Case T‑399/11 RENV

Banco Santander, SA

and

Santusa Holding, SL

v

European Commission

(State aid — Provisions concerning corporate tax allowing companies which are tax resident in Spain to amortise the goodwill resulting from the acquisition of shareholdings in companies which are tax resident abroad — Decision declaring the aid to be incompatible with the internal market and ordering its recovery — Concept of State aid — Selectivity — Reference system — Derogation — Difference in treatment — Justification of the difference in treatment — Undertakings benefiting from the measure — Legitimate expectations)

Summary — Judgment of the General Court (Ninth Chamber, Extended Composition), 15 November 2018

State aid — Recovery of unlawful aid — Aid granted in breach of the procedural rules of Article 108 TFEU — Legitimate expectations entertained by the recipients — None save in exceptional circumstances — Legitimate expectation stemming from specific, unconditional and concordant assurances given by the Commission — Publication of the decision to open the formal investigation procedure putting an end to that expectation

State aid — Concept — Selective nature of the measure — Derogation from the general tax system — Justification derived from the nature and general scheme of the system — Criteria for assessment — Measure seeking the achievement of an objective covered by the mechanisms inherent in the general tax system — Whether appropriate — Extent of the burden of proof

State aid — Concept — Selective nature of the measure — Derogation from the general tax system — Differentiation between undertakings in a comparable factual and legal situation — Criteria for assessment — Comparison in the light of the objective pursued by the common tax regime as a whole

State aid — Concept — Selective nature of the measure — Measure conferring a tax advantage — Measure of a general nature applicable without discrimination to all economic operators — Measure not applicable to transactions comparable to those which govern whether it is granted — Measure which may be regarded as selective

State aid — Concept — Selective nature of the measure — Measure conferring a tax advantage — Reference framework for determining the existence of an advantage — Delimitation ratione materiae — Criteria — Existence of a link between the purpose of the measure at issue and that of the reference framework — Comparability of the situations falling under the measure at issue and those falling under the reference framework

In order to classify, in the context of the application of Article 107(1) TFEU, a national tax measure as ‘selective’, the European Commission must, as a first step, identify the common or ‘normal’ tax regime applicable in the Member State concerned and, as a second step, demonstrate that the tax measure at issue is a derogation from that common regime in so far as it differentiates between operators who, in the light of the objective pursued by that common regime, are in a comparable factual and legal situation. The concept of ‘State aid’ does not, however, cover measures that differentiate between undertakings which, in the light of the objective pursued by the legal regime concerned, are in a comparable factual and legal situation, and are, therefore, a priori selective, where the Member State concerned is able to demonstrate that that differentiation is justified since it flows from the nature or general scheme of the system of which the measures form part. As regards the identification of the common national tax regime, that is to say the first step of the aforementioned method, the delimitation ratione materiae of that reference framework is carried out, in principle, in line with the measure considered to constitute aid. In addition to there being a link between the purpose of the measure at issue and that of the normal regime, the examination of whether situations falling under that measure and situations falling under that regime are comparable also enables the scope ratione materiae of that regime to be defined. That comparability is assessed in the light of the objective pursued by the normal regime. The comparability of those situations also enables the finding that a derogation exists where situations which fall under the measure at issue are treated differently from those which fall under the normal regime, even though they are comparable. Thus, an overall reasoning with regard to the first two steps of the aforementioned method mentioned may, in some cases, result in both the normal regime and the existence of a derogation being determined. (see paras 61, 62, 96, 99, 103-105, 107)

As far as concerns State aid, a finding that a national tax measure is selective is not necessarily the result of it being impossible for certain undertakings to benefit from the tax advantage provided for by the measure at issue on account of legal, economic or practical restrictions which prevent the performance of the transaction governing whether that advantage is granted, but may arise merely from the finding that a transaction exists which, although it is comparable to the transaction which governs whether the advantage in question is granted, does not give rise to the right to that advantage. Accordingly, a tax measure may be selective even though any undertaking may freely choose whether to perform the transaction which governs whether the advantage provided for by that measure is granted. (see para. 83)

