Opinion of the Advocate General — ECLI:EU:C:2024:898
Date: 2024-10-17
Language of the case: Polish
Procedure: Reference for a preliminary ruling
Origin: Poland

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: 
19 July 2023 
Referring court: 
Naczelny Sąd Administracyjny (Poland) 
Date of the decision to refer: 
19 April 2023 
Appellant on a point of law: 
E. sp. z o.o. 
Respondent in the appeal on a point of law: 
Prezydent Miasta Mielca 
  
Subject matter of the main proceedings 
Appeal on a point of law to the Naczelny Sąd Administracyjny (Supreme 
Administrative Court, Poland) brought by E. sp. z o.o. against a judgment of the 
Wojewódzki Sąd Administracyjny w Rzeszowie (Regional Administrative Court, 
Rzeszów) of 19 October 2021, given in an action brought by E. sp. z o.o. against 
an individual interpretation of provisions of tax law relating to property tax issued 
by the Prezydent Miasta Mielca (Mayor of the Town of Mielec) on 14 June 2021. 
Subject matter and legal basis of the request 
Interpretation of Article 107(1) and Article 108(3) of the Treaty on the 
Functioning of the European Union (‘TFEU’), in conjunction with Article 2 of 
Council Regulation (EU) 2015/1589 of 13 July 2015 laying down detailed rules 
for the application of Article 108 TFEU. The questions for a preliminary ruling 
are referred pursuant to Article 267 TFEU. 
EN 
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Questions referred for a preliminary ruling 
(1) In the light of Article 107(1) of the Treaty on the Functioning of the 
European Union (consolidated version: OJ 2016 C 202, p. 47), does the grant by a 
Member State of tax relief addressed to all operators, such as that provided for in 
Article 7(1)(1)(a) of the Ustawa z dnia 12 stycznia 1991 r. o podatkach i opłatach 
lokalnych (Law of 12 January 2019 on local taxes and fees) (Dz.U. of 2019, item 
1170, as amended), consisting in an exemption from tax on immovable property 
for land, buildings and structures forming part of railway infrastructure within the 
meaning of the provisions on rail transport, which is made available to rail-
transport operators, distort or threaten to distort competition? 
(2) If the answer to Question 1 is in the affirmative, is an operator which has 
availed itself of the tax exemption pursuant to the abovementioned provision of 
national law, introduced without following the required procedure, as laid down in 
Article 108(3) of the Treaty on the Functioning of the European Union 
(consolidated version: OJ 2016 C 202, p. 47), in conjunction with Article 2 of 
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 (codification) (Text with EEA relevance) (OJ 2015 L 248, p. 9), required to 
pay the outstanding tax, plus interest? 
Provisions of EU law cited 
Treaty on the Functioning of the European Union: Articles 107(1), 108(3), and 
267; 
Council Regulation (EU) 2015/1589 of 13 July 2015 laying down detailed rules 
for the application of Article 108 TFEU: Article 2 
Provisions of national law cited 
Ustawa z dnia 12 stycznia 1991 r. o podatkach i opłatach lokalnych (Law of 
12 January 1991 on local taxes and charges) (Dz.U. of 2019, item 1170, as 
amended): Articles 2(1) and (2), 4(1), and 7(1)(1)(a); 
Under Article 7(1)(1)(a) of the Law on local taxes and charges cited in the first 
question referred for a preliminary ruling, land, buildings and structures forming 
part of railway infrastructure within the meaning of the provisions on rail 
transport, which is made available to rail-transport operators, are to be exempt 
from tax on immovable property. 
Ustawa z dnia 30 kwietnia 2004 r. o postępowaniu w sprawach dotyczących 
pomocy publicznej (Law of 30 April 2004 on the procedure in cases concerning 
State aid) (Dz.U. of 2023, item 702): Article 6(2). 
