Joined Cases C‑20/15 P and C‑21/15 P

European Commission

v

World Duty Free Group SA and Others

(Appeal — State aid — Article 107(1) TFEU — Tax system — Corporation tax — Deduction — Amortisation of goodwill resulting from acquisitions by undertakings resident for tax purposes in Spain of shareholdings of at least 5% in undertakings resident for tax purposes outside Spain — Concept of ‘State aid’ — Condition relating to selectivity)

Summary — Judgment of the Court (Grand Chamber), 21 December 2016

State aid—Concept—Selective nature of the measure—Measure conferring a tax advantage—Appropriate criterion to establish the selectivity of the measure—Introduction between operators that are in a comparable factual and legal situation of a distinction that is not justified by the nature and general structure of a general tax system

Classification of a national measure as ‘State aid’, within the meaning of Article 107(1) TFEU, requires all the following conditions to be fulfilled. First, there must be an intervention by the State or through State resources. Second, the intervention must be liable to affect trade between the Member States. Third, it must confer a selective advantage on the recipient. Fourth, it must distort or threaten to distort competition. (see para. 53)

So far as concerns the condition relating to the selectivity of the advantage, which is a constituent factor in the concept of ‘State aid’, within the meaning of Article 107(1) TFEU, the assessment of that condition requires a determination whether, under a particular legal regime, the national measure at issue is such as to favour ‘certain undertakings or the production of certain goods’ over other undertakings which, in the light of the objective pursued by that regime, are in a comparable factual and legal situation and which accordingly suffer different treatment that can, in essence, be classified as discriminatory. Further, where the measure at issue is conceived as an aid scheme and not as individual aid, it is for the Commission to establish that that measure, although it confers an advantage of general application, confers the benefit of that advantage exclusively on certain undertakings or certain sectors of activity. (see paras 54, 55)

A measure that confers a tax advantage which, although not involving the transfer of State resources, places the recipients in a more favourable position than other taxpayers is capable of procuring a selective advantage for the recipients and, consequently, constitutes State aid, within the meaning of Article 107(1) TFEU. On the other hand, a tax advantage resulting from a general measure applicable without distinction to all economic operators does not constitute such aid. (see para. 56)

In order to classify a national tax measure as ‘selective’, the Commission must begin by identifying the ordinary or ‘normal’ tax system applicable in the Member State concerned, and thereafter demonstrate that the tax measure at issue is a derogation from that ordinary system, in so far as it differentiates between operators who, in the light of the objective pursued by that ordinary tax system, 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 structure of the system of which the measures form part. Consequently, the appropriate criterion for establishing the selectivity of the measure at issue consists in determining whether that measure introduces, between operators that are, in the light of the objective pursued by the general tax system concerned, in a comparable factual and legal situation, a distinction that is not justified by the nature and general structure of that system. In that regard, it cannot be required of the Commission, in order to establish the selectivity of such a measure, that it should identify certain specific features that are characteristic of and common to the undertakings that are the recipients of the tax advantage, by which they can be distinguished from those undertakings that are excluded from the advantage. All that matters in that regard is the fact that the measure, irrespective of its form or the legislative means used, should have the effect of placing the recipient undertakings in a position that is more favourable than that of other undertakings, although all those undertakings are in a comparable factual and legal situation in the light of the objective pursued by the tax system concerned. (see paras 57, 58, 60, 78, 79)

The fact that the number of undertakings able to claim entitlement under a national measure is very large, or that those undertakings belong to various economic sectors, is not sufficient to call into question the selective nature of that measure and, therefore, to rule out its classification as State aid. Accordingly, the potentially selective nature of a measure is in no way called into question by the fact that the essential condition for obtaining the tax advantage conferred by that measure is that there should be an economic transaction, more particularly an ‘entirely financial’ transaction, for which no minimum investment is required and which is available regardless of the nature of the business of the recipient undertakings. In that context, it cannot be held that a measure whose application does not depend on the nature of the undertakings’ activity is, a priori, not selective. (see paras 80-82)

A tax measure from which solely undertakings that carry out specified transactions benefit, and not undertakings in the same sector that do not carry out those transactions, can be classified as selective, there being no need to assess whether that measure is of greater benefit to large undertakings. Accordingly, where the tax advantage conferred by a measure can be obtained without any minimum investment requirement and where, consequently, the benefit of that measure is not reserved to undertakings having sufficient financial resources, those factors do not preclude the possibility of that measure being classified as selective for other reasons, such as the fact that resident undertakings making acquisitions of shareholdings in companies resident for tax purposes in a Member State cannot obtain that advantage. (see paras 87, 88)