CELEX: 62008CC0078
Language: en
Date: 2010-07-08
Title: Opinion of Mr Advocate General Jääskinen delivered on 8 July 2010. # Ministero dell’Economia e delle Finanze and Agenzia delle Entrate v Paint Graphos Soc. coop. arl (C-78/08), Adige Carni Soc. coop. arl, in liquidation v Agenzia delle Entrate and Ministero dell’Economia e delle Finanze (C-79/08) and Ministero delle Finanze v Michele Franchetto (C-80/08). # References for a preliminary ruling: Corte suprema di cassazione - Italy. # Reference for a preliminary ruling - Admissibility - State aid - Tax advantages granted to cooperative societies - Categorisation as State aid within the meaning of Article 87 EC - Compatibility with the common market - Conditions. # Joined cases C-78/08 to C-80/08.

OPINION OF ADVOCATE GENERAL
      JÄÄSKINEN
      delivered on 8 July 2010 1(1)
      
      Joined Cases C‑78/08 to C‑80/08
      Amministrazione delle finanze
      Agenzia delle Entrate
      v
      Paint Graphos scarl (C‑78/08)
      
      Adige Carni scrl, in liquidation,
      v
      Ministero dell’Economia e delle Finanze, Agenzia delle Entrate (C‑79/08)
      
      and
      Ministero delle Finanze (C‑80/08)
      
      v
      Michele Franchetto
      (References for a preliminary ruling from the Corte suprema di cassazione (Italy))
      (State aid – Tax advantages for producers’ and workers’ cooperative societies – Concepts of advantage and selectivity)
      1.        In the present cases, the national court has referred to the Court of Justice a number of questions relating mainly to whether
         the national tax regime providing for the exemption of producers’ and workers’ cooperative societies is classifiable as State
         aid within the meaning of Article 87(1) EC. (2)
      
      2.        The questions were referred in the context of three disputes concerning, first, the Italian tax authorities’ refusal to grant
         tax exemptions to the cooperative societies Paint Graphos scarl (‘Paint Graphos’) and Adige Carni scrl (in liquidation) (‘Adige
         Carni’) that were accorded at that time to cooperative societies under Italian law and, secondly, the issue of the personal
         taxation of Mr Franchetto, who challenged the decisions of the national tax authorities to adjust his income tax returns for
         the years 1984 – 1988.
      
      3.        It should be pointed out from the outset that there are serious doubts as to the admissibility of the questions referred.
         Indeed, one of the major difficulties of the present case lies in the contrast between the limited number of facts made available
         to the Court and the breadth of the issues to be addressed, since it is required to examine, in particular, the tax regime
         governing producers’ and workers’ cooperative societies. 
      
      4.        However, if the Court were minded to answer the questions, which would have to be reworded, the present proceedings would
         provide an interesting opportunity to analyse the scope of the concepts of advantage and selectivity in relation to national
         measures providing for the taxation of cooperative societies. In particular, the issues raised would be the application of
         the justification test on the basis of the inherent logic of the national regime and the analysis of the choices made by the
         Italian legislature within the context of the national direct taxation system.
      
      I –  Legal framework 
      A –    European Union law 
      5.        Article 87(1) EC provides as follows:
      
      ‘Save as otherwise provided in this Treaty, any aid granted by a Member State or through State resources in any form whatsoever
         which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall,
         in so far as it affects trade between Member States, be incompatible with the common market.’ 
      
      6.        Article 1 of Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for the application of Article
         93 EC (OJ 1999 L 83, p. 1), is worded as follows:
      
      ‘For the purpose of this Regulation:
      (a)      “aid” shall mean any measure fulfilling all the criteria laid down in Article 92(1) of the Treaty;
      (b)      “existing aid” shall mean: 
      (i) … all aid which existed prior to the entry into force of the Treaty in the respective Member States, that is to say, aid
         schemes and individual aid which were put into effect before, and are still applicable after, the entry into force of the
         Treaty; 
      
      …’ 
      B –    National law 
      7.        The fragmentary information on the case file shows that, at the time of the facts in the main proceedings, Italian cooperative
         societies were subject, first, to the tax on the income of legal persons (l’imposta sul reddito delle persone giuridiche,
         ‘IRPEG’) and, secondly, to local income tax (l’imposta locale sui redditi, ‘ILOR’). Between 1977 and 2004, the general taxation
         of capital companies (3) in Italy was based on the principle of single taxation, which was reflected in the introduction of a tax credit system for
         their members. Under that system, a company was taxed on its profits according to the rate applicable to companies, but the
         profits distributed to members/shareholders were taxed according to the progressive rates applicable to the income of natural
         persons. Members who were entitled to a tax credit corresponding to the tax due from the company were required to pay the
         difference between the rate applicable to the company and the progressive rate applicable to their personal income. (4)
      
      8.        I should add that, according to the case file, a number of specific tax provisions applicable to cooperative societies are
         based on the principle of mutuality, which has the effect of restricting the distribution of the profits or funds of those
         societies to their members.
      
      9.        Article 11, entitled ‘Producers’ and workers’ cooperatives’, of Decree No 601 of the President of the Republic of 29 September
         1973 concerning rules on tax benefits (5) in the version in force from 1984 to 1993 (‘DPR No 601/1973’), stated as follows: 
      
      ‘1.      The income of producers’ and workers’ cooperatives and their consortia shall be exempt from the tax on the income of legal
         persons and local income tax if the total amount of remuneration actually paid to the members who work for the cooperative
         on a continuous basis, including the amounts referred to in paragraph 3, is not less than 60 per cent of the total amount
         of all the other costs, excluding those relating to raw materials and supplies. If the total amount of remuneration is less
         than 60 per cent, but not less than 40 per cent, of the total amount of the other costs, the tax on the income of legal persons
         and local income tax shall be reduced by a half.
      
      2.      In the case of producers’ cooperatives, the provisions of the previous paragraph shall apply, on condition that the members
         satisfy all the requirements laid down for members of workers’ cooperatives in Article 23 of Legislative Decree [No 1577]
         … of the Provisional Head of State of 14 December 1947, as subsequently amended.
      
      3.      For the purpose of calculating the income of producers’ and workers’ cooperatives and their consortia, the sums paid to employee-members
         by way of earnings supplement may be deducted up to the limit of current salaries, plus 20%.’
      
      10.      Article 14, entitled ‘Conditions under which the benefits apply’, of DPR No 601/1973 was worded as follows: 
      
      ‘1.      The tax benefits provided for under this Title shall apply to cooperative societies and their consortia which are governed
         by the principles of mutuality laid down by the laws of the State and are entered in the prefectoral registers or the general
         register of cooperatives.
      
      2.      The requirements for the attainment of the objective of mutuality shall be deemed to be met if the conditions laid down in
         Article 26 of Legislative Decree No 1577of the Provisional Head of State of 14 December 1947, as subsequently amended, are
         expressly set out in the society’s articles of association, without any possibility of derogation, and if those conditions
         have in fact been complied with during the tax period and during the preceding five years or during the period which has elapsed
         since the articles of association were adopted, if less than five years.
      
      3.      The tax authorities, in consultation with the Ministry of Labour or other supervisory bodies, shall determine the conditions
         under which the tax benefits are to apply.’
      
      II –  The facts in the main proceedings and the questions referred 
      A –    Case C‑78/08
      11.      Following checks carried out by the Guardia di Finanza, the tax authorities of the town of Matera issued a notice of assessment
         to Paint Graphos, a cooperative society governed by Italian law, adjusting, for 1993, its income chargeable to IRPEG and ILOR.
         By the same notice, the tax authorities refused to grant Paint Graphos the exemptions provided for under Articles 11, 12 and
         14 of DPR No 601/1973. Following a number of appeals lodged by both Paint Graphos and the Ministero dell’Economia e delle
         Finanze and the Agenzia delle Entrate, the case is currently pending before the referring court. 
      
