unit 
is regarded as constituting an institutional unit in the economic territory where it 
has its centre of predominant economic interest if it has decision-making 
autonomy and either keeps a complete set of accounts, or is able to compile a 
complete set of accounts. 
To have autonomy of decision in respect of its principal function, an entity must 
be: 
(a)  entitled to own goods and assets in its own right; it will be able to exchange 
the ownership of goods and assets in transactions with other institutional units; 
(b)  able to take economic decisions and engage in economic activities for which 
it is responsible and accountable at law; 
(c)  able to incur liabilities on its own behalf, to take on other obligations or 
further commitments and to enter into contracts; and 
(d)  able to draw up a complete set of accounts, comprised of accounting records 
covering all its transactions carried out during the accounting period, as well as a 
balance sheet of assets and liabilities. 
… 
Head offices and holding companies 
… 
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Groups of corporations 
… 
Special purpose entities 
… 
Captive financial institutions 
2.21  A holding company that simply owns the assets of subsidiaries is one 
example of a captive financial institution. Examples of other units that are also 
treated as captive financial institutions are units with the characteristics of SPEs as 
described above, including investment and pension funds and units used for 
holding and managing wealth for individuals or families, issuing debt securities on 
behalf of related companies (such a company may be called a conduit), and 
carrying out other financial functions. 
2.22  The degree of independence from its parent may be demonstrated by 
exercising some substantive control over its assets and liabilities to the extent of 
carrying the risks and reaping the rewards associated with the assets and 
liabilities. Such units are classified in the financial corporations sector. 
2.23  An entity of this type that cannot act independently of its parent and is 
simply a passive holder of assets and liabilities (sometimes described as being on 
autopilot) is not treated as a separate institutional unit unless it is resident in an 
economy different from that of its parent. If it is resident in the same economy as 
its parent, it is treated as an artificial subsidiary as described below. 
Artificial subsidiaries 
… 
Special purpose units of general government 
2.27  General government may also set up special purpose units, with 
characteristics and functions similar to the captive financial institutions and 
artificial subsidiaries. Such units do not have the power to act independently and 
are restricted in the range of transactions they can engage in. They do not carry the 
risks and rewards associated with the assets and liabilities they hold. Such units, if 
they are resident, shall be treated as an integral part of general government and not 
as separate units. If they are non-resident, they shall be treated as separate units. 
Any transactions carried out by them abroad shall be reflected in corresponding 
transactions with government. Thus, a unit that borrows abroad is then regarded as 
lending the same amount to general government, and on the same terms, as the 
original borrowing. 
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2.28  In summary, the accounts of SPEs with no independent rights of action are 
consolidated with the parent corporation, unless they are resident in a different 
economy from that of the parent. There is one exception to this general rule, and 
that is when a non-resident SPE is set up by government. 
… 
THE INSTITUTIONAL SECTORS 
2.31  Macroeconomic analysis does not consider the actions of each institutional 
unit separately — it considers the aggregate activities of similar institutions. So 
units are combined into groups called institutional sectors, some of which are 
divided into subsectors. 
Table 2.1 — Sectors and subsectors 
Sectors and subsectors  Public National 
private 
Foreign 
controlled 
Non-financial corporations S.11 S.11001 S.11002 S.11003 
Financial corporations S.12    
Monetary 
financial 
institutions 
(MFIs) 
Central bank S.121    
Other 
monetary 
financial 
institutions 
(OMFI) 
Deposit-taking 
corporations 
except the 
central bank 
S.122 S.12201 S.12202 S.12203 
Money market 
funds (MMFs) 
S.123 S.12301 S.12302 S.12303 
Financial 
corporations 
except MFIs and 
Insurance 
corporations and 
pension funds 
(ICPFs) 
Non-MMF investment 
funds 
S.124 S.12401 S.12402 S.12403 
Other financial 
intermediaries, except 
insurance corporations and 
pension funds 
S.125 S.12501 S.12502 S.12503 
Financial auxiliaries S.126 S.12601 S.12602 S.12603 
Captive financial 
institutions and money 
lenders 
S.127 S.12701 S.12702 S.12703 
ICPFs Insurance corporations (IC) S.128 S.12801 S.12802 S.12803 
Pension funds (PF) S.129 S.12901 S.12902 S.12903 
General government S.13    
Central government (excluding social 
security funds) 
S.1311    
State government (excluding social security 
funds) 
S.1312    
Local government (excluding social security S.1313    
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funds) 
Social security funds S.1314    
Households S.14    
Employers and own-account workers S.141 
+ 
S.142 
   
