1 By its appeals, the European Commission seeks to have set aside the judgments of the General Court of the European Union of 27 September 2023, Spain v Commission (T‑826/14, EU:T:2023:582) (Case C‑776/23 P), of 27 September 2023, Banco Santander and Others v Commission (T‑12/15, T‑158/15 and T‑258/15, EU:T:2023:583) (Case C‑777/23 P), of 27 September 2023, Sociedad General de Aguas de Barcelona v Commission (T‑253/15, EU:T:2023:585) (Case C‑778/23 P), of 27 September 2023, Telefónica and Iberdrola v Commission (T‑256/15 and T‑260/15, EU:T:2023:586) (Case C‑779/23 P), and of 27 September 2023, Ferrovial and Others v Commission (T‑252/15 and T‑257/15, EU:T:2023:584) (Case C‑780/23 P) (‘the judgments under appeal’), by which the General Court annulled Commission Decision (EU) 2015/314 of 15 October 2014 on the State aid SA.35550 (ex 13/NN) (ex 12/CP) implemented by Spain - Scheme for the tax amortisation of financial goodwill for foreign shareholding acquisitions (OJ 2015 L 56, p. 38, ‘the decision at issue’).
2 On 27 December 2001, the Spanish legislature adopted Ley 24/2001 de Medidas Fiscales, Administrativas y del Orden Social (Law 24/2001 on fiscal, administrative and social measures) (BOE No 313 of 31 December 2001, p. 50493). That law inserted a new Article 12(5) in the Ley del Impuesto sobre Sociedades (Corporate Tax Law), with effect from 1 January 2002. That provision formed part of a reform which, by way of the adoption of Real Decreto Legislativo 4/2004, por el que se aprueba el texto refundido de la Ley del Impuesto sobre Sociedades (Royal Legislative Decree 4/2004 approving the recast version of the Corporate Tax Law) of 5 March 2004 (BOE No 61 of 11 March 2004, p. 10951), gave rise to the recast text of the Corporate Tax Law (‘the TRLIS’).
3 Article 12(5) of the TRLIS, read in conjunction with Article 21, provided that any company that was tax resident in Spain and had acquired, and then held uninterruptedly for at least one year, a direct or indirect shareholding of at least 5% in a company which (i) was tax resident in another country, (ii) was subject in that country to a tax similar to the corporate tax applied in Spain and (iii) generated income of which at least 85% arose from business carried on outside Spain, could, by way of amortisation, deduct the financial goodwill deriving from that shareholding from its income that was taxable in Spain.
4 By written questions put in 2005 and 2006 (with the references E‑4431/05, E‑4772/05, E‑5800/06 and P‑5509/06), various Members of the European Parliament asked the European Commission whether the tax scheme under Article 12(5) of the TRLIS was compatible with the EU State aid rules.
5 In its replies of 19 January and 17 February 2006, to questions E‑4431/05 and E‑4772/05 respectively, the Commission indicated that the tax scheme in question appeared, in its view, not to fall within the scope of those rules.
6 By letter of 26 March 2007, the Commission nevertheless invited the Kingdom of Spain to provide it with information so that it could assess the scope and the effects of that tax scheme. It wished to know, in particular, which types of transaction were covered by the scheme.
7 By letter of 4 June 2007, the Spanish authorities replied to the Commission that, according to the administrative interpretation of the tax scheme under Article 12(5) of the TRLIS, that scheme applied only to the financial goodwill resulting from direct acquisitions of shareholdings (‘the letter of 4 June 2007’).
8 By letter of 10 October 2007, a summary of which was published on 21 December 2007 (OJ 2007 C 311, p. 21), the Commission notified the Kingdom of Spain of its decision to initiate a formal investigation procedure under Article 88(2) EC in respect of the tax scheme under Article 12(5) of the TRLIS.
9 As regards ‘intra-Community’ shareholdings, that is to say, those through which companies that are tax resident in Spain held part of the capital of companies with tax residence in a different Member State, that formal investigation procedure was closed by Commission Decision 2011/5/EC of 28 October 2009 on the tax amortisation of financial goodwill for foreign shareholding acquisitions C 45/07 (ex NN 51/07, ex CP 9/07) implemented by Spain (OJ 2011 L 7, p. 48).