      B –    Case C‑79/08
      12.      By notice of assessment of 8 June 1999, the Rovigo tax authorities notified Adige Carni, a cooperative society governed by
         Italian Law, that it was no longer entitled to the tax benefits provided under Article 10 et seq. of DPR No 601/1973, of an
         upwards assessment of its taxable income for 1993, and consequent increase in its liability to IRPEG and ILOR. In particular,
         the tax authorities contested the issue of invoices for non-existent transactions, the sum in question being regarded as income
         and, moreover, not accounted for as income by Adige Carni, the tax authorities assuming that it had been distributed to the
         members, in breach of Article 11 of DPR No 601/1973. After a series of appeals, Adige Carni lodged an appeal in cassation,
         alleging inter alia failure to give any or any adequate reasons for refusing the tax exemptions in question.
      
      C –    Case C‑80/08
      13.      The Monfalcone tax authorities adjusted the income tax returns filed by Mr Franchetto for 1984 to 1988 on the ground that,
         as a member of Cooperativa Maricoltori Alto Adriatico r.l., a cooperative society constituted under Italian law, the object
         of which is the cultivation and sale of shellfish, he had traded independently on the market, whereas the cooperative, in
         whose name the purchase and sales invoices were made out, received a commission on each sale for each service rendered and
         distributed the surplus to its members, instead of appropriating it to the reserve established for that purpose. 
      
      14.      The Ministero delle Finanze is seeking the annulment in cassation of the decision of the Commissione Tributaria Centrale (Central
         tax Court), which, without entering into the merits of the grounds relied on by Mr Franchetto, considered that the cooperative
         could not be refused the tax exemptions unless the opinion of the Ministry of Employment – a mandatory requirement – had first
         been obtained. The Ministero delle Finanze alleges, inter alia, infringement of Article 14 of DPR No 601/1973, on the ground that the assessment notice concerned the member of the cooperative
         and not the cooperative itself, and that the opinion of the Ministry of Employment was not therefore required.
      
      D –    The questions referred 
      15.      According to the Corte suprema di cassazione (Italy), in order to verify the compatibility with European Union law of the
         tax advantages granted to cooperative societies as compared with profit-making companies, it is necessary to ascertain whether
         the fact that the operators in question make tax savings constitutes illegal State aid, which would result, by reason of the
         direct effect of Article 88(3) EC, in the national authorities, including the courts, being required to disapply the national
         regime concerned and to order repayment of the aid received. The referring court also questions whether the use of the form
         of the cooperative society constitutes an abuse of rights.
      
      16.      Those are circumstances in which the Corte suprema di cassazione decided to stay the proceedings and to refer the questions
         to the Court, which are worded as follows: 
      
      ‘(1)      Are the tax benefits granted to cooperative societies, pursuant to Articles 10, 11, 12, 13 and 14 of DPR [No 601/1973], compatible
         with the rules on competition and, in particular, are they classifiable as State aid within the meaning of Article 87 EC,
         especially given that the system of monitoring and for the prevention of abuse provided for under Legislative Decree No 1577
         of the Provisional Head of State of 14 December 1947 is inadequate?
      
      (2)      In particular, for the purposes of determining whether the tax benefits at issue are classifiable as State aid, can those
         measures be regarded as proportionate in relation to the objectives assigned to cooperative societies; can the decision on
         proportionality take into consideration not only the individual measure but also the advantage conferred by the measures as
         a whole and the resulting distortion of competition? 
      
      (3)      For the purpose of the answer to the preceding questions, taking account of the fact that the system of monitoring has been
         seriously and further undermined by the reform of company law, above all in relation to cooperatives that are predominantly
         rather than fully mutual, under Law No 311 of 2004 [.] 
      
      (4)      Regardless of whether the tax benefits in question can be classified as State aid, can the use of the legal form of a cooperative
         society, even in cases not involving fraud or deception, be regarded as an abuse of rights, where that form is used solely
         or predominantly in order to achieve a tax saving?’
      
      III –  The proceedings before the Court
      17.      The reference for a preliminary ruling was received at the Registry of the Court on 25 February 2008.
      
      18.      Written observations were submitted by Paint Graphos and Adige Carni, the Italian, Spanish and French Governments, and the
         Commission of the European Communities. 
      
      19.      Paint Graphos, Adige Carni, Mr Franchetto, the Italian, Spanish and French Governments, the Commission and the EFTA Surveillance
         Authority were represented at the hearing, which took place on 11 March 2010. (6)
      
      IV –  The admissibility of the questions referred 
      A –    Observations of the parties
      20.      Paint Graphos, Adige Carni and the Italian Government propose that the Court should declare the questions referred inadmissible.
         In the Commission’s view, the Court should declare that it has no jurisdiction to answer the questions referred by the national
         court. 
      
      21.      Those arguments are based, first, on the lack of sufficient information concerning the legal and factual context of the main
         proceedings and, secondly, the lack of clear reasons pertaining to the relevance of the questions referred. Indeed, the parties
         doubt whether a reply by the Court will be helpful for the purpose of resolving the disputes in the main proceedings and refer
         in this respect to the premature, hypothetical and even fictitious nature of the questions addressed to the Court. 
      
      22.      In any event, according to the Commission and the Italian and Spanish Governments, the first three questions are inadmissible
         in that they refer to national provisions that cannot be applied to the disputes in the main proceedings. The same applies,
         in the Commission’s view, to the fourth question, on the ground that the issue of practices designed to obtain advantages
         under Community law does not arise, since in the present case those advantages are available under national law alone, and
         the Community principle of abuse of rights is not therefore applicable.
      
      23.      Finally, the issue arises as to whether the Commission alone has competence to determine whether State aid is compatible with
         the common market. Thus, in the Commission’s view, the second question is also inadmissible. 
      
      B –    Assessment of the admissibility of the questions referred 
      24.      As a preliminary point, I should point out that considerable doubts arise as to the admissibility of the questions referred
         to the Court for a preliminary ruling in the present proceedings.
      
      25.      First, the succinct wording of the orders for reference does not make it possible to ascertain either the details of the national
         regime in question or the facts of the disputes in the main proceedings. The information supplied by the national court and
         the various items of evidence in the case file provided by the parties which have submitted observations have given rise to
         some confusion as to the substance of the relevant national law. Moreover, the Court has not been given precise information
         on the taxation of forms of entities other than cooperative societies, even though such information is essential for the purpose
         of determining whether situations are comparable, implicit in the concepts of advantage and selectivity, which are crucial
         aspects of the concept of State aid. 
      
      26.      Secondly, it is even more uncertain whether there is a link between European Union law and the cases brought before the national
         court. In view of the subject-matter and nature of the disputes in the main proceedings, it is difficult to see exactly how
         a reply by the Court could be helpful in resolving the disputes pending before the national court. These cases concern the
         validity of the checks carried out by the tax authorities, whereas the questions relate to how tax advantages might be classified
         under Article 87 EC. I note, moreover, that Paint Graphos states that the pending proceedings relate to provisions on verification
         of income, not the nature of tax rates or whether they are compatible with the provisions of Community law. 
      
      27.      Moreover, as regards the case of Mr Franchetto, it must be recognised that the subject-matter of the dispute in question is
         not the taxation of the cooperative concerned but Mr Franchetto’s personal taxation. Contrary to what is stated in the order
         for reference, the cooperative society of which Mr Franchetto was a member does not seem to have been a workers’ cooperative
         as referred to in Article 11 DPR No 601/1973 but a small-scale fisheries cooperative governed by Article 10 of the DPR, the
         scope of which is not explained by the referring court.
      
      28.      Thirdly, the referring court raises the issue of the proportionality of the national measures to the objectives assigned to
         a cooperative society, which appear to be defined under the national legal system. The examination of the criteria for establishing
         a balance between the interests protected by national tax measures and distortions of competition refers to the examination
         of the compatibility of possible State aid with the common market.
      
      29.      Fourthly, the third question takes the form of a reflection or comment which cannot be regarded as a separate question. 
      
      30.      Finally, I note that the fourth question referred falls solely within the ambit of national law, so the Court has no jurisdiction
         to answer it. The national court seeks clarification as to the link between the use of the legal form of a cooperative society
         and the attainment of tax savings. 
      