Employees S.143    
Recipients of property and transfer income S.144    
Recipients of property income S.1441    
Recipients of pensions S.1442    
Recipients of other transfers S.1443    
Non-profit institutions serving households S.15    
Rest of the world S.2    
Member States and institutions and bodies of 
the European Union 
S.21    
Member States of the European Union S.211    
Institutions and bodies of the European 
Union 
S.212    
Non-member countries and international 
organisations non-resident in the European 
Union 
S.22    
 
2.32 Each sector and subsector groups together the institutional units which have 
a similar type of economic behaviour. 
Diagram 2.1 — Allocation of units to sectors 
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L’unité est-elle résidente? Is the unit resident? 
Non / Oui No / Yes 
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Reste du monde RoW 
L’unité est-elle un ménage? Is the unit a household? 
Ménages Households 
L’unité est-elle un producteur non 
marchand? 
Is the unit a non-market producer? 
L’unité est-elle contrôlée par une 
administration publique? 
Is the unit controlled by government? 
L’unité produit-elle des services 
financiers? 
Does the unit produce financial 
services? 
ISBLSM NPISH 
Administrations publiques General government 
Sociétés non financières Non-financial corporations 
Sociétés financières Financial corporations 
L’unité est-elle contrôlée par les 
administrations publiques? 
Is the unit controlled by general 
government? 
Sociétés non financières publiques Public non-financial corporations 
Sociétés non financières privées Private non-financial corporations 
Sociétés financières privées Private financial corporations 
Sociétés financières publiques Public financial corporations 
 
