European Commission (C-106/09 P) and Kingdom of Spain (C-107/09 P) v Government of Gibraltar and United Kingdom of Great Britain and Northern Ireland.
Date: 2011-11-15
69. In those circumstances, the Commission’s complaint against that reference to the notice relating to State aid in the field of taxation is ineffective (see, to that effect, Case C-182/99 P Salzgitter  v Commission  [2003] ECR I-10761, paragraphs 54 and 55), and so it is unnecessary to consider the content and scope of that notice at this stage.
71. According to settled case-law, the definition of aid is more general than that of a subsidy, given that it includes not only positive benefits, such as subsidies themselves, but also State measures which, in various forms, mitigate the charges which are normally included in the budget of an undertaking and which thus, without being subsidies in the strict sense of the word, are similar in character and have the same effect (see Case C-143/99 Adria-Wien Pipeline and Wietersdorfer & Peggauer Zementwerke  [2001] ECR I-8365, paragraph 38, and Joined Cases C‑78/08 to C-80/08 Paint Graphos and Others [2011] ECR I‑0000, paragraph 45 and the case-law cited).
72. Consequently, a measure by which the public authorities grant certain undertakings favourable tax treatment which, although not involving the transfer of State resources, places the recipients in a more favourable financial position than other taxpayers amounts to State aid within the meaning of Article 87(1) EC (see Case C-387/92 Banco Exterior de España  [1994] ECR I-877, paragraph 14, and Paint Graphos and Others , paragraph 46 and the case-law cited).
73. On the other hand, advantages resulting from a general measure applicable without distinction to all economic operators do not constitute State aid within the meaning of Article 87 EC (see, to that effect, Case C‑156/98 Germany  v Commission  [2000] ECR I‑6857, paragraph 22, and Joined Cases C‑393/04 and C‑41/05 Air Liquide Industries Belgium [2006] ECR I‑5293, paragraph 32 and the case-law cited).
74. It is therefore necessary to determine whether the proposed tax reform is selective, selectivity being a constituent factor in the concept of State aid (see Case C‑88/03 Portugal  v Commission  [2006] ECR I‑7115, paragraph 54).
75. As regards appraisal of the condition of selectivity, it is clear from settled case-law that Article 87(1) EC requires assessment of whether, under a particular legal regime, a national measure is such as to favour ‘certain undertakings or the production of certain goods’ in comparison with others which, in the light of the objective pursued by that regime, are in a comparable factual and legal situation ( Adria-Wien Pipeline and Wietersdorfer & Peggauer Zementwerke , paragraph 41, and Case C‑487/06 P British Aggregates  v Commission  [2008] ECR I‑10515, paragraph 82 and the case-law cited).
87. First, it is appropriate to recall that the Court has consistently held that Article 87(1) EC does not distinguish between measures of State intervention by reference to their causes or their aims but defines them in relation to their effects, and thus independently of the techniques used (see British Aggregates  v Commission , paragraphs 85 and 89 and the case-law cited, and Case C‑279/08 P Commission  v Netherlands  [2011] ECR I‑0000, paragraph 51).
90. The Court admittedly held in paragraph 56 of Portugal  v Commission that the determination of the reference framework has a particular importance in the case of tax measures, since the very existence of an advantage may be established only when compared with ‘normal’ taxation.
91. However, contrary to the General Court’s reasoning and the proposition put forward by the Government of Gibraltar and the United Kingdom, that case-law does not make the classification of a tax system as ‘selective’ conditional upon that system being designed in such a way that undertakings which might enjoy a selective advantage are, in general, liable to the same tax burden as other undertakings but benefit from derogating provisions, so that the selective advantage may be identified as being the difference between the normal tax burden and that borne by those former undertakings.
92. Such an interpretation of the selectivity criterion would require, contrary to the case-law cited in paragraph 87 above, that in order for a tax system to be classifiable as ‘selective’ it must be designed in accordance with a certain regulatory technique; the consequence of this would be that national tax rules fall from the outset outside the scope of control of State aid merely because they were adopted under a different regulatory technique although they produce the same effects in law and/or in fact.
93. Those considerations apply particularly with regard to a tax system which, as in the present case, instead of laying down general rules applying to all undertakings from which a derogation is made for certain undertakings, achieves the same result by adjusting and combining the tax rules in such a way that their very application results in a different tax burden for different undertakings.
97. It is true that, in the absence of European Union rules governing the matter, it falls within the competence of the Member States, or of infra‑State bodies having fiscal autonomy, to designate bases of assessment and to spread the tax burden across the different factors of production and economic sectors, as the General Court held in paragraph 146 of the judgment under appeal.
98. However, the General Court failed to assess the regime at issue as a whole and did not take into account the factors on which the Commission based its assessment of the regime at issue in the contested decision.
101. In view of the features of that regime, outlined in the preceding paragraph, it is apparent that the regime at issue, by combining those bases, even though they are founded on criteria that are in themselves of a general nature, in practice discriminates between companies which are in a comparable situation with regard to the objective of the proposed tax reform, namely to introduce a general system of taxation for all companies established in Gibraltar.
119. While, according to the contested decision, the tax regime at issue confers selective advantages, that conclusion is justified to a sufficient legal standard by the existence of selective advantages for offshore companies, without it being necessary in addition that the other two elements identified in that decision as being selective also confer selective advantages (see, to that effect, Case C-66/02 Italy  v Commission  [2005] ECR I‑10901, paragraph 98). Consequently, the second part of the second plea is ineffective.