      31.      In view of the difficulties thus identified, it is sufficient to point out that, according to settled case-law, the Court
         may refuse to rule on a question referred for a preliminary ruling by a national court where it is quite obvious that the
         interpretation of Community law that is sought bears no relation to the actual facts of the main action or its purpose, where
         the problem is hypothetical, or where the Court does not have before it the factual or legal material necessary to give a
         useful answer to the questions submitted to it. (7)
      
      32.      The national court is required to state the precise reasons as to why it has doubts concerning the interpretation and validity
         of certain provisions of European Union law. Thus, the Court has held that it is essential that the national court should
         give at the very least some explanation of the reasons for the choice of the Community provisions of which it seeks an interpretation
         or an assessment as to validity and of the link it establishes between those provisions and the national legislation applicable
         to the dispute. (8)
      
      33.      Moreover, the Court does not have jurisdiction to rule on the compatibility of a national measure with European Union law.
         (9) Nor can it rule on the compatibility of State aid or an aid scheme with the common market, as the assessment of such compatibility
         falls within the exclusive competence of the Commission, subject to review by the Court. (10) Nor does the Court have jurisdiction to give a ruling on the facts in an individual case or to apply the rules of European
         Union law to national measures or situations, since those questions are matters for the exclusive jurisdiction of the national
         court. (11)
      
      34.      In view of the foregoing, the questions referred to the Court should therefore be declared inadmissible in their entirety.
         
      
      35.      However, in the event that the Court considers that it cannot adopt such a radical proposal, I propose to focus this analysis
         on the first question referred. 
      
      36.      It seems that the Corte suprema di cassazione proceeds from the proposition that even if the cooperative societies in question
         were entitled to the exemptions, those societies could not benefit from the tax advantages at issue because they constitute
         illegal State aid. 
      
      37.      By its order for reference, in particular its first question, the national court therefore seeks to provide the Court with
         an analysis of the compatibility of the provisions of the national tax rules on cooperative societies with European Union
         law. In this connection, it discusses at length the development of the Italian tax legislation in question, which is largely
         inapplicable to the disputes in the main proceedings, and also refers to both the case-law of the Court and the various Commission
         notices on the application of the rules on State aid to national tax measures. 
      
      38.      Although the Court has no jurisdiction, under Article 234 EC, to give preliminary rulings on the interpretation of rules pertaining
         to national law, (12) it may provide the national court with an interpretation of European Union law on all such points as may enable that court
         to determine the issue of the compatibility of a national measure with European Union law for the purposes of the case before
         it. (13) As regards State aid, the Court has jurisdiction, inter alia, to give the national court guidance on interpretation in order
         to enable it to determine whether a national measure may be classified as State aid under European Union law. (14)
      
      39.      In the present case, in view of the factual and legal information provided by the referring court, it seems to me prudent
         to take the view that the Court has a minimum of sufficient evidence to enable it to rule, in part, on the reference for a
         preliminary ruling, if the first question is reworded (15) to the effect that the Court is asked to rule on the criteria underlying the concept of State aid, in light of the tax regime
         in question. Following that examination and in the light of the guidance given by the Court, it will be for the referring
         court to decide whether any tax advantage intended for cooperative societies is liable to constitute State aid within the
         meaning of Article 87(1) EC. 
      
      40.      Moreover, in rewording that question, reference should be limited to the national provisions applicable to the disputes in
         the main proceedings. Since the national court confirms in the three orders for reference that it is producers’ and worker’s
         cooperatives which are at issue, I therefore propose to confine the analysis of the first question referred to Article 11
         of DPR No 601/1973. 
      
      41.      Finally, I note that the Court has expressly indicated that, like the Commission, national courts are authorised to interpret
         the concept of State aid. (16) Therefore, where the national court entertains doubts concerning the interpretation of that concept, it is entitled to make
         a reference to the Court. However, the cooperation between the national courts and the Court of Justice should not have the
         effect of disturbing the balance of the powers conferred on the European Union institutions. As regards the examination as
         to compatibility, the role of a national court remains secondary in relation to the Commission’s scope for intervention.
      
      V –  Preliminary observations on cooperative societies 
      A –    The characteristics of cooperative societies and their fiscal treatment
      42.      Cooperative societies are groups of natural or legal persons with a highly personal nature which conform to special operating
         principles, including the principle of democratic structure and control and the fair distribution of the net profits deriving
         from the activities pursued. (17)
      
      43.      The specific nature of cooperatives is characterised by the concept of mutual advantage, which may be attained by two separate
         means, namely immediate advantage or deferred advantage – in other words a dividend. In cooperative societies, it is also
         possible to distinguish between income earned through activity involving members and income earned by trading with third parties.
         (18)
      
      44.      In connection with the cooperative society’s activities involving its members, income is distributed among the members in
         two stages. The immediate advantage takes the form of special terms relating to the price paid or of discounts given on the
         purchases of goods by the member. The deferred advantage is obtained by means of a dividend, which is a sum distributed periodically
         by a cooperative to its members in proportion to their relationship with the cooperative and the capital subscribed. 
      
      45.      The tax system for cooperatives is strictly linked to the structure of their capital and the economic system underlying that
         structure. It is therefore possible to infer from this that cooperative societies operate within a specific legal and economic
         framework. 
      
      46.      The complex question of the tax treatment of the income of cooperative societies is illustrated by the variety of approaches
         adopted in the various Member States. (19) Thus, it has been observed in legal literature that this fiscal ‘heterogeneity’ reflects their civil ‘heterogeneity’ and
         seems to be necessary in order to achieve objectives which, despite the competitive direction that cooperatives have taken,
         are quite distinct from those of profit-making companies. (20)
      
      47.      Hence, under some national schemes, general corporation tax provisions are applied to cooperative societies. (21) Other Member States apply an exemption method reflected, first, in the ‘transparency’ system, which is based on the sums
         earned by the cooperative being attributed to the members, and, secondly, in the fact that the exemption applies solely to
         profits derived from transactions made with members, who are required to pay tax on the income distributed on an individual
         basis. (22) Some national schemes allow the dividend to be deducted from the taxable amount. (23) Finally, there is the possibility of treating the profits distributed to the members as dividends, to which a lower tax rate
         is applied. (24)
      
      48.      Often, the taxation of cooperative societies is linked to a requirement to adopt behaviour specific to cooperatives. Non-compliance
         with this requirement has major tax consequences. Thus, it is not always possible to identify the differences between the
         principles governing taxation of cooperative societies and those governing taxation of capital companies in general, for the
         purpose of establishing whether those differences are based on the objective of promoting cooperatives or on their particular
         nature. (25)
      
      49.      In Italy, producers’ and workers’ cooperatives developed, first, as a form of cooperation between artisans – the first in
         1855 between glass manufacturers in Altare – and, secondly, as a form of organisation bringing together manual workers without
         special skills. The latter form of cooperative was established – the first one in 1883 in Ravenna – in order to improve access
         to employment for members subject to structural or seasonal unemployment, originally mainly in the building and construction
         sector, but more recently in connection with quite a wide range of activities. I note, in this respect, that in Italy there
         is a distinction between producers’ and worker’s cooperatives involved in the agricultural or even fisheries sectors and other
         producers’ and workers’ cooperatives. (26)
      
      50.      In the case in question, the order for reference indicates that, under the provisions of the Italian legal system applicable
         at the time of the facts in the main proceedings, cooperative undertakings enjoyed total or partial exemption from a whole
         range of taxes, in the interest of attaining a specific economic objective, which is identified by Article 45 of the Italian
         Constitution in the social function and mutualist nature of cooperatives. 
      
      51.      It should be noted that, under Article 26 of Legislative Decree No 1577 of the Provisional Head of State of 14 December 1947
         (‘the Basevi Law’), the prerequisites for mutuality were deemed to be met if the cooperative society’s articles of association
         contained the following clauses: first, a prohibition on distribution of dividends exceeding the statutory interest rate applicable
         to the capital actually paid; secondly, a prohibition on distribution of reserves to members during the life-time of the cooperative;
         thirdly, where the cooperative is wound up, a requirement to transfer all the assets, after deduction of the paid up capital
         and any dividends, to associations whose purpose is the advancement of socially beneficial objectives, in accordance with
         the principle of mutuality.
      