10 That decision is worded as follows: 1. The aid scheme implemented by Spain under Article 12(5) [of the TRLIS], unlawfully put into effect by the Kingdom of Spain in breach of Article 88(3) [EC], is incompatible with the common market as regards aid granted to beneficiaries in respect of intra-Community acquisitions. 2. [Nonetheless], tax reductions enjoyed by the beneficiaries in respect of intra-Community acquisitions, by virtue of Article 12(5) [of the] TRLIS, which are related to rights held directly or indirectly in foreign companies fulfilling the relevant conditions of the aid scheme by 21 December 2007, apart from the condition that they hold their shareholdings for an uninterrupted period of at least [one] year, can continue to apply for the entire amortisation period established by the aid scheme. 3. Tax reductions enjoyed by beneficiaries in respect of intra-Community acquisitions, by virtue of Article 12(5) [of the] TRLIS which are related to an irrevocable obligation entered into before 21 December 2007 to hold such rights where the contract contains a suspensive condition linked to the fact that the operation at issue is subject to the mandatory approval of a regulatory authority and where the decision and the operation has been notified before 21 December 2007, can continue to apply for the entire amortisation period established by the aid scheme for the part of the rights held as of the date when the suspensive condition is lifted. … 1. Spain shall recover the incompatible aid corresponding to the tax reduction under the scheme referred to in Article 1(1) from the beneficiaries whose rights in foreign companies, acquired in the context of intra-Community acquisitions, do not fulfil the conditions described in Article 1(2). … 4. Spain shall cancel any outstanding tax reduction provided under the scheme referred to in Article 1(1) with effect from the date of adoption of this Decision, except for the reduction attached to rights in foreign companies fulfilling the conditions described in Article 1(2). …’
11 Article 1(2) and (3) of that decision has its basis, inter alia, in the following recitals thereof: … …
12 As regards holdings by companies that are tax resident in Spain in the capital of companies that have tax residence outside the European Union, the formal investigation procedure was closed by Commission Decision 2011/282/EU of 12 January 2011 on the tax amortisation of financial goodwill for foreign shareholding acquisitions No C 45/07 (ex NN 51/07, ex CP 9/07) implemented by Spain (OJ 2011 L 135, p. 1), which was the subject of corrigenda on 3 March and 26 November 2011 (‘Decision 2011/282’).
13 That decision is worded as follows: 1. The aid scheme implemented by Spain under Article 12(5) [of the TRLIS], unlawfully put into effect by Spain in breach of Article 108(3) [TFEU], is incompatible with the internal market as regards aid granted to beneficiaries in respect of extra-EU acquisitions. 2. Nonetheless, tax reductions enjoyed by beneficiaries in respect of extra-EU acquisitions under Article 12(5) [of the] TRLIS which are related to rights held directly or indirectly in foreign companies fulfilling the relevant conditions of the aid scheme by 21 December 2007, apart from the condition that they hold their shareholdings for an uninterrupted period of at least [one] year, can continue to apply over the entire amortisation period established by the aid scheme. 3. Tax reductions enjoyed by beneficiaries in respect of extra-EU acquisitions under Article 12(5) [of the] TRLIS which are related to an irrevocable obligation entered into before 21 December 2007 to hold such rights when the contract contains a suspensive condition linked to the fact that the operation at issue is subject to the mandatory approval of a regulatory authority and the operation has been notified before 21 December 2007, can continue to apply for the entire amortisation period established by the aid scheme for those rights held on the date on which the suspensive condition is lifted. 4. Furthermore, tax reductions enjoyed by beneficiaries under Article 12(5) [of the] TRLIS in respect of extra-EU acquisitions carried out by the date of publication of this Decision in the Official Journal of the European Union, which are related to majority shareholdings held directly or indirectly in foreign companies established in China, India or in other countries where the existence of explicit legal barriers to cross-border business combinations have been or can be demonstrated, can continue to apply over the entire amortisation period established by the aid scheme. 5. Tax reductions enjoyed by beneficiaries when realising extra-EU acquisitions under Article 12(5) [of the] TRLIS which are related to an irrevocable obligation entered into before this Decision is published in the Official Journal of the European Union, to hold such rights in foreign companies established in China, India or in other countries where the existence of explicit legal barriers to cross-border business combinations have been or can be demonstrated, when the contract contains a suspensive condition linked to the fact that the operation at issue is subject to the mandatory approval of a regulatory authority and the operation has been notified before the publication of this Decision in the Official Journal of the European Union, can continue to apply over the entire amortisation period established by the aid scheme for those rights held on the date on which the suspensive condition is lifted. … 1. Spain shall recover the incompatible aid corresponding to the tax reduction under the scheme referred to in Article 1(1) from the beneficiaries whose rights in foreign companies, acquired in the context of extra-EU acquisitions, do not fulfil the conditions laid down in Article 1(2) to (5). … 4. Spain shall cancel any outstanding tax reduction provided under the scheme referred to in Article 1(1) with effect from the date of adoption of this Decision, except for the reduction attached to rights in foreign companies fulfilling the conditions laid down in Article 1(2). …’