122. In that connection, it is sufficient to note that the Court of Justice has consistently held that the Commission may, in the case of an aid scheme, confine itself to examining the general characteristics of the scheme in question, without being required to examine each particular case in which it applies, in order to determine whether that scheme comprises aid elements (Joined Cases C‑71/09 P, C‑73/09 P and C‑76/09 P Comitato ‘Venezia vuole vivere’ and Others v Commission  [2011] ECR I‑0000, paragraph 130 and the case-law cited).
3. The first part of the second plea
(a) Arguments of the parties
128. With regard, first, to the complaint that, in the contested decision, the Commission departed from the notice relating to State aid in the field of taxation, it should be observed that that notice, which, being an internal measure adopted by the administration, cannot be regarded as a rule of law, nevertheless forms rules of practice from which the administration may not depart in an individual case without giving reasons which are compatible with the principle of equal treatment (see, with regard to the guidelines on State aid, the judgment of 9 June 2011 in Joined Cases C‑465/09 P to C‑470/09 P Diputación Foral de Vizcaya and Others v Commission , paragraph 120 and the case-law cited).
136. In that regard, it is sufficient to observe that, according to case-law, the question whether a measure constitutes State aid must be assessed solely in the context of Article 87(1) EC and not in the light of an alleged earlier decision-making practice of the Commission (see, to that effect, the judgment of 21 July 2011 in Case C‑459/10 P Freistaat Sachsen and Land Sachsen-Anhalt  v Commission , paragraph 50).
145. According to well-established case-law, the concept of State aid does not refer to State measures which differentiate between undertakings and which are, therefore, prima facie selective where that differentiation arises from the nature or the general scheme of the system of which they form part (see, to that effect, inter alia, Adria-Wien Pipeline and Wietersdorfer & Peggauer Zementwerke , paragraph 42; Portugal  v Commission , paragraph 52; and British Aggregates  v Commission , paragraph 83).
146. It is for the Member State which has introduced such a differentiation between undertakings in relation to charges to show that it is actually justified by the nature and general scheme of the system in question (Case C‑159/01 Netherlands  v Commission  [2004] ECR I‑4461, paragraph 43, and Commission  v Netherlands , paragraph 77).
147. A Member State which seeks to be allowed to grant aid by way of derogation from the Treaty rules has a duty to collaborate with the Commission. In pursuance of that duty, it must in particular provide all the information necessary to enable the Commission to verify that the conditions for the derogation sought are fulfilled (see Case C‑364/90 Italy  v Commission  [1993] ECR I‑2097, paragraph 20, and Case C‑372/97 Italy  v Commission  [2004] ECR I‑3679, paragraph 81).
148. Lastly, it should be noted that the Commission is required, in the interests of sound administration of the rules relating to State aid, to conduct a diligent and impartial examination of the evidence at its disposal (see, inter alia, Case C‑367/95 P Commission  v Sytraval and Brink’s France  [1998] ECR I‑1719, paragraph 62).
165. According to established case-law, observance of the rights of the defence, during the formal investigation procedure under Article 88(2) EC, requires the Member State concerned to be placed in a position in which it may effectively make known its views on the truth and relevance of the facts and circumstances alleged and on the documents obtained by the Commission to support its claim that there has been infringement of European Union law (see, to that effect, Case 40/85 Belgium  v Commission [1986] ECR 2321, paragraph 28, and Case 234/84 Belgium  v Commission [1986] ECR 2263, paragraph 27), as well as on the observations submitted by interested third parties in accordance with Article 88(2) EC. In so far as the Member State has not been afforded the opportunity to comment on those observations, the Commission may not use them in its decision against that State (see Case C‑301/87 France  v Commission  [1990] ECR I‑307, paragraph 30; Case C‑142/87 Belgium  v Commission  [1990] ECR I‑959, paragraph 47; and Case C‑288/96 Germany  v Commission  [2000] ECR I‑8237, paragraph 100).
168. With regard, first, to the fact that the preliminary assessment did not contain any considerations with regard to offshore companies, it should be noted that it is true that the Commission is required to express its doubts clearly as to the compatibility of the aid when it initiates a formal investigation procedure, in order to allow the Member State and other parties concerned to respond as fully as possible (judgment of 8 May 2008 in Case C‑49/05 P Ferriere Nord  v Commission , paragraph 92).
179. In the light of the above, the United Kingdom’s third plea, alleging infringement of its rights of defence, must be rejected, and there is no need to consider whether, had it not been for the irregularity alleged, the outcome of the procedure might have been different, which is a condition to be met in order for an infringement of the rights of the defence to result in annulment of the contested decision (see France  v Commission , paragraph 31; Case C-142/87 Belgium  v Commission , paragraph 48; and Case C-288/96 Germany  v Commission , paragraph 101).
181. In that regard, it is clear from the case-law of the Court that interested parties other than the Member State concerned, such as in the present case the Government of Gibraltar, have, in the procedure for reviewing State aid, only the opportunity to send to the Commission all information intended for the guidance of the latter with regard to its future action and they cannot themselves seek to engage in an adversarial debate with the Commission in the same way as is offered to that Member State (see Commission  v Sytraval and Brink’s France , paragraph 59, and Joined Cases C‑74/00 P and C‑75/00 P Falck and Acciaierie di Bolzano  v Commission  [2002] ECR I‑7869, paragraphs 80 and 82).