      52.      As the national court points out, producers’ and workers’ cooperatives are characterised by the role played by the trader/employee
         member. In those cooperatives, as in the present case, members pursue their own occupational activity within the cooperative
         and the surplus generated by their work may be distributed as additional remuneration. (27)
      
      53.      According to the information supplied by the parties which submitted observations in the present proceedings, a cooperative
         society’s basis of assessment is determined in the same way as that of a non-cooperative undertaking. In principle, a rate
         is levied on the net profit derived from the undertaking’s activities. It should be added that the case file indicates that
         all undertakings are entitled to deduct remuneration paid from their taxable income.
      
      54.      Finally, I note that, in addition to the difficult issues raised by the order for reference, the taxation of cooperative societies
         has been discussed by the parties from a broader perspective than that relating to the exemptions contained in Article 11
         of DPR No 601/1973. The Commission, especially, seems to me to have redefined its position at the hearing, by comparison with
         that adopted in its written observations, by raising the question of the non-taxation of the undistributable reserves of cooperative
         societies under Italian law. 
      
      55.      In that regard, I consider that that question can affect producers’ and workers’ cooperatives only in so far as the cooperative
         concerned has not been able to benefit from the exemptions at issue in the main proceedings. The Court’s assessment should,
         in my view, be confined to the question whether the exemptions provided for in Article 11 of DPR No 601/1973 in respect of producers’ and workers’ cooperatives are liable to satisfy the criteria underlying the concept of State
         aid within the meaning of Article 87(1) EC. 
      
      B –    Article 11 of DPR No 601/1973
      56.      According to Article 11(1) of DPR No 601/1973, the income of cooperatives is exempt from tax if the total amount of remuneration is not less than 60% of the total
         amount of all other costs, excluding those relating to raw materials and supplies. Such exemption is therefore subject to
         it being possible to determine the relationship between the contribution, in terms of the work of its members, and the contribution
         of other production factors – such as the capital and work of third parties – including general expenditure and the costs
         of goods and equipment. By defining such a parameter, it is possible to monitor the relationship between the remuneration
         actually paid and the total amount of all the other costs borne by the cooperative society. (28) Where the amount of remuneration paid is between 60% and 40%, the aforementioned taxes are reduced by half. (29)
      
      57.      Moreover, the tax relief provided for in Article 11(1) of DPR No 601/1973 is applicable only where cooperatives meet the conditions
         laid down in Article 23 of the Basevi Law. 
      
      58.      Article 11(3) of DPR No 601/1973 provides for the deduction from the cooperative’s income of sums paid to employee-members
         by way of earnings supplements up to a limit of the going rate of pay, plus 20%, as those amounts are equivalent to dividends,
         that is the deferred mutualist advantages enjoyed by members. It has therefore been observed in Italian legal literature that
         such a deduction does not constitute a derogation from the common tax rules applied to commercial companies and entities.
         (30)
      
      59.      In my view, that provision establishes a limitation on the possibility of distributing the surplus of the cooperative society
         to members in the form of additional remuneration deductible from the cooperative’s taxable income.
      
      60.      As the Italian Government stated at the hearing, the member receives remuneration for the work done for the cooperative and
         that income is subject to the progressive tax on income. Tax is deducted in respect of the sums paid to members by way of
         additional remuneration in that such sums represent income equivalent to that of a salaried worker. Indeed, the employee-member
         is taxed on such income. (31)
      
      VI –  Classification of a tax regime as State aid
      A –    General criteria underlying the concept of State aid
      61.      The concept of State aid within the meaning of Article 87(1) EC embraces not only positive benefits, such as subsidies, but
         also measures which, in various forms, mitigate the charges which are normally included in the budget of an undertaking and
         which, without therefore being subsidies in the strict meaning of the word, are similar in character and have the same effect.
         (32)
      
      62.      It follows that a measure by which the public authorities grant to certain undertakings a tax exemption which, although not
         involving a transfer of State resources, places the persons to whom the tax exemption applies in a more favourable financial
         situation than other taxpayers constitutes State aid within the meaning of Article 87(1) EC. (33)
      
      63.      With regard to cooperative societies, as is apparent from the Commission Communication of 23 February 2004, (34) some Member States, including the Italian Republic, consider that the restrictions inherent in the special nature of cooperative
         capital merit special tax treatment. The Commission has therefore called upon the Member States to observe the principle that
         any protection or benefit afforded to a particular type of entity should be proportionate to any legal constraints, social
         added value or limitations inherent in that form and should not lead to unfair competition.
      
      64.      The Court has held on numerous occasions that the objective pursued by State measures is not sufficient to exclude those measures
         outright from classification as ‘aid’ for the purposes of Article 87 EC. (35) Article 87(1) EC does not distinguish between the causes or the objectives of State aid, but defines them in relation to
         their effects. (36)
      
      65.      The adoption of this relatively simple approach nevertheless gives rise to difficulties in the context of taxation of undertakings
         with varying legal forms. In the case of small- or medium-sized undertakings, virtually identical activities may be exercised
         in the form of a partnership, (37) a profit-making capital company, (38) a cooperative society or even an individual undertaking without legal personality. 
      
      66.      In this respect, I note that although the types of the legal forms taken by undertakings is broadly comparable between the
         Member States, there are significant differences regarding, in particular, the concept of the legal personality, or even the
         legal capacity, (39) of undertakings. 
      
      67.      The taxation of different legal forms may be based on the traditional principle of double taxation, where the undertaking
         and the owner are taxed in respect of the income generated by the economic activity. On the other hand, in single taxation
         systems, either the undertaking is taxed in respect of all income from such activity, the income distributed to members being
         exempt from tax, or the member is taxed, in which case the undertaking is not liable to tax. Clearly, there are several variants
         that combine certain aspects of these models.
      
      68.      Thus, in identifying the key concepts of advantage and selectivity in the context of the choices made by the national legislature
         in adopting tax law provisions, there is a certain danger of apparent conceptual clarity, which, in reality, may make the
         analysis of the difficulty at issue more obscure. 
      
      69.      Above all, I should like to add that the existence of a justification based on the nature or general scheme of the tax system
         seems to me to be relevant for the purposes of the consideration of both the concept of advantage and that of selectivity.
         
      
      70.      In both cases in question it is necessary to examine the separate treatment provided for within a tax system by comparing
         this to a hypothetical situation in which there is no such treatment, including an assessment of the significance of and reasons
         for such a choice by the national legislature. For reasons of economy of presentation, I have decided to approach the question
         of the existence of an advantage from a somewhat formal viewpoint and to discuss the aspects which, in themselves, might also
         call into question the existence of an advantage in the economic sense, in the context of selectivity.
      
      B –    Advantage 
      71.      It should be noted that an advantage within the meaning of Article 87(1) EC exists only where the measure provides for an
         alleviation of the tax burden as compared with the normal situation provided for in the tax system. The fundamental concept
         in determining whether there is an advantage in a tax regime is therefore that of a general system of taxation. (40)
      
      72.      In that context, in order to be able to determine whether there is an advantage, the general level of taxation to which legal
         persons are subject under a national tax system must be identified. As this is a particularly complex task, it is therefore
         appropriate to examine the situation of the beneficiary undertaking by comparison with other undertakings which are in a legal
         and factual situation that is comparable, in the light of the objective pursued by the measure in question. (41)
      
      73.      Moreover, a distinction should be made conceptually between pure advantage and actual advantage. Although a certain kind of
         tax advantage may be identified, for example in the form of tax relief, it is necessary to examine whether it is not a means
         of precluding the application of one tax provision in favour of another. For instance, a tax exemption may steer the taxation
         of a certain activity towards another regime. (42) The tax benefit may thus be offset or justified by the obligations arising under the legal structure pertaining to a certain
         form of legal person, which negates any advantage in the economic sense. (43)
      
      74.      In the case at issue, Article 11(1) of DPR No 601/1973 wholly or partially exempts the taxable income of a producers’ and
         workers’ cooperative according to the amount of work contributed by the members in generating economic value in the context
         of the cooperative’s activities. The extent of the exemption is determined approximately. The aforementioned provision does
         not govern deductions from the members’ remuneration that must actually be paid, as such deductions are governed by the general
         provisions applicable to the calculation of the taxable income of a legal person.
      