14 Article 1(2) to (5) of that decision has its basis, inter alia, in recital 210 of the decision, which states: ‘However, given the presence of legitimate expectations until the date of publication of the opening Decision, the Commission accepts that implementation may continue over the entire amortisation period established by the aid scheme and exceptionally waives recovery of any tax advantage deriving from the application of the aid scheme to shareholdings held directly or indirectly by a Spanish acquiring company in a foreign company before the date of publication in the Official Journal of the European Union of the Commission Decision to initiate the formal investigation procedure under Article 108(2) [TFEU], except where, firstly, an irrevocable obligation has been entered into before 21 December 2007 by a Spanish acquiring company to hold such rights and, secondly, the contract contained a suspensive condition linked to the fact that the operation in question is subject to the mandatory approval of a regulatory authority and, thirdly, the operation had been notified before 21 December 2007. Moreover, the Commission must waive recovery and accepts that implementation may continue over the entire amortisation period established by the aid scheme also for any tax advantage deriving from the application of the aid scheme to majority shareholding transactions carried out before the publication of this Decision which relate to third countries where the presence of explicit legal barriers to cross-border combinations is duly justified in accordance with the principles laid down in this Decision’.
15 By email of 12 April 2012, the Spanish authorities informed the Commission that, on 21 March 2012, the Dirección General de Tributos (Directorate-General for Taxation, Spain) (‘the DGT’) had adopted a binding administrative interpretation, which was also applicable to transactions carried out before that date.
16 According to that interpretation, Article 12(5) of the TRLIS, read in conjunction with Article 21 thereof, had to be understood as applying to both direct and indirect shareholdings. In that regard, the view should be taken that the business activities carried on abroad referred to in Article 21 of the TRLIS may, where applicable, be carried on by an operating company belonging to a second or lower level subsidiary of a holding company. Since Article 12(5) of the TRLIS aims at fostering the internationalisation of Spanish companies and foreign investment by them, it would go against the spirit of that provision if investments in holding companies established abroad were excluded from its application. Article 21 of the TRLIS in fact refers explicitly to indirect shareholdings, and Decisions 2011/5 and 2011/282, likewise, make reference to such shareholdings.
17 Between 4 July 2012 and 1 July 2013, the Commission sent the Kingdom of Spain various questions and requests for information concerning that administrative interpretation.
18 By letter of 17 July 2013, a summary of which was published on 7 September 2013 (OJ 2013 C 258, p. 8), the Commission notified the Kingdom of Spain of its decision to initiate the formal investigation procedure under Article 108(2) TFEU, in the light of the effects that in its view flowed from that administrative interpretation, which was introduced on 21 March 2012 and amended the interpretation which had been sent to the Commission by the letter of 4 June 2007.
19 In that decision, as summarised in the Official Journal of the European Union, the Commission found as follows: ‘On 28 October 2009 and on 12 January 2011, the Commission adopted two negative decisions with recovery concerning the aid granted to the beneficiaries on the basis of Article 12(5) [of the] TRLIS … The Commission nevertheless decided to limit the scope of the recovery obligation due to the existence of legitimate expectations. … in March 2012, in reply to a request for a tax opinion, the Spanish Ministry of Finance adopted a binding administrative interpretation of Article 12(5) [of the] TRLIS, having [retroactive] effects, allowing the tax deductions for financial goodwill to be applied at various shareholdings levels. Until then, as explained by Spain during the administrative proceedings which led to [Decisions 2011/5 and 2011/282], it was consistent practice that the measure could be applied only to financial goodwill arising from direct acquisitions of shareholdings. … Even if [Decisions 2011/5 and 2011/282] mention both direct and indirect acquisitions of shareholdings, this is merely because such Decisions referred to the text of the relevant legislative provisions. The Commission observes however that the scope of a State aid decision must be determined not only by reference to the actual wording of that decision but also by taking account of the aid scheme as described by the Member State concerned during the administrative procedure. … The Commission at this stage is of the opinion that by enlarging the scope of application of the measure and consequently the number of operations and eventually also of potential beneficiaries of the scheme, Spain has introduced substantial changes to the scheme, which was declared by the Commission illegal and incompatible State aid. … Thus, at this stage the Commission considers that the new administrative interpretation constitutes new aid. The Commission at this stage considers that the legitimate expectations recognised in [Decisions 2011/5 and 2011/282] cannot be extended (retroactively) to situations (indirect acquisitions of shareholdings) which were not covered by the scope of application of the measure at the time of the adoption of [those decisions].’
