Appeal brought on 21 July 2021 by the Grand Duchy of Luxembourg against the judgment of the General Court (Second Chamber, Extended Composition) delivered on 12 May 2021 in Joined Cases T-516/18 and T-525/18,

Grand Duchy of Luxembourg and Engie Global LNG Holding and Others v Commission

(Case C-451/21 P)

(2021/C 481/21)

Language of the case: French

Parties

Appellant: Grand Duchy of Luxembourg (represented by: A. Germeaux and T. Uri, acting as Agents, and D. Waelbroeck and J. Bracker, avocats)

Other parties to the proceedings: European Commission, Ireland

Form of order sought

The Grand Duchy of Luxembourg claims that the Court should:

— set aside the judgment of the General Court of the European Union of 12 May 2021 in Joined Cases T-516/18 and T-525/18, Luxembourg and Engie Global LNG Holding and Others v Commission;

— principally, give final judgment in the matter, in accordance with Article 61 of the Statute of the Court of Justice, and uphold the forms of order sought by the Grand Duchy of Luxembourg at first instance by annulling Commission Decision (EU) 2019/421 of 20 June 2018 on State aid SA.44888 (2016/C) (ex 2016/NN) implemented by Luxembourg in favour of ENGIE (OJ 2019 L 78, p. 1);

— in the alternative, refer the case back to the General Court;

— order the Commission to pay the costs incurred by the Grand Duchy of Luxembourg.

Grounds of appeal and main arguments

In support of the appeal, the Grand Duchy of Luxembourg raises four grounds of appeal.

The first ground of appeal alleges infringement of Article 107 TFEU, inasmuch as the General Court confirmed that the two sets of tax rulings at issue conferred a ‘selective’ advantage in the light of the ‘narrow’ reference framework used by the Commission. (i) By accepting the existence of a ‘narrow’ reference framework (namely, the Luxembourg corporate income tax system rules relating to the participation exemption and the taxation of profit distributions), the General Court committed several errors of law. It not only endorsed an incomplete and artificially limited reference framework, but also distorted Luxembourg law by upholding a contra legem interpretation of the provisions at issue. In addition, the judgment under appeal endorses discrimination between cross-border transactions and purely national transactions, inasmuch as it excludes from the reference framework Luxembourg companies with participating interests in companies from other Member States. (ii) The finding of a derogation from the ‘narrow’ reference framework is incorrect. That finding is based on a rewriting of the national law and infringes the case-law of the Court of Justice concerning the analysis of selectivity and in particular the line of case-law requiring discrimination vis-à-vis undertakings in a comparable situation to be shown.

The second ground of appeal alleges infringement of Article 107 TFEU inasmuch as the General Court confirmed the existence of a ‘selective’ advantage on account of the non-application of the Luxembourg provision on abuse of law, and, in the alternative, infringement of Regulation (EU) 2015/1589 (1) and the rights of the defence. (i) The legal classification of ‘selectivity’ by the General Court on account of the non-application of the Luxembourg provision on abuse of law is based on an incorrect premiss and a distortion of the national law. Contrary to what the General Court states, recourse to a ‘direct’ ZORA would have led to the same taxable result. (ii) The General Court’s reasoning concerning the determination of the reference framework is vitiated by several errors of law and flaws in the reasoning. (iii) The General Court’s reasoning concerning the existence of a derogation is incorrect. The finding that the criteria necessary for the application of the provision on abuse of law were met in the case at hand is based on the incorrect premiss that recourse to a ‘direct’ ZORA would not have led to the same taxable result. The judgment under appeal also infringes Article 107 TFEU, inasmuch as it operates on a presumption of an abuse of law and an absence of non-tax related reasons. The General Court also infringed its obligation to state reasons and failed to carry out a comprehensive assessment of the facts, by disregarding certain facts confirming that an abuse of law could not be established under Luxembourg law. Lastly, the General Court infringed Article 107 TFEU inasmuch as it failed to show that there was any discrimination whatsoever in favour of Engie as compared to companies in a comparable factual and legal situation. (iv) Lastly, in the alternative, the judgment under appeal infringes the rights of defence of the Grand Duchy of Luxembourg.

The third ground of appeal alleges infringement of Articles 4 and 5 TEU. The Grand Duchy of Luxembourg submits that the judgment under appeal restricts the autonomy of the national tax authorities in an area reserved for the competence of the Member States, thus infringing Articles 4 and 5 TEU and the principles governing the division of competences between the Member States and the European Union.

The fourth ground of appeal alleges infringement of Article 296 TFEU, inasmuch as the General Court failed to comply with its obligation to state reasons.

(1) 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 (OJ 2015 L 248, p. 9).