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Succinct presentation of the facts and procedure in the main proceedings 
1 The appellant company, which is a taxable person for the purposes of property tax 
on the infrastructure and land underneath it which it owns, submitted a request to 
the Mayor of the Town of Mielec (‘the interpreting authority’) for a written 
individual interpretation of the provisions of tax law. In the request, it stated that, 
as an entity carrying on an economic activity, it owns a railway siding on its land, 
and part of the infrastructure of the railway siding forms part of it. In its view, 
from the moment at which the siding is made available to another rail transport 
operator, which will carry out transport operations on its behalf, it will be able to 
avail itself of the exemption from property tax in respect of the entire cadastral 
parcel on which the elements of the railway infrastructure are located, and also 
parcels of land acquired in the future, which will also have a siding (railway 
infrastructure) built on part of them. 
2 In order to obtain confirmation of its position, the company asked the interpreting 
authority the following questions: (1) can it apply the exemption from property tax 
under Article 7(1)(1)(a) of the Law on local taxes and charges to the land and 
infrastructure concerned starting from the moment at which the permission to 
enter the siding is granted and the relevant authorisation is granted to the licensed 
railway transport operator, which [was] to occur in 2021, and (2) following the 
acquisition of the new land will it be able to apply the exemption from property 
tax under Article 7(1)(1)(a) of the Law of local taxes and charges to the entire area 
of the new land? 
3 The interpreting authority found that the company’s position is incorrect. In its 
view, although the conditions for the exemption are formally fulfilled, that right 
cannot be exercised because it infringes EU provisions on State aid. The 
amending law, as a result of which State aid was granted to operators in the form 
of an exemption from property tax, was not made subject to the European 
Commission’s preliminary examination procedure. 
4 The appellant then brought an action against that individual interpretation before 
the Wojewódzki Sąd Administracyjny w Rzeszowie, which is the court of first 
instance. 
5 The court of first instance dismissed the action. That court found that the tax 
exemption, which relieves a company of the burden of tax owed to the budget of a 
public entity (local authority), fulfils the conditions for being regarded as State 
aid, and therefore pointed to the need to determine whether the national legislature 
had satisfied the requirements laid down Articles 107 and 108 TFEU. 
6 The court of first instance went on to state that the Ustawa z dnia 16 listopada 
2016 r. o zmianie ustawy o transporcie kolejowym oraz niektórych innych ustaw 
(Law of 16 November 2016 amending the Law on railway transport and certain 
other laws) had not been notified to the European Commission for prior 
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consultation. That gives rise to certain consequences for the Member State under 
the FEU Treaty and Regulation 2015/1589. 
7 The court of first instance further held that the interpreting authority’s position on 
the company’s inability to exercise the right arising from Article 7(1)(1)(a) of the 
Law on local taxes and charges has a legal basis. The interpreting authority, in 
assessing the future event set out, was therefore entitled to rely directly on EU 
law, both on Articles 107 and 108 TFEU and on Article 3 of Regulation 
2015/1589, since the matter identified concerns selective new State aid granted by 
a Member State to an operator, that is to say, a matter transferred to the 
competence of the European Union within the context of protection of the internal 
market and business competitiveness. 
8 The appellant, which disagreed with the reasoning of the court of first instance, 
lodged an appeal on a point of law with the referring court. 
The essential arguments of the parties in the main proceedings 
9 The appellant – in contrast to the interpreting authority – takes the view that the 
exemption laid down in Article 7(1)(1)(a) of the Law on local taxes and charges 
does not meet the criteria relating to State aid and that its introduction therefore 
did not have to be notified to the European Commission. 
Succinct presentation of the reasoning in the request for a preliminary ruling 
10 In relation to the first question, the referring court notes that the provisions of the 
Law on local taxes and charges in force until the end of 2016, which limited the 
application of the exemption to a small number of entities (railway line operators 
and the owners of several transhipment terminals), gave rise to the risk of that 
exemption being regarded as unlawful State aid on account of the overt selectivity 
of its application. The exemption laid down in Article 7(1)(1)(a) of the Law on 
local taxes and charges, in the version in force from 1 January 2017, does not 
appear to constitute State aid. 