      75.      Consequently, if the Court opted for a formal approach, the exemption in question would undoubtedly constitute an advantage.
         By way of exception to the rule generally applicable to legal persons, the taxable income of the cooperative societies concerned
         is exempt.
      
      76.      However, I wonder whether such a formal approach is justified from the viewpoint of the analysis of the economic effects of
         the provision in question. 
      
      77.      Indeed, it goes without saying that the application of uniform rules to the various forms of undertaking is impossible without
         making arbitrary assumptions concerning the taxation of the economic factors contributing to the generation of income. In
         the area of fiscal policy, the Member States have considerable scope for discretion as to the choice and extent of taxation
         of production factors. (44)
      
      78.      Nevertheless, from the economic point of view, the exemption provided for by Article 11(1) of DPR No 601/1973 does not seem
         to me to constitute an advantage of the kind referred to in Article 87(1) EC. It is apparent from the case‑file that the general
         system of taxation of legal persons is not intended to apply, apart from certain exceptions, to undertakings adopting the
         principle of mutuality. It seems to me that, where the general rules on taxation of legal persons are applied to cooperative
         societies, those rules are designed to regulate the relevant factors in determining the basis of assessment and the calculation
         of taxable income. However, definitive taxation is subject to derogations that apply to all cooperatives, to certain types
         of cooperatives or to certain sectors. Thus, the general regime would be applicable, in its entirety, to a cooperative society
         only where such a cooperative did not fulfil the criteria laid down by the strict provisions concerning its mutualist nature,
         in other words, where it did not act in a manner that is required of cooperatives. 
      
      C –    Selectivity 
      79.      Article 87(1) EC prohibits State aid ‘favouring certain undertakings or the production of certain goods’, that is to say,
         selective aid. In order to determine whether a measure is selective, it is necessary to examine whether, in the context of
         a particular legal system, that measure constitutes an advantage for certain undertakings in comparison with others which
         are in a comparable legal and factual situation. (45) The condition of selectivity is a constituent factor of the concept of State aid. (46)
      
      80.      Although it has a very rich case-law, the concept of selectivity is not unambiguously defined, especially in respect of tax
         measures. 
      
      81.      As is apparent from the Commission’s notices, the fact that some firms or some sectors benefit more than others from some
         of these tax measures does not necessarily mean that they are caught by the competition rules governing State aid. (47) The measures may, on the other hand, prove to be selective without being formally limited to certain sectors. (48) Thus, measures open to all sectors may, none the less, be regarded as selective where the eligibility criteria for such measures
         in practice restrict the potential number of recipients. (49)
      
      82.      Indeed, according to the case-law, first, aid in the form of an aid programme may concern a whole economic sector and still
         be covered by Article 92(1) of the EC Treaty (now, after amendment, Article 87(1) EC) and, secondly, a measure designed to
         give the undertakings of a particular industrial sector a partial reduction of the financial charges arising from the normal
         application of the general social security system, without there being any justification for this exemption on the basis of
         the nature or general scheme of this system, must be regarded as aid. (50)
      
      83.      According to the wording of Article 87(1) EC, aid favouring certain undertakings or the production of certain goods is incompatible
         with the common market. However, the Treaty remains silent as to the criterion of the legal form of the legal person.
      
      84.      Admittedly, recourse to a certain model of legal person may be characteristic of a specific sector or a specific undertaking.
         In that case, the criteria of the form of the legal person and the Treaty criteria whereby a measure is prohibited if it favours
         certain undertakings or certain sectors come together or rather merge into each other. (51)
      
      85.      In the case giving rise to the judgment in Cassa di Risparmio di Firenze and Others, (52) the Commission maintained that, by favouring certain undertakings on account of their legal form (foundations or legal persons
         governed by public law) and certain specific sectors (education, public health, etc.) in which they operate, the national
         legislation prima facie satisfied the criterion of selectivity.
      
      86.      The Court pointed out that the measure in question did not apply to all economic operators. It could not therefore be considered
         to be a general measure of tax or economic policy (53) as the tax advantage concerned was accorded on account of the undertaking’s legal form, a legal person governed by public
         law or a foundation, and of the sectors in which that undertaking carries on its activities. The Court stated that the derogation
         was not based on the measure’s logic or the technique of taxation, but resulted from the national legislature’s objective
         of financially favouring organisations regarded as socially deserving. (54)
      
      87.      Such an approach based on the legal form of an undertaking must not therefore be regarded as a rule that brooks no exception.
         I conclude from this that tax measures geared to the form and structure of the legal person could be classified as non-selective
         in so far as they are justified by the nature or overall structure of the system. 
      
      88.      Indeed, the Court has interpreted the concept of State aid as not referring to measures that differentiate between undertakings
         in respect of charges where that differentiation arises from the nature or the overall structure of the system of charges
         in question. (55) In that case, classification as State aid can be ruled out. 
      
      89.      As regards the field of taxation, according to case-law, a measure which creates an exception to the application of the general
         tax system may be justified by the nature and overall structure of the tax system if the Member State concerned can show that
         that measure results directly from the basic or guiding principles of its tax system. In that connection, a distinction must
         be made between, on the one hand, the objectives attributed to a particular tax scheme which are extrinsic to it and, on the
         other hand, the mechanisms inherent in the tax system itself which are necessary for the achievement of such objectives. (56)
      
      90.      In practice, the Commission has accepted that justification may be found in the nature and overall scheme of the system where
         the tax is progressive in nature, where there is no taxation in the absence of profits, and where non-profit making organisations
         receive special treatment. (57) This was also the case with agricultural land which benefited from exemptions or tax relief in relation to the land tax regime
         applicable under ordinary law. (58) Thus, the advantage was justified by the special role of the landowner in agricultural production. 
      
      91.      The Court has accepted a justification based on the nature and general scheme of the national system of taxation of insurance,
         in the particular context in which the higher rate of tax was applied to a specific part of insurance contracts previously
         subject to the standard rate. (59)
      
      92.      The difficulty raised by the criterion of the nature or overall structure of the system lies, however, in the fact that, where
         the Court considers that the measure differs from the general national tax system, the measure is classified as selective.
         This case-law thus leads to a situation in which no measure can be regarded as justified by the nature or overall structure
         of the system. (60)
      
      93.      What matters in this regard are not, in fact, the objectives of the measure but the inherent logic of the national tax system.
      
      94.      Article 11 of DPR No 601/1973 is a complex measure incorporating a number of tax approaches designed to introduce tax treatment
         that is specific to producers’ and workers’ cooperatives. (61)
      
      95.      Although this measure appears at first sight to constitute a derogation, it clearly does not follow that the tax advantages
         accorded to producers’ and workers’ cooperatives are selective. On the contrary, it seems to me that, when one considers the
         ‘transversal’ nature of those cooperatives, that is, the variety of sectors in which they may be active, the selective nature
         of the measure in question is debatable. In any event, on the assumption that the system of exemptions for those societies
         is a priori selective, it may be justified by the overall structure and nature of the system. 
      
      96.      In this regard, I note that, according to case-law, (62) the condition of selectivity is satisfied if the measure favours certain undertakings by comparison with others which are
         in a comparable legal and factual situation, even though the aid covers a whole economic sector. 
      
      97.      For this purpose, it is necessary, first, to determine whether cooperative societies pursuing an objective based on mutuality
         and other for-profit undertakings are in a comparable situation. Then, the situation of a producers’ and worker’s cooperative
         must be compared, if Article 11 of DPR No 601/1973 were applied, with that of other for-profit undertakings and other cooperative
         societies. 
      
      98.      In its written observations, the Commission argued that producers’ and workers’ cooperatives conforming to the pure mutualist
         model and for-profit undertakings are not in a comparable legal and factual situation, as regards sums paid to employee-members
         by way of remuneration, including any remuneration supplements. 
      