2.33 The institutional units are grouped into sectors on the basis of the type of 
producer they are and depending on their principal activity and function, which 
are considered to be indicative of their economic behaviour. 
2.34 Diagram 2.1 shows how units are allocated to the main sectors. In order to 
determine the sector of a unit which is resident and not a household, according to 
the diagram, it is necessary to determine whether it is controlled by general 
government or not, and whether it is a market or a non-market producer. 
2.35 Control over a financial or non-financial corporation shall be defined as the 
ability to determine general corporate policy, for example by choosing appropriate 
directors if necessary. 
… 
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2.40  Differentiating between market and non-market, and so for public sector 
entities classification between the general government sector and the corporations 
sector, depends on the criteria set out in paragraph 1.37. 
… 
2.99  In particular, the following financial corporations and quasi-corporations are 
classified in subsector S.127: 
… 
(d)  units which provide financial services exclusively with own funds, or funds 
provided by a sponsor, to a range of clients and incur the financial risk of the 
debtor defaulting. Examples are money lenders, corporations engaged in lending 
to students or for foreign trade from funds received from a sponsor such as a 
government unit or a non-profit institution, and pawnshops that predominantly 
engage in lending; 
… 
CHAPTER 20 
THE GOVERNMENT ACCOUNTS 
… 
Financial intermediation and the government boundary 
20.32  The case of units engaged in financial activities needs special 
consideration. Financial intermediation is the activity in which units acquire 
financial assets and at the same time incur liabilities on their own account by 
engaging in financial transactions. 
20.33  A financial intermediary places itself at risk by incurring liabilities on its 
own account. For instance, if a public financial unit manages assets but does not 
place itself at risk by incurring liabilities on its own account, it is not a financial 
intermediary and the unit is classified in the general government sector rather than 
in the financial corporations sector. 
20.34  Applying the quantitative criterion of the market/non-market test to public 
corporations involved in financial intermediation or in managing assets is 
generally not relevant, because their earnings arise from both property income and 
holding gains. 
… 
Public sector control 
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20.309 Control of a resident public sector unit is defined as the ability to 
determine the general policy of the unit. This can be through the direct rights of a 
single public sector unit or the collective rights of many. The following indicators 
of control are to be considered: 
… 
(g)  rights to control from agreements/permission to borrow. Lenders often 
impose controls as conditions of making loans. If the public sector imposes 
controls through lending, or to protect its risk exposure from a guarantee, which 
are tougher than a private sector entity would typically face from a bank, this is an 
indicator of control. If an entity requires permission from the public sector to 
borrow, then this is an indicator of control; 
… 
(i)  others. Control may also be obtained from statutory powers or rights 
contained in an entity’s constitution, for example to limit the activities, objectives 
and operating aspects, approve budgets or prevent the entity changing its 
constitution, dissolving itself, approving dividends, or terminating its relationship 
with the public sector. An entity that is fully, or close to fully, financed by the 
public sector is considered to be controlled if the controls on that funding stream 
are restrictive enough to dictate the general policy in that area. 
B. National law 
Brussels Housing Code 
‘CHAPTER VI. The Housing Fund of the Brussels-Capital Region 
Section 1 — Constitution and form 
Article 111. The Housing Fund of the Brussels-Capital Region, hereinafter 
referred to as ‘the Fund’, shall be established in the form of a limited liability 
cooperative. 
… 
Section 2. — Tasks 
Art. 112. § 1. The Fund shall undertake tasks in the public interest and in 
particular: 
1°  provide persons on low or middle incomes, through the grant of mortgage 
loans (the conditions of which shall be determined by the Government), with the 
means to renovate, redevelop, adapt, acquire (in full ownership or in the form of 
another principal right in rem), construct or retain housing intended, primarily, for 
personal occupation, or to improve the energy performance of such housing; 
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2°  provide persons on low or middle incomes with a home insurance guarantee 
free of charge, subject to conditions determined by the Government; 
3°  provide persons on low or middle incomes with the means to rent housing, 
subject to conditions determined by the Government. … 
4°  purchase or exchange (in full ownership or in the form of another principal 
right in rem), convert, develop, improve, rent or take on a long lease buildings 
with a view to renting or sub-letting them or selling them as housing, primarily, to 
persons on low or middle incomes. 
… 
5°  provide persons on low or middle incomes with the means to provide a rent 
guarantee, subject to conditions determined by the Government. This assistance 
may take the form of an interest-free loan, a surety or even a mutual fund; 
6°  promote pilot schemes and debate in these areas and propose new policies to 
the Government.’ 
III. Arguments of the parties 
A. The applicant 
15 The applicant criticises the two-stage reasoning of the ICN, which first identified 
factors indicating the determination by the Region of the general policy of the 
controlled unit within the meaning of paragraph 20.309 of the ESA 2010, and then 
factors pointing to its domination, down to its day-to-day management, putting it 
on ‘autopilot’ within the meaning of paragraph 2.23 of the ESA 2010. The ICN 
thus took the view that the applicant cannot act independently of the Region and 
stated, on the basis of that finding, that the applicant does not assume the 
economic risk of its activity. It therefore classified it in the general government 
sector of the ESA 2010. 
16 The applicant submits, first of all, that an institution which engages in a financial 
activity is classified under the ESA 2010 in accordance with two criteria: first, the 
controls over its assets and liabilities, and, second, the economic risk which it 
actually assumes. 
17 In its view, it is only by way of exception that paragraph 2.23 of the ESA 2010 
assumes there to be no assumption of risk if the unit controlled cannot act 
independently of the controlling unit; that assumption is not irrefutable, since the 
unit in question can rebut it by showing that it assumes that risk. 
18 In the present case, the ICN treated the presumption as being irrefutable, and 
failed to take into account, in its decision, the information which the applicant had 
contributed to the discussion concerning the risk associated with its activity. 
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19 The applicant disputes that it has no independent decision-making power, or even 
any management power, and denies operating ‘on autopilot’ within the meaning of 
paragraph 2.23 of the ESA 2010. 
20 First, the legal structures governing the relationship between the applicant and the 
Region, to which the ICN refers, are not of such an intensity that they entail the 
applicant’s dependence or its placement ‘on autopilot’; in reality, those structures 
allow the applicant to take its own decisions and manage its own activities. 
Second, the financing of the applicant’s activities by the Region is not enough to 
establish a relationship of dependence. In particular, its borrowing is not subject to 
the prior authorisation of the Region and the applicant does actually assume the 
risks of its activity, inter alia vis-à-vis the loans covered by the Region’s 
guarantee. 
21 The applicant points to the difference in degree between government control 
within the meaning of paragraph 20.309 of the ESA 2010, that is to say the ability 
of the government in question to determine the general policy of the institution, 
and the total dependence characterising a captive institution. 