11 As of 1 January 2017, the scope of the tax exemption laid down in 
Article 7(1)(1)(a) of the Law on local taxes and charges was extended. In 
particular, railway sidings omitted in the earlier wording of the legislation, 
including those constituting so-called private infrastructure, and thus those located 
in mines, production facilities or power stations, which are the driving force 
behind all railway freight traffic, were exempted from property tax. In addition, 
buildings forming part of the railway infrastructure were also covered by the 
exemption and the scope of the exemption for land was also extended (to include 
cadastral parcels forming part of the railway infrastructure, and not only parts of 
land occupied by tracks, as was the case in the previous version of the provisions). 
However, as from 1 January 2017, the mere fact of possessing a siding on one’s 
land is not sufficient for the application of the tax exemption for railway 
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infrastructure; it is necessary to make it actually available to a railway transport 
operator. 
12 Thus, the exemption laid down Article 7(1)(1)(a) of Law on local taxes and 
charges relates, as of 1 January 2017, to an unlimited circle of recipients (any 
operator who makes use of rail transport may avail itself of the exemption). 
Consequently, it is not addressed to specified operators, to a specific sector or 
region, and to a specific activity, as a result of which the production of certain 
goods is favoured. However, the criterion relating to possession of a certain type 
of infrastructure used in that provision may give rise to uncertainty, which in 
practice means that operators carrying on economic activity in the same sectors 
(for example, mines, thermal power stations, breweries) may be in a different 
situation in terms of their tax burden. 
13 The referring court adds that, if the difference in situation of economic operators 
does not arise directly from the mechanism of the exemption introduced, and 
every economic operator has access to it, the attribute of selectivity cannot, in 
principle, be attached to it. Every operator (regardless of region, industry and 
other features) who makes use of rail transport by means of railway sidings which 
it owns is entitled to benefit from the statutory tax exemption under 
Article 7(1)(1)(a) of Law on local taxes and charges. The inability to attribute the 
characteristic of selectivity to a tax exemption laid down in national law precludes 
the condition relating to distortion of competition from being fulfilled and, 
consequently, such an exemption cannot be regarded as State aid within the 
meaning of Article 107 TFEU. 
14 On the other hand, however, uncertainty arises as to possible covert selectivity 
related to the use of what are, at first sight, objective exemption criteria. There is 
therefore de facto selectivity, whereby the instrument in question has the effect of 
favouring certain undertakings or sectors, irrespective of the fact that it is not 
addressed exclusively to those undertakings (sectors). 
15 The referring court makes it clear that the exemption laid down in 
Article 7(1)(1)(a) of the Law on local taxes and charges was introduced on the 
occasion of a wide-ranging amendment of the Law on railway transport, which in 
turn implemented Directive 2012/34/EU of the European Parliament and of the 
Council of 21 November 2012 establishing a single European railway area. The 
aim of both Directive 2012/34/EU and the amendment of the Law on railway 
transport is development of the railways, to be achieved, inter alia, through 
liberalisation of legislation and stimulus measures. The form of the rail exemption 
in force since 1 January 2017 can be considered reasonable and in line with the 
stimulating function of the tax, which thus encourages operators to use zero-
emission and safe rail transport. 
16 The second question concerns the situation where an operator has availed itself of 
a tax exemption pursuant to the abovementioned provision of national law, 
introduced without following the required procedure laid down in Article 108(3) 
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TFEU, and is now left uncertain as to whether, in circumstances such as those in 
the dispute before the national court, it is required to pay the outstanding tax, plus 
interest. 
17 The issue under consideration here is all the more significant because, in the four 
years since the introduction of the exemption, neither the tax authorities nor the 
administrative courts have questioned the application of the tax exemption by 
operators. This has led to the belief that the use of the tax exemption is correct. 
