Keywords

Summary



Keywords

1. State aid – Definition – Selective nature of the measure

(Art. 87(1) EC)

2. State aid – Definition – Selective nature of the measure – Measures adopted by an infra-State body

(Art. 87(1) EC)

Summary

1. When examining whether a measure is selective, it is essential to determine the reference framework and that framework is not necessarily defined within the limits of the national territory concerned.

Accordingly, in order to determine whether a measure, adopted by an infra‑State body and seeking to fix in only one part of the territory of a Member State a lower tax rate than that which is applicable in the rest of that Member State, is selective, it is appropriate to examine whether the measure was adopted by that body in the exercise of sufficiently autonomous powers in relation to the central power and, if so, to investigate whether it applies to all undertakings established in or to all production of goods carried out on the territory falling within the competence of that body.

In the situation where a regional or local authority adopts, in the exercise of sufficiently autonomous powers in relation to the central power, a tax rate lower than the national rate and which is applicable only to undertakings present in the territory within its competence, the legal framework appropriate to determine the selectivity of a tax measure may be limited to the geographical area concerned where the infra-State body, in particular on account of its status and powers, occupies a fundamental role in the definition of the political and economic environment in which the undertakings present on the territory within its competence operate. In that regard, that fundamental role is the consequence of the autonomy and not a precondition for that autonomy. Where an infra‑State body is sufficiently autonomous, in other words, when it has autonomy from the institutional, procedural and economic points of view, it plays a fundamental role in the definition of the political and economic environment in which the undertakings operate.

In order for a decision taken in such circumstances to be regarded as having been adopted in the exercise of sufficiently autonomous powers, it must first have been adopted by a regional or local authority with, from a constitutional point of view, a political and administrative status which is distinct from that of the central government. That autonomy requires that the infra‑State body assume responsibility for the political and financial consequences of a tax reduction measure. That cannot be the case where the body is not responsible for the management of a budget, in other words, where it does not have control of both revenue and expenditure. Next, the decision must have been adopted without the central government being able to intervene directly as regards its content, even if such procedural autonomy does not preclude the establishment of a conciliation procedure in order to avoid conflicts, provided that the final decision taken at the conclusion of that procedure is adopted by the infra‑State body and not by the central government. Finally, the financial consequences of a reduction of the national tax rate for undertakings in the region must not be offset by aid or subsidies, declared or resulting only from the actual examination of the financial flows from other regions or central government.

(see paras 46-51, 55, 67, 96, 133, 107, 123, 135, 144, operative part)

2. When examining whether an infra‑State body has sufficient autonomy for it to be possible to consider that the provisions favourable to undertakings established on its territory which it adopts must be treated as general rules and, therefore, as not fulfilling the condition of selectivity necessary for the identification of State aid, it is necessary to take into consideration the provisions of national law fixing the extent of that body’s competences, as those provisions are interpreted and enforced by the national courts, bearing in mind that the fact that that body is, in the exercise of those competences, under the control of the court, as is the case in all States governed by the rule of law, is not relevant for the purpose of measuring its degree of autonomy.

(see paras 77-83, operative part)