      99.      Its view on this point was shared by the French Government, which states that it is logical not to treat companies that distribute
         their profits to their members in the same way as other entities such as cooperatives which, because of their articles of
         association, cannot make such distributions. 
      
      100. As the representative of Adige Carni pointed out at the hearing, participation by shareholders or members in a capital company
         is limited to contributing capital. On the other hand, a trading relationship or one based on the principle of mutuality is
         typical of a cooperative society. The difference in tax treatment is based on the difference between these relationships.
         Moreover, after pointing out that the issue was not one of double taxation, the representative of Adige Carni stated that,
         in accordance with the general scheme of the tax system applicable at the time of the facts in the main proceedings, the national
         regime’s objective was single taxation of income, whereby either the cooperative, or the member, was taxed. 
      
      101. I note that the exemption provided for by Article 11 of DPR No 601/1973 seems to result in the non-taxation of the exempt
         income as regards both the members and the cooperative society. The general tax regime for legal persons applies only where
         the cooperative society does not fulfil conditions specific to cooperatives. 
      
      102. Under the rules applicable at the time of the facts in the main proceedings, the essential difference between a for-profit
         undertaking and a cooperative society lay in the fact that, in the case of a for-profit undertaking, either the member or
         the undertaking was taxed only in respect of profits, which the shareholders could obtain at a subsequent stage, for example,
         when the dividends were distributed, when the shares were sold or when the undertaking was wound up. It is therefore reasonable
         to regard this as a kind of payment on account of income from capital. 
      
      103. The ideology underlying the concept of ‘shareholder value’ as a guiding principle of for-profit capital companies is based
         on the theory that, in the economic sense, the assets of the company always belong to the members. 
      
      104. By contrast, under the rules governing of mutualist cooperative societies, the members of the cooperative society could never
         obtain that kind of benefit. An advance payment comparable to that which is permissible in respect of capital companies is
         therefore not possible. The accumulation of capital within a cooperative society does not benefit the members. 
      
      105. As regards, in particular, producers’ and workers’ cooperatives, I note that, in accordance with the strict conditions requiring
         compliance with the principle of mutuality, Article 11(1) of DPR No 601/1973 is intended to exclude from the scope of the
         exemption available under that provision producers’ and workers’ cooperatives whose taxable income is generated by production
         factors other than the work of the members who are required to participate in the society’s activities by contributing their
         work on a continuous basis. (63) On the other hand, in so far as the income of a producers’ and worker’s cooperative society may be regarded as being generated
         by the work contribution of its members, that income is not taxed. 
      
      106. It is difficult to imagine such a situation in the case of profit-orientated legal persons subject to general tax rules since,
         first, their members are not obliged to work for the undertaking and, secondly, the profits of such an undertaking can be
         distributed to its members. 
      
      107. Finally, I wish to draw the Court’s attention to the problematic nature of one aspect of the comparison of the situation of
         capital companies and that of producers’ and workers’ cooperatives. This aspect seems to me to be particularly relevant in
         view of the position adopted by the Commission, which maintained at the hearing that, since the member is not liable to tax,
         the tax should be levied on the profits of the cooperative in order to avoid the measure in question being classified as State
         aid. 
      
      108. As I remarked above, Article 11 of DPR No 601/1973 attempts to draw a schematic distinction between ‘internal’ or mutualist
         income generated by the work of members and ‘external’ income derived from capital or relations with non-members, the latter
         not being covered by the exemption. Indeed, surpluses generated by other production factors which correspond to the operating
         profits actually made by the cooperative society are not covered by Article 11 of DPR No 601/1973. 
      
      109. It should be pointed out in this respect that, in most cases, a member’s contribution to the capital of a company is not,
         in a capital company, taxable income for the company, whereas the company is taxed on the profits, such as the yield from
         that capital. Moreover, a contribution to a company in the form of a contribution in kind, such as work, is normally not taken
         into account in the case of capital companies. 
      
      110. In a producers’ and workers’ cooperative society, one of the members’ main obligations is to contribute work on a continuous
         basis. The social added value generated by the work of a member of the cooperative society that exceeds the remuneration paid
         to the member remains with the society. Economically, that part of the surplus which is not paid out and which the member
         must leave as part of the assets of the cooperative takes the form of a capital contribution. Following this logic, the society
         must be exempt from tax in respect of that part. 
      
      111. In view of all the foregoing, the tax regime for producers’ and workers’ cooperative societies, as provided for in particular
         by Article 11 of DPR No 601/1973, cannot be regarded as selective, since those societies were not in a situation comparable
         with that of for-profit companies or other cooperative societies. 
      
      112. In any event, the rules in question can be explained by the nature or general scheme of the national tax system applied in
         the context of producers’ and workers’ cooperatives. The tax relief accorded to producers’ and workers’ cooperative societies
         seems to me, in fact, to result directly from the basic and guiding principles of the Italian tax system. 
      
      113. In my view, as at least one of the criteria underlying the concept of State aid is not met in this case and since those criteria
         are cumulative in nature, there is no need to examine the other criteria laid down in Article 87(1) EC. 
      
      114. On the other hand, if the Court were not minded to adopt my proposal, it would be necessary to study the issues relating to
         the condition requiring that trade between Member States be affected and the condition requiring possible distortion of competition.
         In this regard, I consider that the case-law of the Court provides sufficient guidance to the national court. (64) In any event, it will be for the national court to determine, in the light of the guidance on interpretation to be found
         in the case-law, whether the two aforementioned conditions are met in this case. 
      
      115. However, the issue of possible existing aid and that of the applicability of the de minimis principle remain to be considered. 
      
      VII –  The concept of existing aid and the de minimis principle
      A –    The concept of existing aid
      116. According to case-law, the concept of State aid, whether existing or new, corresponds to an objective situation. That concept
         cannot depend on the conduct or statements of the institutions. (65)
      
      117. In their written observations, the Italian Government, Paint Graphos and Adige Carni argued that the special tax measures
         intended for cooperative societies are ‘existing aid’, as they were already provided for by the Italian legislation applicable
         before the entry into force of the Treaty of Rome in 1957. (66)
      
      118. The Italian Government stated that the legislation applicable before the entry into force of the Treaty of Rome in 1957 provided
         for a tax regime which, in essence, completely exempted cooperative societies from the tax normally applicable to for-profit
         companies, although the exemption was of course available only to cooperatives pursuing an objective based on mutuality, in
         accordance with the principle established at that time by the Basevi Law. (67)
      
      119. As the Commission also stated, under the Italian legal system since 1957, cooperative societies have been able to exclude
         all of the percentage of annual profits from the taxable amount, an advantage which, in overall terms, has steadily diminished
         since that date. The Commission’s departments have also established that the amendments made to the measures in question since
         the entry into force of the EEC Treaty were designed to introduce technical modifications in order to adapt the tax scheme
         for cooperatives to the general system of taxation that was amended following the reforms of 1973, 1986 and 2004.
      
      120. At the hearing, Adige Carni, Paint Graphos, the Italian Government and the Commission supported the argument that the measures
         in question, without prejudice to the possibility that they constitute State aid within the meaning of Article 87 EC, are
         existing aid within the meaning of Article 1(1)(b)(i) of Regulation No 659/1999. 
      
      121. At first sight, it therefore seems reasonable to take the view that, if they fulfil the criteria laid down in Article 87(1)
         EC, the measures in question are liable to constitute existing aid. 
      
      122. However, since, first, the 1954 regime (68) taxed both assets and income and, secondly, the regime established by DPR No 601/1973 taxed only income and there were certain
         limits to the application of tax advantages to the capital of a cooperative society, I consider that only the national court
         is in a position to assess, overall, to what extent there may have been continuity between those regimes. In this connection,
         it will be required to verify, in particular, whether the reduction in the tax burden on the date of entry into force of the
         Treaty of Rome was comparable with or greater than that introduced by DPR No 601/1973. Only if that were so would there be
         existing aid in this case. 
      