22 It criticises the INC’s confusion of indicators of ‘control’ and those of operation 
on ‘autopilot’ or of total dependence. It submits that, although an element of 
control found to exist may influence the general policy of the unit controlled, 
particular circumstances are required for that element of control to go further and 
entail the dependence of the unit controlled down to its day-to-day management. 
23 The applicant infers from paragraphs 2.21 to 2.23 of the ESA 2010 that, in order 
to assess whether or not an institutional unit placed under government control 
engages in a market activity, consideration must be given, within the area of 
financial activities, to two conditions: first, the constraint on the unit’s assets and 
liabilities (that is to say, control), and, second, the assumption of the risk of its 
activity. In its view, it is only by way of exception that, where a financial 
institution is controlled down to its day-to-day management, it is assumed that the 
risk of its activity is transferred to the controlling unit, which justifies classifying 
the institution by equating with that unit. If, on the contrary, despite its 
dependence, the institution controlled actually takes its own decisions as part of its 
day-to-day management, the general rules should be applied and it is necessary to 
establish whether or not the institution assumes the risk of its activity. The 
applicant considers that the contested act is wrong to omit a risk analysis, 
assuming that that risk is transferred to the controlling unit. 
24 The applicant disputes in particular the impact both of the guarantee of its loans 
and of the management of its activities by the Region. 
25 With regard to the guarantee granted by the Region in respect of the loans taken 
out by the applicant, the applicant states that that guarantee does not have the 
effect of transferring the risk of its activity to the Region or of removing the 
control enjoyed by the unit controlled over its liabilities. It claims that, as a matter 
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of economic reality, that guarantee is not intended to allow the applicant to access 
loans or release it from the risk of its activity, or to cover the risk of default or an 
insufficient capacity to meet its liabilities. In the applicant’s view, the guarantee 
was conceived in order to allow the interest rate applied to the loans granted by 
the applicant to be fixed at an attractive rate, such that that financial support does 
not distort per se the activity of granting loans, which fundamentally remains an 
economic activity. The applicant puts the risk of its customers defaulting into 
perspective and observes that the guarantee provided by the Region is not, in 
principle, a first-demand guarantee, meaning that the applicant would first handle 
any default on its own part itself before its creditor would call on the guarantee. It 
concludes that the guarantee does not release its activity from the contingencies of 
economic rationality. 
26 It adds that, since the conclusion of an agreement with the Region on 9 September 
2015, the guarantee that it receives from the Region is subject to payment of an 
annual fee fixed, in view of the risk, at 15 basis points of the amount guaranteed. 
In the applicant’s view, since the fee for the guarantee is economically significant, 
this may bring about a change in the classification of the relationship between it 
and the Region. It likewise points out that that agreement provides for counter-
guarantees in favour of the Region (prohibition on granting securities on mortgage 
claims totalling 110% of the amount guaranteed and a pledge in favour of the 
Region covering all the applicant’s claims), traditional mechanisms which 
significantly reduce the risk incurred by the Region in relation to the applicant’s 
activity. 
27 It concludes that the guarantee provided by the Region does not transfer the risk 
from the applicant to the Region. 
28 As for the management of its activity by the Region, the applicant submits that the 
provisions of the Housing Code cannot be given a scope which they do not have, 
and that neither its existence nor its object is dependent on any delegation 
whatsoever from the Region. Next, it considers the nature of the management 
contract between it and the Region and takes the view that that contract is not a 
legal instrument of the same kind as that which accompanies the decentralisation 
of public services. In the applicant’s view, it is a legal instrument negotiated in 
order to establish a programme and set objectives upon which the parties have 
agreed. It regards its involvement in the development of regional housing policy 
as a partnership, in which it is the main stakeholder. 
29 The applicant disputes a fortiori that the regulation of its activity can represent a 
factor which removes its control over its assets. It observes that the conditions 
governing the grant of its mortgage loans, which are determined by an 
implementing decree adopted under the Brussels Housing Code, are strictly linked 
to the objective pursued, namely that of facilitating access to property for persons 
who would be unable to do so without assistance, and seek to avoid speculation 
and to protect the economic viability of its activity. 
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B. The opposing party 
30 The opposing party contends that paragraph 20.309 of the ESA 2010 defines 
control using several criteria. In the present case, it relied on indicators (g) 
(permission of the Region in order to borrow) and (i) (close to full financing by 
the Region, either through grants or interest-free loans or by granting a guarantee 
on the entity’s loans). 
31 Furthermore, it submits that the applicant is wrong to claim that the Region does 
not impose significant constraints on the applicant’s day-to-day management, its 
assets and its liabilities. It refers to passages of the Manual on Government Deficit 
and Debt (published by Eurostat) (‘the MGDD’), which gives examples of 
constraints on assets and of units under public control with the characteristics of 
captive financial institutions and points out, as does the contested act, that those 
passages are relevant in relation to the applicant’s activity, which consists in 
granting mortgage loans subject to conditions which are significantly regulated by 
the government. It contends that the leeway enjoyed by the applicant in carrying 
on its principal activity is therefore limited and that its power of initiative to seek 
the amendment of the conditions governing the grant of loans confirms that it 
requires the agreement of the Region. 
32 The opposing party takes the view that it did not have to assess the applicant’s 
‘market/non-market’ producer status or the risk associated with its activity. In this 
regard, it relies on paragraph 20.34 of the ESA 2010, in accordance with which 
the market/non-market test does not apply to corporations whose activities are of a 
financial nature. It states that Article 112(1) of the Brussels Housing Code 
constitutes a sufficient basis on which to conclude that the applicant enjoys no 
leeway, that the power of initiative is largely offset by the regional decision-
making power, that constraints are proven to exist, and that the financing of the 
applicant comes exclusively from public sources or is guaranteed by the Region. 
IV. Assessment by the Council of State 
33 The lawfulness of the contested decision must be assessed by reference to the 
‘ESA 2010’ established by Regulation (EU) No 549/2013 and not by reference to 
the MGDD, which was not issued by an authority with regulatory powers and, in 
addition, was published in English only. 
34 The ESA 2010 assumes that all institutional units, which it defines as economic 
entities that are capable of owning goods and assets, of incurring liabilities and of 
engaging in economic activities and transactions with other units in their own 
right, can be grouped together into five sectors (paragraph 1.57, definition 
reproduced in paragraph 2.01 of the ESA 2010). 
35 The ESA 2010 goes on to define the sectors in which institutional units are to be 
classified and, in paragraph 2.32, illustrates that process of allocation using a 
diagram. Those sectors include the central government sector (sector 13) and the 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING — CASE C-632/18 
 