20 On completion of that formal investigation procedure, the Commission adopted the decision at issue, which is worded as follows: The new administrative interpretation adopted by the Kingdom of Spain that extend[s] the scope of application [of] Article 12 (5) of the [TRLIS] in order to cover indirect shareholding acquisitions of non-resident companies through a direct shareholding acquisition of non-resident holding companies, and which has been unlawfully put into effect by the Kingdom of Spain in breach of Article 108(3) [TFEU], is incompatible with the internal market. … 1. The Kingdom of Spain shall put an end to the aid scheme referred to in Article 1, as regards aid granted to beneficiaries when carrying out indirect acquisitions of shareholdings of non-resident companies through a direct acquisition of shareholdings of holding companies, to the extent that it is incompatible with the common market. 2. The Kingdom of Spain shall recover the incompatible aid granted under the scheme referred to in Article 1 from the beneficiaries. 3. The sums to be recovered shall bear interest from the date on which they were put at the disposal of the beneficiaries until their actual recovery. … 5. The Kingdom of Spain shall cancel all outstanding payments of aid under the scheme referred to in Article 1 with effect from the date of adoption of this decision. …’
21 In recital 25 of that decision, the Commission explained that it understands ‘direct [shareholding]’ to mean the holding by a company of shares in the equity of a company, and ‘indirect [shareholding]’ to mean the holding by a company of shares in the equity of a company at second or lower level as a consequence of a previous direct acquisition, whereby the acquiring company indirectly becomes the holder of shareholdings in second or lower level subsidiaries.
22 In recital 26 of that decision, the Commission stated that, in the case in question, the indirect shareholdings are the result of purchases of direct shareholdings in the equity of non-resident holding companies, and that the concept of ‘holding company’ refers to a company whose main business aim is to own the shares in other companies. The latter are operational, whereas holding companies do not carry on an economic activity as such and therefore cannot, by themselves, generate goodwill, which can, on the other hand be generated at lower levels by operating companies.
23 Recitals 33 to 36 of that decision refer to documents from which it is apparent that, initially, the DGT and the Tribunal Económico-Administrativo Central (Central Tax Tribunal, Spain) had excluded indirect shareholdings from the scope of Article 12(5) of the TRLIS.
24 In recitals 95 to 101 of the decision at issue, the Commission noted that Decisions 2011/5 and 2011/282 concerned assessment of whether the scheme laid down in Article 12(5) of the TRLIS, as presented by the Spanish authorities during the procedure leading to those decisions, was compatible with the internal market. In the letter of 4 June 2007, the Kingdom of Spain had stated that deduction was authorised only of the financial goodwill resulting from direct shareholdings. Having regard, also, to the practice of the DGT and of the Tribunal Económico-Administrativo Central (Central Tax Tribunal), Decisions 2011/5 and 2011/282 related only to direct shareholdings. The new administrative interpretation in place since March 2012 is therefore, in the Commission’s view, not covered by those decisions.
25 According to recital 151 of the decision at issue: ‘… the distinction between direct and indirect acquisitions was not deemed relevant for the purposes of the assessment required in [Decisions 2011/5 and 2011/282]. …’
26 In recital 189 of the decision at issue, the Commission observed that the Kingdom of Spain and the interested parties claimed that the legitimate expectations recognised in Decisions 2011/5 and 2011/282 apply also to indirect shareholdings.
27 For the reasons set out in recitals 190 to 200 of the decision at issue, the Commission did not concur with those arguments. In that regard, it found, inter alia, as follows: … … …
28 By an action relying on four pleas in law, the Kingdom of Spain sought annulment of the decision at issue or, in the alternative, of the recovery order contained in Article 4 thereof.
29 The first plea alleged infringement of the obligation to state reasons.
30 The second plea alleged infringement of Article 107(1) TFEU on account of an error of law concerning the selectivity requirement.
31 The third plea alleged that there was no new aid within the meaning of, inter alia, Article 108(3) TFEU.
32 The fourth plea, raised in the alternative, alleged, inter alia, infringement of the principles of the protection of legitimate expectations and of legal certainty.