      B –    The de minimis principle
      123. In its written pleadings, Paint Graphos raised the issue of the de minimis rule. It referred, in this regard, to the various reports and notices of the Commission produced between 1984 and 1993, (69) and argued that, given, first, the rate of corporation tax and, secondly, the thresholds for applying the de minimis principle at the time of the income tax returns at issue, the amount of tax avoided would in any event be lower than the threshold
         in force during the years affected by the adjustments.
      
      124. It should be borne in mind that the de minimis rule is intended to reduce the administrative burden on both the Member States and the Commission, which must be able to
         concentrate its resources on cases that are genuinely important at European Union level. (70)
      
      125. Even if the de minimis rule can be applied to the cooperative societies in question, which, in my view, cannot be ruled out, ascertaining the effect
         of that principle in this case is not a simple matter, especially from the viewpoint of the application of the law ratione temporis.
      
      126. It seems to me that if the national court were to consider that the right to the exemptions was contested and, therefore,
         the cooperatives in question were not in fact entitled to the tax advantages, the question whether the measure is to be classified
         as de minimis aid should be determined in the light of the criteria in force at the time when it was definitively established that it was
         State aid, and any tax advantage arising from it for the undertaking is to be calculated in the light of Regulation No 1998/2006.
         
      
      127. However if the national court were to consider that the cooperatives have already benefited from the exemptions, which, in
         my view, is not possible because the taxes in question have not become definitive in law, the question whether the measure
         constitutes de minimis aid should be determined in the light of the criteria set out in Commission notices which were applicable at the time of
         the facts in the main proceedings. 
      
      VIII –  Conclusion
      128. In view of the foregoing considerations, I propose that the Court should:
      
      –        declare the questions referred by the Corte Suprema di Cassazione inadmissible; 
      –        in the alternative, declare only the first question referred admissible and answer it to the effect that a tax regime for
         producers’ and workers’ cooperative societies which, even though it is based on a broad-brush approach, is intended to exempt
         income corresponding to the surplus generated by the work of the members, such as the regime provided for by Article 11 of
         DPR No 601/1973, in so far as it results directly from the basic and guiding principles of the tax rules for cooperative societies,
         cannot be regarded as State aid within the meaning of Article 87(1) EC.
      
      1 –	Original language: French.
      
      2 –	As the dispute in the main proceedings concerns the interpretation of a decree dating from 29 September 1973, reference
         will be made to the provisions of the EC Treaty according to the numbering applicable before the entry into force of the Treaty
         on the Functioning of the European Union.
      
      3 –	In Italy, cooperative societies are also regarded as capital companies and not, as in several other legal systems of the
         Member States, associations of persons. Originally, before specific rules applicable to cooperatives were adopted in Italy,
         a cooperative society was classified as a company with variable capital. See Klingberg, W., Genossenschaften und Genossenschaftsrecht in Italien, Veröffentlichung des Institut für Genossenschaftswesen an der Philipps‑Universität Marburg, Marburg/Lahn, 1957, p. 49‑50.
      
      4 –	Under to the system currently applicable, capital companies are subject to corporation tax (l’imposta sul reddito delle
         societa, ‘IRES’), which is a proportional tax applied at a fixed rate. Members pay the tax on the income of natural persons
         (l’imposta sul reddito delle persone fisiche), which is a progressive tax on the dividends or profits distributed to them,
         their income being taxed at 40%. A 60% exemption for members’ dividends or profits has therefore been introduced to eliminate
         a series of charges to tax. 
      
      5 –	Ordinary supplement to GURI No 268 of 16 October 1973, p. 3.
      
      6 –	In an annex to the notice to attend the hearing, the parties were requested to focus their oral pleadings on to the question
         whether and, if so, in what circumstances, tax exemptions such as those in question in the main proceedings are liable to
         constitute State aid within the meaning of Article 87(1) EC. A question on the matter of existing aid was also addressed to
         the Italian Government.
      
      7 –	Case C‑343/90 Lourenço Dias [1992] ECR I‑4673, paragraph 20, and Case C‑314/08 Filipiak [2009] ECR I-0000 , paragraph 42 and the case-law cited.
      
      8 –	Case C‑437/97 EKW and Wein & Co [2000] ECR I‑1157, paragraph 52.
      
      9 –	See, inter alia, Case C‑118/08 Transportes Urbanos y Servicios Generales [2010] ECR I-0000, paragraph 23 and the case-law cited. 
      
      10 –	See Case C‑237/04 Enirisorse [2006] ECR I‑2843, paragraph 23.
      
      11 –	See Case C‑451/03 Servizi Ausiliari Dottori Commercialisti [2006] ECR I‑2941, paragraph 69 and the case-law cited.
      
      12 –	Case C‑341/94 Allain [1996] ECR I‑4631, paragraph 11.
      
      13 –	See Enirisorse, paragraph 24, and Transportes Urbanos y ServiciosGenerales, paragraph 23, both cited above.
      
      14 –	See Case C‑140/09 Fallimento Traghetti del Mediterraneo [2010] ECR I-0000, paragraph 24 and the case-law cited.
      
      15 –	Case C‑45/06 Campina [2007] ECR I‑2089, paragraph 30; Case C‑427/06 Bartsch [2008] ECR I‑7245, paragraph 31; and Case C‑350/07 Kattner Stahlbau [2009] ECR I-0000, paragraph 24.
      
      16 –      Case 78/76 Steinike & Weinlig [1977] ECR 595, paragraph 14; Case C‑354/90 Fédération nationale du commerce extérieur des produits alimentaires and Syndicat national de négociants et transformateurs
            de saumon [1991] ECR I‑5505, paragraph 10; Case C‑39/94 SFEI and Others [1996] ECR I‑3547, paragraph 49; and Case C‑368/04 Transalpine Ölleitung in Österreich [2006] ECR I‑9957, paragraph 39.
      
      17 –	Cathiard, C., ‘La société coopérative européenne’, La semaine juridique. Entreprise et affaires. No 1 (2009), pp. 34‑50.
      
      18 –	Bassi, A., Le società cooperative, UTET, Turin, 1995, p. 30. 
      
      19 –	For a survey of taxation of cooperatives in the 12 Member States of the European Union, see Stracke, B., Besteuerung von Genossenschaften in der Europäischen Union, Erich Schmidt Verlag, Bielefeld, 1997. 
      
      20 –	Lolli, R., ‘Social Cooperatives in the Context of Recent Italian Regulation’, Droit comparé des coopératives européennes, Larcier, Luxembourg, 2009, p. 89.
      
      21 –	Alguacil Marí, M.P., ‘Il trattamento fiscale delle cooperative alla luce del regime europeo degli aiuti di Stato’, Rivista di diritto tributario internazionale (International tax law review), 1 (2004), pp. 51‑79. The author identifies in this group Ireland and most cooperatives in Austria and Greece.
      
      22 –	Alguacil Marí, M.P., opus cit., lists in this category, inter alia, the Portuguese Republic as regards of consumer cooperatives, the Federal Republic of
         Germany and the Hellenic Republic as regards agricultural cooperatives and the Italian Republic as regards agricultural and
         fisheries cooperatives. 
      
      23 –	Alguacil Marí, M.P, opus cit., mentions, in particular, Germany, Denmark, Finland and the United Kingdom. 
      
      24 –	Alguacil Marí, M.P, opus cit., mentions, inter alia, in this group the Portuguese Republic and the Kingdom of Spain.
      
      25 –	See Mannio, L., Osuuskunnat ja verotus, Edita, Helsinki, 2004, p. 73.
      
      26 –	On the history of producers’ and workers’ cooperatives in Italy, see Klingberg, W., op cit., pp. 21 to 27. The legislation adopted in 1911 provided for a special regime as regards the distribution of the surplus
         of producers’ and workers’ cooperatives wishing to participate in public works. Ibid. pp. 123 and 124. 
      
      27 –	According to Stracke, the objective of typical producers’ and workers’ cooperatives in the Member States of Southern Europe
         is to improve their members’ access to employment. Their special tax treatment is designed to promote the continuity of such
         cooperatives through the accumulation of common cooperative capital. See Stracke, B., op cit., p. 46. 
      
      28 –	Stillitani, G., ‘La piccola società cooperativa: applicazione delle agevolazioni fiscali’, Sistema Leggi d’Italia, Dottrina,
         2008. See also Stracke, B., op cit., pp. 180 and 181. 
      
