Appeal brought on 19 April 2016 by GFKL Financial Services GmbH, formerly GFKL Financial Services AG, against the judgment of the General Court (Ninth Chamber) of 4 February 2016 in Case T-620/11 GFKL Financial Services AG v European Commission

(Case C-219/16 P)

(2016/C 222/10)

Language of the case: German

Parties

Appellant: GFKL Financial Services GmbH, formerly GFKL Financial Services AG (represented by: Dr M Schweda, J. Eggers, Dr M. Knebelsberger, Dr F. Loose, Rechtsanwälte)

Other parties to the proceedings: European Commission, Federal Republic of Germany

Form of order sought

The appellant claims that the Court should:

1. set aside the judgment of the General Court of the European Union (Ninth Chamber) of 4 February 2016 in Case T-620/11 in so far as that judgment dismissed the action as unfounded; and annul Commission Decision of 26 January 2011 on State aid C 7/10 (ex CP 250/09 and NN 5/10) implemented by Germany — Scheme for the carry-forward of tax losses in the case of restructuring of companies in difficulty (Sanierungsklausel), (1) document C(2011) 275;

2. in the alternative, set aside the judgment of the General Court of the European Union (Ninth Chamber) of 4 February 2016 in Case T-620/11 in so far as that judgment dismissed the action as unfounded, and refer the case back to the General Court;

3. order the respondent to pay the costs of the proceedings.

Grounds of appeal and main arguments

By its appeal, the appellant contests the characterisation as selective State aid of the restructuring clause (Sanierungsklausel) in Paragraph 8c(1a) of the Law on corporation tax (Körperschaftsteuergesetz; ‘the KStG’).

The appellant founds its appeal on two grounds of appeal:

First ground of appeal: infringement of Article 107(1) TFEU

The restructuring clause is not a selective measure and therefore does not have the character of State aid within the meaning of the first paragraph of Article 107 TFEU.

— The General Court erred in proceeding from the premiss that the derogation in Paragraph 8c(1) of the KStG, under which, in certain cases of acquisitions of a shareholding, losses prima facie capable of being carried forward are extinguished, is part of the system of reference. In reality, that provision provides an exception to the system of reference. The system of reference consists in the general possibility of carrying losses forward into later tax periods.

— The restructuring clause is also of general application in so far as it does not confer any selective advantage. There are significant differences between undertakings in difficulty, which fall under the scope of the restructuring clause, and all other undertakings, in particular those that are economically healthy, so that those two groups of undertakings are not in a comparable situation. Furthermore, with regard to its assessment of equal treatment, the General Court reasoned on the basis of a purely hypothetical situation; the comparable group to which the General Court had regard scarcely occurs in legal reality.

— Nor does the restructuring clause favour ‘certain undertakings or the production of certain goods’. The restructuring clause is potentially open to all undertakings and does not exclude a priori any group of undertakings. Its application is not connected to a ‘specific type’ of undertaking, but to an economic mechanism, namely a ‘restructuring acquisition’.

— The restructuring clause can moreover be justified by the nature and the general aims of the German tax system. It facilitates the implementation of fundamental principles of German corporation tax law, such as the principle of loss carry-forward, the principle of taxation according to economic ability to pay and the general tax purpose of ensuring sustainable tax revenue.

Second ground of appeal: infringement of the principle of the protection of legitimate expectations

The judgment of the General Court infringes the principle of EU law of the protection of legitimate expectations. The alleged character of the restructuring clause as aid was not apparent as such even to the most diligent economic operator. Comparable rules in Germany or other EU Member States have never been objected to by the Commission as contrary to the State aid rules.

(1) OJ 2011 L 235, p. 26.