33 In written observations lodged with the General Court on 15 November 2021, in the light of the judgments of 6 October 2021, Sigma Alimentos Exterior v Commission (C‑50/19 P, EU:C:2021:792); of 6 October 2021, World Duty Free Group and Spain v Commission (C‑51/19 P and C‑64/19 P, EU:C:2021:793); of 6 October 2021, Banco Santander v Commission (C‑52/19 P, EU:C:2021:794); of 6 October 2021, Banco Santander and Others v Commission (C‑53/19 P and C‑65/19 P, EU:C:2021:795); of 6 October 2021, Axa Mediterranean v Commission (C‑54/19 P, EU:C:2021:796); and of 6 October 2021, Prosegur Compañía de Seguridad v Commission (C‑55/19 P, EU:C:2021:797), the Kingdom of Spain withdrew the first and second pleas, acknowledging that the Court of Justice had, by those judgments, ruled on whether the scheme laid down in Article 12(5) of the TRLIS was selective and on the legality of Decisions 2011/5 and 2011/282.
34 By its judgment in Case T‑826/14, the General Court upheld the third plea of the action, and annulled the decision at issue.
35 By actions relying on four pleas in law, Banco Santander SA, Santusa Holding SL (‘Santusa’), Abertis Infraestructuras SA (‘Abertis’), Abertis Telecom Satélites SA and Axa Mediterranean Holding SA (‘Axa’) sought annulment of the decision at issue.
36 The first plea alleged infringement of Article 107(1) TFEU on account of an error of law concerning the selectivity requirement.
37 The second plea alleged an error of law in determining the beneficiaries of the tax scheme laid down in Article 12(5) of the TRLIS.
38 The third plea alleged that there was no new aid within the meaning of, inter alia, Article 108(3) TFEU.
39 The fourth plea alleged infringement of the principles of the protection of legitimate expectations, of estoppel and of legal certainty.
40 In written observations lodged with the General Court on 15 November 2021, those companies withdrew the first and second pleas of their actions in the light of the judgments referred to in paragraph 33 of the present judgment.
41 By its judgment in Joined Cases T‑12/15, T‑158/15 and T‑258/15, the General Court upheld the third and fourth pleas, and annulled the decision at issue.
42 By an action relying on seven pleas in law, Sociedad General de Aguas de Barcelona SA (‘SGAB’) sought annulment of the decision at issue or, in the alternative, limitation of the order to recover the aid under Article 12(5) of the TRLIS.
43 The first plea alleged infringement of Article 107(1) TFEU on account of an error of law concerning the selectivity requirement.
44 The second plea alleged infringement of Article 107(1) TFEU, on the ground that there was no competitive advantage because SGAB had returned the tax advantage from which it had benefited.
45 The third plea alleged that Article 107(1) TFEU had been infringed because the tax scheme laid down in Article 12(5) of the TRLIS was a general measure.
46 The fourth to seventh pleas alleged, respectively, the absence of new aid, misuse of powers, that the new administrative interpretation did not apply to SGAB and infringement of the principles of equal treatment and of the protection of legitimate expectations.
47 In written observations lodged with the General Court on 17 November 2021, SGAB withdrew the first and third pleas in law of its action in the light of the judgments referred to in paragraph 33 of the present judgment.
48 By its judgment in Case T‑253/15, the General Court upheld the fourth and seventh pleas of the action, and annulled the decision at issue.
49 By actions relying on six pleas in law, Telefónica SA and Iberdrola SA sought annulment of the decision at issue or, in the alternative, limitation of the recovery order contained in Article 4 thereof.
50 The first plea alleged infringement of Article 107(1) TFEU on account of errors of law and of assessment concerning the selectivity requirement.
51 The second plea alleged an error of law concerning the requirement for an adverse effect on competition and on trade between Member States.
52 The third plea alleged errors of law and of assessment in so far as the Commission had found the new administrative interpretation to be capable of amounting to new aid.
53 The fourth plea alleged errors of law and of assessment in so far as the Commission had found that Decisions 2011/5 and 2011/282 did not cover indirect acquisitions of shareholdings.
54 The fifth plea alleged infringement of the principles of legal certainty, of estoppel and of good administration.
55 The sixth plea alleged infringement of the principle of the protection of legitimate expectations.
56 In written observations lodged with the General Court on 13 and 15 November 2021 respectively, the applicants in Cases T‑256/15 and T‑260/15 withdrew the first and second pleas in law of their actions, in the light of the judgments referred to in paragraph 33 of the present judgment.
57 By its judgment in those cases, the General Court upheld the third and sixth pleas of the actions, and annulled the decision at issue.