      29 –	Mathematically, this amounts to an exemption of 50% of income. 
      
      30 –	Pistolesi, F., ‘Le agevolazioni fiscali per le cooperative’, TributImpresa No 3/2005.
      
      31 –	Article 50 of the consolidated legislation on direct taxes (Testo Unico No 917 of 22 December 1986) indicates that remuneration
         received by employee-members of producters’ and workers’ cooperatives, up to the limit of current salaries, plus 20%, is treated
         as the income of a salaried worker. 
      
      32 –	Case C‑143/99 Adria‑Wien Pipeline and Wietersdorfer & Peggauer Zementwerke [2001] ECR I‑8365, paragraph 38; Case C‑126/01 Gemo [2003] ECR I‑13769, paragraph 28 and the case‑law cited, Case C‑501/00 Spain v Commission [2004] ECR I-6717, paragraph 90 and the case-law cited; Case C‑66/02 Italy v Commission [2005] ECR I-10901, paragraph 77; and Joined Cases C‑182/03 and C‑217/03 Belgium and Forum 187 v Commission [2006] ECR I‑5479, paragraph 86.
      
      33 –	Case C‑387/92 Banco Exterior de España [1994] ECR I‑877, paragraph 14, and Italy v Commission, paragraph 78.
      
      34 –	Communication from the Commission to the Council and the European Parliament, the European Economic and Social Committee
         and the Committee of the Regions on the promotion of cooperative societies in Europe, COM(2004) 18 final.
      
      35 –	Case C‑487/06 P British Aggregates v Commission [2008] ECR I‑10505, paragraph 84 and the case-law cited. 
      
      36 –	British Aggregates, cited above, paragraph 85.
      
      37 –	General partnership, limited partnership. 
      
      38 –	Private limited liability company or public limited liability company/joint stock company.
      
      39 –	Italian law seems to make a distinction between ‘soggettività giuridica’ and ‘personalità giuridica’. See Magrini, P.P.,
         Italienisches Gesellschaftsrecht: das neue Recht und seine erweiterten Aufbau- und Finanzierungsformen, Sellier European Law Publishers, Munich, 2004, p. 8.
      
      40 –	Rossi‑Macanico, P. ‘The specificity criterion in fiscal aid review: proposals for state aid control of direct business
         tax measures’, EC tax review, Vol. 16 (2007), issue 2, p. 91. 
      
      41 –	See, to that effect, Adria‑Wien Pipeline and Wietersdorfer & Peggauer Zementwerke, paragraph 41; Case C‑308/01 GIL Insurance and Others [2004] ECR I‑4777, paragraph 68 and the case-law cited; and Case C‑172/03 Heiser [2005] ECR I‑1627, paragraph 40.
      
      42 –	This appears to be the case with the exemption provided for by Article 10 of DPR No 601/1973 in respect of agricultural
         activities. As is apparent from the pleadings of Paint Graphos, according to the general rules for establishing IRES, the
         actual income of cooperative societies is taxable in its entirety. It follows that a farmer who brings his products to a cooperative
         would remain subject to the tax on the income of natural persons on the basis of cadastral income, because of the simple fact
         that he owns agricultural land, like any other farmer, and the cooperative – and through it, the member – would also remain
         subject to IRES in respect of the income derived from processing, selling, etc. its products, whereas an independent farmer
         does not pay any tax on that type of income. The function of the exemption in question is therefore to rectify this inequality
         of treatment which – if it were not corrected – would completely discourage use of the form of the cooperative as a mode of
         association between farmers. I note, moreover, that the taxation of partnerships is often governed by the aforementioned principle
         of transparency, whereby the partnership is exempt from tax but the partners are taxed in respect of its income regardless
         of whether the income has been distributed or not. 
      
      43 –	Rossi‑Macanico, P., op cit., pp. 92 and 93. The author noted that the distinctions that form part of the logic of the tax system are not exceptions
         and, therefore, do not constitute advantages that have to be justified. 
      
      44 –	In my view, this scope for discretion exists, for example, in respect of the classification of certain parts of the income
         of the owner/member of an undertaking as income from work or capital, or in respect of the adoption of various tax scales.
         
      
      45 –	See British Aggregates, cited above, paragraph 82.
      
      46 –	Case C‑88/03 Portugal v Commission [2006] ECR I‑7115, paragraph 54.
      
      47 –	Commission notice on the application of the State aid rules to measures relating to direct business taxation, (OJ 1998
         C 384, p. 3, paragraph 14, first sentence: ‘Thus, measures designed to reduce the taxation of labour for all firms have a
         relatively greater effect on labour-intensive industries than on capital-intensive industries, without necessarily constituting
         State aid. Similarly, tax incentives for environmental, R&D or training investment favour only the firms which undertake such
         investment, but again do not necessarily constitute State aid.’
      
      48 –      See Commission Decision 2003/755/EC of 17 February 2003 on the aid scheme implemented by Belgium for coordination centres
         established in Belgium (OJ 2003 L 282, p. 25).
      
      49 –	Report on the implementation of the Commission Notice on the application of the State aid rules to measures relating to
         direct business taxation.
      
      50 –	Case C‑75/97 Belgium v Commission [1999] ECR I‑3671, paragraph 33.
      
      51 –	For example, there are legal forms of legal person that are limited and specific to certain economic sectors, such as the
         banking sector and the insurance sector. See paragraph 20 of the Commission notice of 1998.
      
      52 –	Case C‑222/04 [2006] ECR I‑289.
      
      53 –	Ibidem, paragraph 135.
      
      54 –	Ibidem, paragraph 137.
      
      55 –	See British Aggregates, cited above, paragraph 83. 
      
      56 –	Portugal v Commission, cited above, paragraph 81.
      
      57 –	Commission notice of 1998, paragraphs 24 to 27.
      
      58 –	Decisions N/20/2000 (Netherlands) and N53/99 (Denmark) available on the site of the Commission’s General Secretariat. http://ec.europa.eu/competition/elojade/isef/index.cfm?clear=1&policy_area_id=3.
      
      59 –	GIL Insurance and Others. 
      
      60 –	See, to this effect, Lenaerts, K., ‘State Aid and Direct Taxation’, EU competition law in context: essays in honour of Virpi Tiili, 2009, p. 305.
      
      61 –	The measure in question seems to implement an objective of more general scope laid down in Italian tax law aimed at promoting
         capitalisation of cooperative societies and discouraging dividends. See, Stracke, B., op cit. pp. 176 to 183. 
      
      62 –      Belgium v Commission, Adria‑Wien, Pipeline and Wietersdorfer & Peggauer Zementwerke; Heiser, and Italy v Commission.
      
      63 –	Such an obligation is characteristic of partnerships, which, in several Member States, do not constitute independent taxable
         entities but whose income is attributed and taxed in the hands of its members even though that income has not been distributed
         to them. Notwithstanding their separate legal personality, cooperative societies possess several features characteristics
         of partnerships. See Stracke, op cit., pp. 16 to 19, and Mannio, op cit., p. 69. 
      
      64 –	See Cassa di Risparmio di Firenze, cited above, paragraphs 140 and 141.
      
      65 –	Case C‑89/08 P Commission v Ireland and Others [2009] ECR I-0000, paragraph 72.
      
      66 –	See Article 1(b)(i) of Council Regulation No 659/1999.
      
      67 –	Until 2003, that law governed the tax provisions designed to verify compliance with the mutuality requirements, which was
         a necessary condition for the application of the special tax measures benefiting cooperative societies.
      
      68 –	Law No 603, of 6 August 1954, Istituzione di una imposta sulle società e modificazioni in materia di imposte indirette
         sugli affari, GURI n° 182, of 11 August 1954.
      
      69 –	See the 14th Report on Competition Policy – 1985, paragraph 203, in fine, and the Commission notice of 6 March 1996 on the de minimis rule for State aid (OJ 1996 C 68, p. 9).
      
      70 –	Case C‑310/99 Italy v Commission [2002] ECR I‑2289, paragraph 94.