As far as concerns State aid, in order to assess the condition of selectivity, a measure conferring a tax advantage is capable of constituting its own reference framework where it introduces a clearly defined tax regime which pursues specific objectives and is therefore different from any other tax regime that is applied in the Member State concerned. In such a case, it must therefore be determined whether certain operators are excluded from the scope of the measure whereas, in the light of the objective it pursues, those operators are in a comparable factual and legal situation to that of the operators to which it applies. With regard to a measure which does not introduce a clearly defined tax system, but belongs to a much broader package of laws, it is necessary, by contrast, to rely on the systematic and general nature of the measure in order to identify, where relevant, an autonomous regime which is capable of constituting a reference framework. In that context, it is appropriate to refer, by way of illustration, to the notices adopted by the Commission in this field. (see paras 128, 129, 131, 132)

See the text of the decision. (see paras 144-150)

The concept of ‘State aid’ under Article 107(1) TFEU does not cover measures that differentiate between undertakings which, in the light of the objective pursued by the normal regime, are in a comparable factual and legal situation and are, therefore, a priori selective, where the Member State concerned is able to demonstrate that that differentiation is justified since it flows from the nature or general scheme of the system of which the measures form part. In that connection, a distinction must be made between, on the one hand, the objectives attributed to a tax measure or a particular tax scheme which are extrinsic to it and, on the other hand, the mechanisms inherent in the tax system itself which are necessary for the achievement of such objectives. Consequently, tax exemptions which are the result of an objective that is unrelated to the tax system of which they form part cannot circumvent the requirements under Article 107(1) TFEU. On the basis of such a distinction, a Member State may effectively rely on the principle of fiscal neutrality in order to justify the difference in treatment introduced by a measure conferring a tax advantage to certain undertakings. It is however for the Member State concerned to demonstrate that the derogation from the general tax system is justified. In that regard, a tax derogation cannot be regarded as justified in the light of the principle of fiscal neutrality where the Member State does not demonstrate that that derogation enables fiscal neutrality to be restored or when the measure at issue itself has discriminatory effects. In that context, it is not for the European Commission, when making its decision declaring a measure conferring a tax advantage to be incompatible with the internal market, to determine conditions for the application of the measure at issue which might have made it possible, in certain situations, not to classify it as aid. If an obligation to examine the various economic transactions to which the advantage in question could validly apply without the existence of aid being established was imposed on the Commission, this would result in it amending the content or the conditions for the application of the measure examined and not just defining its geographic or sectoral scope. Such an obligation would result in the Commission exceeding powers devolved upon it by the provisions of the FEU Treaty and those of Regulation No 659/1999 laying down detailed rules for the application of Article [108 TFEU]. (see paras 167, 168, 172, 173, 177, 180-189, 191-200, 207, 213)

See the text of the decision. (see para. 223)

See the text of the decision. (see paras 226, 253)

See the text of the decision. (see paras 242-251)

When a national measure may, rightly, be classified as State aid within the meaning of Article 107(1) TFEU, previous assurances by the European Commission regarding the fact that that measure does not constitute aid cannot be compatible with Article 107(1) TFEU since the concept of State aid corresponds to an objective situation. An infringement of the principle of the protection of legitimate expectations cannot therefore be invoked against a decision of the Commission in so far as that decision classifies that measure as State aid. However, a plea alleging infringement of the principle of the protection of legitimate expectations may effectively be raised against a decision by which the Commission decides that the Member State concerned must abolish a national measure or alter it within a period of time to be determined by the Commission or must order its recovery. The beneficiary of aid may, for the purposes of challenging the lawfulness of a Commission decision in so far as it provides for the recovery of the aid granted, effectively raise before the General Court a plea alleging infringement of the principle of the protection of legitimate expectations and, in that regard, rely on the assurances that the Commission may have given it with regard to the measure at issue not being classified as aid, which necessarily implied that the advantage conferred on it by that measure would not be recovered or would be recovered only in compliance with those assurances. Even if the first sentence of Article 14(1) of Regulation No 659/1999 laying down detailed rules for the application of Article [108 TFEU] provides that, where negative decisions are taken in cases of unlawful aid, the Commission ‘shall decide that the Member State concerned shall take all necessary measures to recover the aid from the beneficiary’, an exception to the obligation to order the recovery of aid that is unlawful and incompatible with the internal market is provided for in the second sentence of Article 14(1), in accordance with which the Commission is not to require the recovery of the aid if this would be contrary to a general principle of EU law. However, the principle of the protection of legitimate expectations is recognised as a general principle of EU law. Moreover, since the second sentence of Article 14(1) of Regulation No 659/1999 is specifically intended to ensure the protection of legitimate expectations, its first sentence cannot be interpreted as precluding the application of the principle of the protection of legitimate expectations. (see paras 264, 265, 272, 274-278)