18  
financial corporations sector (sector 12); the corporations in the latter sector may 
be public, national and private or foreign controlled (paragraph 2.71). The sectors 
are subdivided into subsectors. 
36 Paragraph 2.99 describes those entities which fall within subsector S.127, entitled 
‘captive financial institutions and money lenders’ and [including] in particular in 
point (d): 
‘(d) units which provide financial services exclusively with own funds, or funds 
provided by a sponsor, to a range of clients and incur the financial risk of the 
debtor defaulting. Examples are money lenders, corporations engaged in lending 
to students or for foreign trade from funds received from a sponsor such as a 
government unit or a non-profit institution, and pawnshops that predominantly 
engage in lending;’. 
37 It appears to follow from that provision that an institutional unit regarded as being 
a ‘captive financial institution’ may, nevertheless, be classified in the financial 
corporations sector, even where it grants loans using funds ‘received from a 
sponsor such as a government unit’, provided that it ‘incur[s] the financial risk of 
the debtor defaulting’. 
38 In Chapter 20, entitled ‘The Government Accounts’, the ESA 2010 defines that 
sector and includes in paragraph 20.17 the following ‘decision tree’, which differs 
from, if not contradicts, the diagram contained in paragraph 2.32: 
Diagram 20.1 — Decision tree 
 