From 2021, four years after the introduction of the exemption, the tax authorities 
began to refuse to apply it, citing Poland’s failure to notify the exemption to the 
European Commission and the associated risk of granting State aid. The case 
therefore concerns fundamental issues. Such a situation infringes the fundamental 
rights of taxable persons and is at odds with legal certainty and a favourable 
business environment. It would be all the more reprehensible if it were to transpire 
that operators had ultimately to bear the financial cost of the entire situation. 
18 The crucial question is therefore whether taxable persons can bear negative 
consequences in the form of an obligation to pay tax, plus interest, in a situation 
where they have acted in reliance on the law. If it were to transpire that the 
exemption under consideration was not, contrary to such an obligation, notified, 
should they be economically obliged to repay the unlawfully granted aid and thus 
to pay the tax, plus interest, or is such an obligation excluded on the basis of the 
principle of legitimate expectations? 
19 The relevance of a potential judgment of the Court of Justice may therefore be 
very broad and relate to the quality of tax law, the acceptable practices of State 
authorities, and liability for their acts or omissions. Although the Court of Justice 
has repeatedly ruled on State aid, its case-law has not so far covered property tax 
to the extent set out in the question. 
20 The referring court’s uncertainty concerns whether the introduction of the 
exemption in question into the Polish legal order may lead to an imbalance in the 
internal market within the meaning of Article 107(1) TFEU, including as a result 
of the potentially selective nature of that exemption. The case pending before the 
referring court concerns the exemption from property tax, and thus it is possible to 
consider whether it constitutes a type of State aid granted by a Member State, 
which must be accepted by the European Commission, or whether it constitutes a 
simple exemption of an objective nature, which does not fall within the concept of 
State aid. In its view, the exemption is lawful and consistent with EU law, but the 
question arises as to whether it can be applied if the notification obligation has not 
been complied with. 
21 The referring court notes that the interpretation of the term ‘State aid’ may give 
rise to uncertainties as to interpretation on account of the lack of a definition of 
that term in EU law. The Court of Justice’s definition of State aid – based on an 
interpretation of Article 107(1) TFEU – is broad and covers an extensive spectrum 
of measures of State support for undertakings. The case-law of the Court of 
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Justice distinguishes between four criteria for declaring aid (an aid measure) 
incompatible with the internal market. The aid must meet the following 
cumulative conditions: (1) it must take place as part of intervention by the State or 
through State resources; (2) it must constitute an economic advantage for the 
operator concerned; (3) it must be selective in nature; and (4) it must affect trade 
between the Member States and distort or threaten to distort competition. In the 
view of the referring court, it is uncertain whether the latter two conditions are 
satisfied in the present case. 
22 The referring court points out that in the case of the subsequent amendment of 
Article 7 of the Law on the local taxes and charges on 17 November 2021, which 
included railway freight terminals in the tax relief, the Polish legislature 
considered that there is a risk of State aid and, therefore, that notification to the 
European Commission is required. However, the referring court notes in this 
respect that that amendment is targeted at specific operators. It adds that, in 
Poland’s commercial reality, there are so many operators (both private and public) 
which own land on which railway infrastructure is located that the inclusion of 
that infrastructure in the tax relief may undermine the argument as to the selective 
nature of the tax exemption introduced in 2017. It is therefore uncertain whether 
the inclusion of rail infrastructure in the tax exemption entails sectoral aid granted 
to operators which own the property on which such infrastructure is located. 
23 The referring court concludes by stating that there is considerable uncertainty as to 
the potential impact of the exemption in question on competition, notably in view 
of the possibility that that exemption may display selective characteristics (covert 
selectivity). In that situation, it is crucial to determine whether, even if it is likely 
that there is aid as referred to in Article 107(1) TFEU, the draft legislative 
amendments should have been notified and whether the lack of such notification 
makes it impossible to grant the aid under Article 108(3) TFEU. Consequently, it 
is necessary to determine whether, despite the fact that Article 7(1)(1)(a) of the 
Law on local taxes and charges, in the version in force between 2017 and 2021, 
has entered the national legal order, it could, in the absence of notification, 
provide a basis for operators to acquire a right to the exemption.