Case T-752/19: Action brought on 5 November 2019 – Inchcape v Commission
Date: 2019-11-05
Institutions: General Court
Subjects: State aid, United Kingdom, control of State aid, corporation tax, equal treatment, foreign enterprise, group of companies, tax avoidance, tax exemption, tax law








C_2020027EN.01005101.xml










27.1.2020   


EN


Official Journal of the European Union


C 27/51






Action brought on 5 November 2019 – Inchcape v Commission
(Case T-752/19)
(2020/C 27/54)
Language of the case: English

Parties


Applicant: Inchcape plc (London, United Kingdom) (represented by: M. Anderson, Solicitor)

Defendant: European Commission

Form of order sought

The applicant claims that the Court should:






—


annul Commission Decision (EU) 2019/1352 of 2 April 2019 on the State aid SA.44896 implemented by the United Kingdom concerning CFC Group Financing Exemption (OJ 2019 L 216, p. 1) in its entirety insofar as it concerns the applicant;










—


alternatively, order that in determining the amount of aid to be recovered, losses, reliefs or exemptions which were available to the applicant at the time when it claimed the Group Financing Exemption, or which would have been available to the applicant at that time had it not claimed the Group Financing Exemption, should in either case be taken into account even if access to those losses, reliefs or exemptions is now time barred under UK law and irrespective of whether or not they are automatic;










—


in any event, order the defendant to pay the applicant’s costs.





Pleas in law and main arguments

In support of the action, the applicant relies on nine pleas in law.






1.


First plea in law, alleging that the defendant has failed to establish that the Group Financing Exemption constitutes an advantage. The applicant argues that the defendant has failed to show that there is an advantage in each case where the Group Financing Exemption has been claimed.










2.


Second plea in law, alleging that there was no intervention by the State or through State resources. The Commission has failed to prove that claiming the Group Financing Exemption has certainly led to a reduction in the UK corporate tax liability.










3.


Third plea in law, alleging that the Group Financing Exemption does not favour certain undertakings or the production of certain goods. The applicant argues that the defendant has erred by (i) defining the reference system too narrowly as the rules in Part 9A of the Taxation (International and Other Provisions) Act 2010 instead of the wider UK corporate tax system; (ii) failing to understand that Chapter 9 of Part 9A of the Taxation (International and Other Provisions) Act 2010 is not a derogation from Chapter 5 thereof; and (iii) failing to recognise that, even if the said Chapter 9 is a derogation from that Chapter 5, it is justified by the nature or general scheme of the said Part 9A.










4.


Fourth plea in law, alleging that the Group Financing Exemption does not affect trade between Member States. The Commission, it is argued, has erred by concluding that the Group Financing Exemption is liable to influence choices made by multinational groups as to the location of their group finance functions and their head office within the EU.










5.


Fifth plea in law, alleging that the Group Financing Exemption does not distort or threaten to distort competition. The Commission, it is asserted, has failed to prove that claiming the Group Financing Exemption has certainly led to a reduction in the UK corporate tax liability.










6.


Sixth plea in law, alleging that recovery of the alleged aid would be contrary to general principles of EU law. The applicant argues that the significant people functions test in Section 371EB of Chapter 5 of Part 9A of the Taxation (International and Other Provisions) Act 2010 lacks legal certainty, the UK had a margin of appreciation to address that uncertainty and that the defendant has breached its duty to carry out a complete analysis of all relevant factors. By ordering the recovery of aid, the Commission has acted contrary to Article 16(1) of Council Regulation (EU) 2015/1589, (1) which prohibits the recovery of aid where recovery would be contrary to a general principle of EU law.










7.


Seventh plea in law, alleging that the selective advantage would be eliminated, and no recovery would be required, if the UK were retrospectively to extend the Group Financing Exemption to upstream lending and third-party lending. The applicant argues that the defendant has failed to acknowledge that taking such action would eliminate any selective advantage (assuming for the moment that there is one) and in such case there would be no unlawful State aid to be recovered under EU law.










8.


Eighth plea in law, alleging that, in determining the amount of the aid to be recovered, losses, reliefs or exemptions which were available to the applicant (whether by way of claim, election, or automatically) at the time when it claimed the Group Financing Exemption, or which would have been available at that time had it not claimed the Group Financing Exemption, should be taken into account even if access to those losses, reliefs or exemptions is now time barred under UK law. The applicant argues that that is the correct interpretation of recital 203 of the contested decision but, insofar as that is not the case, the decision is incorrect because failing to take such losses, reliefs or exemptions into account would lead to over-calculation of the amount of the aid, which would introduce a distortion into the internal market.










9.


Ninth plea in law, alleging that the Commission has failed to substantiate its reasons in relation to the qualifying resources exemption and the matched interest exemption and to carry out a complete analysis of all relevant factors. The applicant argues that the defendant has failed to distinguish between three separate exemptions under Chapter 9 of Part 9A of the Taxation (International and Other Provisions) Act 2010, which function independently, and to understand that the qualifying resources exemption and the matched interest exemption are not proxies for the significant people functions test and that the existence of the matched interest exemption in Chapter 9 demonstrates that the defendant has erred by defining the reference system too narrowly as the rules in the said Part 9A instead of the wider UK corporate tax system.






(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).