Case C-547/23 P: Appeal brought on 29 August 2023 by the Região Autónoma da Madeira against the judgment of the General Court (Fifth Chamber) delivered on 21 June 2023 in Case T-131/21, Região Autónoma da Madeira v Commission
Date: 2023-08-29
Institutions: Court of Justice
Subjects: Madeira, Portugal, State aid, control of State aid, corporation tax, job creation, profit, regional aid, reimbursement of aid, tax exemption, tax relief








C_202300208EN.000101.fmx.xml












Official Journal of the European Union


EN
Series C













C/2023/208


23.10.2023





Appeal brought on 29 August 2023 by the Região Autónoma da Madeira against the judgment of the General Court (Fifth Chamber) delivered on 21 June 2023 in Case T-131/21, Região Autónoma da Madeira v Commission
(Case C-547/23 P)
(C/2023/208)
Language of the case: Portuguese

Parties


Applicant: Região Autónoma da Madeira (represented by: M. Gorjão-Henriques and A. Saavedra, advogados)

Other party to the proceedings: European Commission

Form of order sought

The applicant claims that the Court should:






—


set aside the judgment of the General Court of 21 June 2023 in Case T-131/21 Região Autónoma da Madeira v Commission;










—


order the European Commission to pay all the costs of the proceedings, including those of the Região Autónoma da Madeira.





Pleas in law and main arguments







1.



Error of law consisting of the misinterpretation of the condition relating to the origin of the profits to which the reduction in corporation tax is applied.

The requirement that the profits are to be the result of activities actually and materially carried on in Madeira must not be interpreted as excluding from operating aid (that is to say, the reduction in corporation tax) activities carried on outside Madeira which, allegedly because of this fact, are not affected by additional costs associated with remoteness, even if they are carried on by companies licensed in Madeira engaged in international activities.










2.



Errors of law due to a misinterpretation of the condition concerning the origin of the profits and/or a failure to state reasons and/or distortion of evidence — the notification of the proposed public aid, the Estatuto dos Benefícios Fiscais (Tax Incentives Statute) and the negotiations that preceded Regime III.

The concept of material and actual activity in Madeira coincides with the granting of licences to undertakings in the Zona Franca da Madeira (Madeira Free Zone — ‘the ZFM’), for which reason the judgment under appeal is vitiated by an error of law by interpreting the Commission’s decisions approving Regime III of the ZFM without examining the Portuguese Republic’s notification of the proposed aid scheme and/or the Tax Incentives Statute which implemented Regime III in national legislation and/or the negotiations between the Commission and the Portuguese Republic which preceded the approval of Regime III.










3.



Errors of law consisting of a failure to state reasons or an inadequate statement of reasons and/or distortion of the evidence and/or substitution of the reasoning of the decision — condition relating to the creation/retention of jobs.

The General Court erred in considering that the Commission did not require the Portuguese authorities to use the full-time equivalent (‘FTE’) and annual labour units (‘ALU’) methods. The decision at issue and the preliminary decision to initiate the procedure directly contradict that interpretation.










4.



Error of law involving the misinterpretation of the condition relating to job creation/retention and/or an inadequate statement of reasons.

For the purposes of verifying the criterion for Regime III of the ZFM relating to jobs, the General Court erred in law by applying the methodology for defining jobs in terms of ‘FTE’ and ‘ALU’, given that the concept of job applicable to the ZFM regime is the one derived from national employment legislation.










5.



Error of law in that the judgment under appeal is vitiated by contradictory and/or inadequate reasoning and/or a failure to state reasons and/or a failure to adjudicate.

The Court states that the Commission did not require the Portuguese authorities to use the ALU/FTE methods, but rather, in contradictory terms and/or with inadequate or no reasoning, endorses the Commission’s position regarding the requirement to use those ALU/FTE methods. Furthermore, by failing to rule on the pleas in law for annulment submitted in relation to the interpretation of the criterion relating to jobs, the General Court failed to adjudicate.










6.



Error of law in that the jobs created are to be linked to activities actually and materially carried on in Madeira.

The General Court erred in law by stipulating that a job assigned to activities carried on outside Madeira must always be disregarded.










7.



Error of law in that the national authorities provided the Commission with a method capable of verifying that the jobs actually existed and were permanent for the purposes of Regime III.

The judgment under appeal is vitiated by an error of law in holding that the national authorities did not adopt a method that made it possible to verify that the jobs actually existed and were permanent, since it reaches that conclusion by applying the concepts of ALU/FTE.










8.



Errors of law due to the existence of obstacles to the free movement of workers and the freedom to provide services.

The interpretation by the General Court of the conditions for Regime III of the ZFM is contrary to the principles of free movement of workers and the freedom to provide services, in particular by requiring the pursuit of an actual and material professional activity within Madeira.










9.



Error of law by failing to adjudicate and/or an inadequate statement of reasons or no statement of reasons — failure to examine the pleas in law concerning the infringement of fundamental freedoms

The General Court erred in law by failing to adjudicate and/or not providing an adequate statement of reasons or not providing any statement of reasons by rejecting as inadmissible the pleas in law, put forward by the Região Autónoma da Madeira in its action, relating to the infringement of fundamental freedoms.










10.



Judgment under appeal infringes general principles of EU law

The judgment under appeal infringes the general principles of EU law of legal certainty, legitimate expectations and good administration, in particular in so far as the Commission caused the Região Autónoma da Madeira and the licensed undertakings to entertain legitimate expectations, on account of the lack of clarity of the applicable legal regime and the Commission’s failure, over an extended period without justification, to take a decision in the context of the formal investigation of Regime III of the ZFM.






ELI: http://data.europa.eu/eli/C/2023/208/oj
ISSN 1977-091X (electronic edition)