 
 
 
 
 
 
 
 
 
 
Is the unit controlled by 
government? 
Is the unit a non-market 
producer? 
Is the entity an institutional 
unit? 
 
Part of the controlling unit 
Unit is classified to the private 
sectors 
Unit is classified as a public 
corporation 
yes 
yes 
no 
no 
no 
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19 
 
 
 
 
39 Next, in paragraph 20.19 et seq., the ESA addresses the ‘market/non-market’ 
distinction. It lays down a ‘market/non-market test’, which sets out in essence that 
a market unit is to cover at least 50% of its costs by its sales over a sustained 
multi-year period, before going on to specify that ‘applying the quantitative 
criterion of the market/non-market test to public corporations involved in financial 
intermediation or in managing assets is generally not relevant’ (paragraph 20.34). 
40 In the present case, the decision-making process followed by the opposing party 
(diagram 20.1) is as follows: 
1.  Is the entity an institutional unit?      Yes 
2. Is the entity controlled by government?    Yes 
3. Is the entity a non-market producer?     Yes 
This leads to the conclusion that the ‘unit is part of general government’. 
41 The Council of State endorses points 1 and 2 of the contested decision and rejects 
in particular the plea in law criticising the indicators identified by the ICN to come 
to the conclusion that the applicant is controlled by government, that is to say the 
Region, which exercises decisive influence over the applicant’s general policy. 
42 Next, the Council of State addresses point 3, in which the applicant is regarded as 
being a non-market institution. In relation to that point, the ICN examines whether 
the applicant has the characteristics of a captive financial institution, finds that to 
be the case and concludes that the entity should be classified in the general 
government sector. 
43 The statement of reasons for the contested decision refutes the objection that 
analysis of the classification of an institution with the characteristics of a captive 
financial institution is an exception or a derogation. 
44 It further states: 
‘If a unit controlled by government meets the characteristics of captive financial 
units, it will be regarded as being non-market and must be classified in the general 
government sector. Where a unit under public control has the characteristics of 
captive financial institutions, it is not regarded as being a financial intermediary 
and analysis of its risk exposure is not relevant. 
Unit is part of general 
government 
yes 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING — CASE C-632/18 
 