58 By actions relying on five and on four pleas in law respectively, (i) Ferrovial SA, Ferrovial Servicios SA and Amey UK plc and (ii) Arcelormittal Spain Holding SL (‘Arcelormittal Spain’) sought annulment of the decision at issue or, in the alternative, of the recovery order contained in Article 4(2) thereof.
59 All the applicants raised four pleas, alleging, in turn, infringement of the obligation to state reasons; infringement of Article 107(1) TFEU, on account of an error of law concerning the selectivity requirement; the absence of new aid; and infringement of the principles of the protection of legitimate expectations, of estoppel and of legal certainty.
60 Ferrovial, Ferrovial Servicios and Amey UK also raised a fifth plea, alleging that the recovery order was invalid in so far as it did not exclude transactions before 10 March 2005.
61 In written observations lodged with the General Court on 13 and 15 November 2021 respectively, the applicants in Cases T‑252/15 and T‑257/15 withdrew the first and second pleas of their actions in the light of the judgments referred to in paragraph 33 of the present judgment.
62 By its judgment in those cases, the General Court upheld the third and fourth pleas of the actions, and annulled the decision at issue.
63 The Commission claims that the Court of Justice should: - set aside the judgments under appeal; - dismiss the actions; and - order the applicants at first instance to bear their own costs and to pay those incurred by the Commission, both at first instance and on appeal.
64 The other parties to the proceedings claim that the Court should: - dismiss the appeals and - order the Commission to bear its own costs and to pay those incurred by the other parties to the proceedings, both at first instance and on appeal.
65 By decision of the President of the Court of 18 December 2024, the cases were joined.
66 The Commission submits two grounds of appeal in support of its appeal in Case C‑776/23 P and three grounds of appeal - the first two of which are the same as the grounds of appeal in Case C‑776/23 P - in support of its appeals in Cases C‑777/23 P to C‑780/23 P.
67 According to the Commission, the General Court erred when it found that Decisions 2011/5 and 2011/282 concern both direct and indirect acquisitions of shareholdings.
68 That institution notes that it had been informed, by the letter of 4 June 2007, that the tax scheme laid down in Article 12(5) of the TRLIS applied only to direct acquisitions of shareholdings. Decisions 2011/5 and 2011/282 must be understood in the light of that information.
69 The Commission cites, among others, the judgments of 16 December 2010, Kahla Thüringen Porzellan v Commission (C‑537/08 P, EU:C:2010:769, paragraph 44), and of 20 September 2018, Carrefour Hypermarchés and Others (C‑510/16, EU:C:2018:751, paragraph 38), from which it is in its view apparent that the scope of a State aid decision must be determined not only by reference to its wording but also taking into account the information provided by the Member State concerned.
70 By declining to apply that case-law, on the ground that it is limited to situations in which the Commission decides that a notified aid scheme is compatible with the internal market, the General Court erred in law. In that regard, the Commission, referring to the judgment of 16 December 2010, Kahla Thüringen Porzellan v Commission (C‑537/08 P, EU:C:2010:769, paragraph 45), submits that, when examining an aid scheme, whether notified or otherwise, it is required to rely on the information provided by the Member State concerned, which is an indivisible part of that aid scheme.
71 By drawing a distinction between notified aid and non-notified aid, the General Court also disregarded the case-law according to which the Commission’s examination to determine whether there is State aid cannot favour Member States which pay aid in breach of Article 108(3) TFEU, to the detriment of those which notify the aid at the planning stage and refrain from implementing it pending the final decision adopted by that institution (judgment of 4 March 2021, Commission v Fútbol Club Barcelona, C‑362/19 P, EU:C:2021:169, paragraph 92 and the case-law cited).
72 In addition, relying on the lessons drawn from the judgment of 15 November 2011, Commission and Spain v Government of Gibraltar and United Kingdom (C‑106/09 P and C‑107/09 P, EU:C:2011:732, paragraph 165), the Commission submits that it is only if it decides to depart from the scope of the aid scheme as defined by the Member State concerned that it must indicate that fact in its decision, after giving the Member State an opportunity to submit observations on that point. In the present case, since there is nothing in Decisions 2011/5 and 2011/282 to suggest that the Commission was departing from the interpretation of national law supplied in the letter of 4 June 2007, according to that institution those decisions should have been read by the General Court as relating only to direct acquisitions of shareholdings.
73 The Commission states that the fact that Decisions 2011/5 and 2011/282 contain references to indirect acquisitions of shareholdings is due to the wording of Article 21 of the TRLIS, to which Article 12(5) thereof refers. Those references do not mean, however, that the examination carried out by the Commission in those decisions encompasses indirect acquisitions of shareholdings. The Commission also observes that, at the time it took those decisions, it was not in a position to know that a new administrative interpretation would be adopted, extending the scope of the aid scheme laid down in Article 12(5) of the TRLIS to indirect acquisitions of shareholdings.