20  
45 However, it is clear from the provisions of the ESA 2010, and more specifically 
from paragraph 20.17 thereof, that a separate institutional entity controlled by 
government must be classified in the general government sector only if it is 
regarded as being a non-market producer. In the case of financial intermediaries, 
such classification assumes that the institutional entity ‘does not place itself at risk 
by incurring liabilities on its own account’, as provided for in paragraph 20.33. 
46 The contested act does indeed identify the applicant as a separate institutional 
entity (point 1), but classifies it in the general government sector essentially on 
account of its lack of independence vis-à-vis the Region. In so doing, as criticised 
by the applicant, the opposing party thus omits a risk analysis — which is in fact 
required by paragraph 20.33 — and makes reference to paragraphs 2.22 and 2.23 
of the ESA 2010. However, the purpose of the latter two provisions is to define 
which organisations constitute separate institutional entities, a matter already 
addressed and found to be the case here. 
47 The approach taken by the opposing party is based on the claim that, ‘where a unit 
under public control has the characteristics of captive financial institutions, it is 
not regarded as being a financial intermediary and analysis of its risk exposure is 
not relevant’. No provision of the ESA 2010 is cited which directly supports that 
point of view. 
48 In order to rule on this plea in law, it is necessary to determine whether the 
provisions of the ESA 2010 cited above provide a basis for that claim. The plea 
thus calls into question the interpretation of those provisions. The first question set 
out below must therefore be referred to the Court of Justice of the European Union 
for a preliminary ruling. 
49 Furthermore, the applicant questions the legality of the grounds relied on by the 
opposing party for regarding the applicant as being a captive financial institution. 
In coming to that view, the ICN essentially refers to various provisions of the 
MGDD. The decision clarifies that that concept of ‘dependence goes beyond the 
definition of control within the meaning of the ESA as it applies to the general 
policy of a unit. [It] concerns the leeway afforded in the day-to-day management 
of its activities’. 
50 Having refuted the objection that only an institution created by public authorities 
can constitute a captive financial institution, the contested decision goes on to 
detail the factors which are deemed to constitute constraints on the applicant’s 
assets and liabilities. The statement of reasons for the contested act refers to 
various indicators of dependence in this regard. It makes particular mention of the 
fact that, since the Government fixes the interest rate of the loans granted by the 
applicant, the applicant enjoys no leeway in determining its income. On the 
question of liabilities, it focuses primarily on the existence of subsidies and loans 
from the Region and on the guarantee of the applicant’s loans by the Region. The 
contested act does not explicitly state that the applicant ‘cannot act independently’ 
of the Region, to use the wording of paragraphs 2.23 and 2.28 of the ESA 2010, 
FONDS DU LOGEMENT DE LA RÉGION DE BRUXELLES-CAPITALE 
 
21 
that the control exercised by the Region goes beyond the power to guide general 
policy or that the applicant has no autonomy in its day-to-day management. It is 
however clear from the wording of the contested act that the opposing party took 
the view that this was indeed the case. 
51 In its written submissions in the case, the opposing party does not address the 
argument advanced by the applicant regarding the leeway afforded to it by the 
decrees governing its activity other than by referring to the grounds of the 
contested decision. The same is true of the argument that the guarantee provided 
by the Region in respect of the applicant’s loans has only limited economic 
significance and does not prompt the applicant to abandon economic logic in the 
everyday management of its mortgage loan transactions. 
52 In order to rule on the legality of the grounds which led the opposing party to 
regard the applicant as being a captive financial institution, the second question 
set out below must be referred to the Court of Justice for a preliminary ruling. 
V. Questions referred for a preliminary ruling 
53 The following two questions are referred to the Court of Justice of the European 
Union for a preliminary ruling: 
‘Are paragraphs 2.22, 2.23, 2.27, 2.28 and 20.33 of Regulation (EU) No 549/2013 
of the European Parliament and of the Council of 21 May 2013 on the European 
system of national and regional accounts [in the European Union] to be interpreted 
as meaning that a separate institutional entity placed under government control 
must be regarded as being non-market and thus falling within the general 
government sector where it has the characteristics of a captive financial 
institution, there being no need to examine its risk exposure?’ 
‘Can an entity operating under government control be regarded as being a captive 
financial institution within the meaning of paragraphs 2.21 to 2.23, 2.27 and 2.28 
of Regulation (EU) No 549/2013 of the European Parliament and of the Council 
of 21 May 2013 on the European system of national and regional accounts [in the 
European Union]: 
(a)  on the ground that the regulation of its activity by the government in 
question removes from it control over its assets, even though it is afforded the 
capacity to decide to grant the mortgage loans which it provides, their duration, 
their amount and some of their conditions, whilst at the same time the government 
determines other factors, and in particular the interest rate applied to the loans; 
(b)  on the ground that, inter alia, the guarantee given to it by government in 
respect of the loans taken out by it removes from it control over its liabilities, 
without examining the purpose and the effects of such a guarantee in the light of 
its features in the present case and of the underlying economic reality?’