74 By disregarding the various elements of the case-law on State aid referred to above when interpreting Decisions 2011/5 and 2011/282, the General Court interpreted those decisions in a manner that fails to take into account either the context in which those decisions were adopted or the purpose of the State aid rules. It thereby departed from the case-law according to which the interpretation of a provision of EU law must take into account not only its wording but also the context in which it occurs and the objectives pursued by the rules of which it is part.
75 The Commission notes that the only aspect of Decisions 2011/5 and 2011/282 that is favourable to the Kingdom of Spain and to the companies that benefit from the aid scheme laid down in Article 12(5) of the TRLIS relates to the exceptions from the recovery obligation. Since the recovery obligation is intended to eliminate the effects of the unlawful application of that scheme and is therefore concerned with the past, it is all the more important when reading those decisions, including the provisions establishing those exceptions, to take into consideration the initial situation described by the Spanish authorities, in which that scheme did not apply to indirect shareholdings.
76 The applicants at first instance dispute both that the first ground of appeal is admissible and that it is well founded.
77 They claim, in particular, that the first ground of appeal is inadmissible. While trying to create the impression that there has been an error of law, in reality the Commission is merely making factual assertions, although without claiming any distortion of the facts.
78 In that regard, the Kingdom of Spain notes that the Commission, in essence, bases its arguments on the interpretation of national law apparent from the letter of 4 June 2007, and then from the binding interpretation of 21 March 2012. In EU law, the interpretation of national law constitutes a matter of fact. It therefore cannot give rise to an alleged error of law on appeal before the Court of Justice.
79 According to Banco Santander, Santusa, Abertis, Axa, Ferrovial, Serveo Servicios, Amey UK and Arcelormittal Spain, the first ground of appeal is also inadmissible in so far as, among other matters, it infringes the principle of res judicata.
80 In that regard, those companies note that the finding that Decisions 2011/5 and 2011/282 concern the tax scheme laid down in Article 12(5) of the TRLIS, but do not draw a distinction between its application to direct shareholdings and its application to indirect shareholdings, has already been made in various judgments that have become final and have therefore acquired the force of res judicata. In support of that position, they refer to the judgment of 19 December 2013, Telefónica v Commission (C‑274/12 P, EU:C:2013:852), to paragraphs 29 and 30 of the judgment of 15 November 2018, Deutsche Telekom v Commission (T‑207/10, EU:T:2018:786), and to the judgment of 6 October 2021, Banco Santander and Others v Commission (C‑53/19 P and C‑65/19 P, EU:C:2021:795). By its first ground of appeal, the Commission is attempting, in essence, to obtain a ruling from the Court of Justice that reopens a finding made in the grounds of a decision that has the force of res judicata, and that ground of appeal is therefore inadmissible.
81 Telefónica, Iberdrola and Arcelormittal Spain further state that the first ground of appeal is, moreover, ineffective, because the Commission has omitted to dispute an element of the General Court’s assessment which in itself justifies annulment of the decision at issue, that is to say, the finding that the decision at issue, in essence, revoked Decisions 2011/5 and 2011/282 even though the requirements for revocation laid down by Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for the application of Article [108 TFEU] (OJ 1999 L 83, p. 1) were not met. Since the Commission has not challenged that finding, its ground of appeal is in their view ineffective. The errors allegedly vitiating the judgments under appeal, relied on in that ground of appeal, cannot, even if they are assumed to exist, give rise to the setting aside of those judgments, since the annulment of the decision at issue by those judgments is in any event justified by the finding that Decisions 2011/5 and 2011/282 were revoked.
82 By its first ground of appeal, the Commission criticises the General Court for misinterpreting Decisions 2011/5 and 2011/282, in so far as it relied solely on the wording of those decisions and therefore failed to take into account the context in which they were adopted - which included the information provided by the Kingdom of Spain, before those decisions were adopted, on the scope of national law - and the purpose of the State aid rules.
83 That ground therefore raises the question of whether the General Court failed to comply with the principles governing the interpretation of EU acts, which is a question of law.
84 Admittedly, the judgments of 19 December 2013, Telefónica v Commission (C‑274/12 P, EU:C:2013:852, paragraphs 29 and 30), and of 15 November 2018, Deutsche Telekom v Commission (T‑207/10, EU:T:2018:786), and of 6 October 2021, Banco Santander and Others v Commission (C‑53/19 P and C‑65/19 P, EU:C:2021:795), to which Banco Santander, Santusa, Abertis, Axa, Ferrovial, Serveo Servicios, Amey UK and Arcelormittal Spain refer, have the force of res judicata. However, the content of those judgments neither supports nor weakens those companies’ line of argument that Decisions 2011/5 and 2011/282 relate to both direct and indirect acquisitions of shareholdings. It cannot be argued therefore that the Commission is disregarding the principle of res judicata by claiming that those decisions relate only to direct acquisitions of shareholdings.
85 Given that a number of claimants at first instance assert also that the first ground of appeal is ineffective, because the Commission has not disputed the General Court’s finding, which they submit is in itself decisive, that the decision at issue in essence revokes Decisions 2011/5 and 2011/282, it must be stated that that claim is based on a misreading of the first ground of appeal. When it claims that the General Court made an error of law in its interpretation of Decisions 2011/5 and 2011/282, the Commission is asserting that, had the General Court not made that error, it would necessarily have found that those decisions relate only to direct acquisitions of shareholdings. By that line of argument the Commission clearly expresses its position that the decision at issue, which relates to indirect acquisitions of shareholdings, does not revoke Decisions 2011/5 and 2011/282. Accordingly, it cannot be argued that that institution has failed to challenge the General Court’s finding that the decision at issue, in essence, revokes those decisions.
86 Consequently, the first ground of appeal is admissible and is not ineffective.
87 It is common ground that, for the purposes of determining corporate tax in Spain, Article 12(5) of the TRLIS authorised the deduction, under certain conditions, of the financial goodwill resulting from shareholdings acquired by companies that are tax resident in Spain in the capital of companies that are tax resident in other countries.
88 By Decisions 2011/5 and 2011/282, the first of which applies to the acquisition of shareholdings in the capital of companies that are tax resident in a Member State of the European Union other than the Kingdom of Spain and the second, to shareholdings acquired in the capital of companies that are tax resident outside the European Union, the Commission classified Article 12(5) of the TRLIS as a State aid scheme which had been implemented unlawfully.
89 In those decisions, the Commission ordered the cessation of that scheme and recovery of the sums corresponding to the tax deductions applied, while, in the interests of protecting legitimate expectations, it explicitly authorised that scheme to continue in respect of direct and indirect acquisitions of shareholdings which fulfilled the relevant conditions of the aid scheme before 21 December 2007, the date on which the summary of the decision to initiate the formal investigation procedure was published. In addition, the Commission authorised the scheme to continue in respect of, in particular, majority shareholdings acquired directly or indirectly no later than 21 May 2011, the date on which Decision 2011/282 was published, in foreign companies established in China, India or in other countries where the existence of explicit legal barriers to cross-border business combinations have been or can be demonstrated.
90 By the judgments referred to in paragraph 33 of the present judgment, the Court of Justice dismissed the appeals brought against the judgments of the General Court dismissing the actions for annulment of Decisions 2011/5 and 2011/282.
91 Consequently, subject to any revision by the Court of Justice of the judgments referred to in paragraph 33 of the present judgment, it has been finally established that Decisions 2011/5 and 2011/282 are lawful.
92 As regards the interpretation of the scope of those decisions, the General Court correctly held, in paragraph 46 of the judgment under appeal in Case C‑776/23 P, in paragraph 52 of the judgment under appeal in Case C‑777/23 P, in paragraph 62 of the judgment under appeal in Case C‑778/23 P, in paragraph 53 of the judgment under appeal in Case C‑779/23 P and in paragraph 52 of the judgment under appeal in Case C‑780/23 P, that the principle of legal certainty, which requires that rules of law be clear and precise and predictable in their effect, so that interested parties can ascertain their position in situations and legal relationships governed by EU law and take steps accordingly, applies when the Commission adopts a decision on State aid.
93 The foregoing is true, in particular, of negative decisions by which the Commission orders the cessation and recovery of aid. The Member State to which a decision requiring the recovery of illegal aid is addressed is obliged, under the fourth paragraph of Article 288 TFEU, to take all measures necessary to ensure implementation of that decision. In accordance with the principle of legal certainty, a decision of that nature must therefore indicate clearly, precisely and predictably the aid that is to be recovered (see, to that effect, judgment of 8 December 2011, France Télécom v Commission, C‑81/10 P, EU:C:2011:811, paragraphs 100 to104).
94 In the present case, it is expressly stated in Article 1(2) and recitals 167, 170 and 175 of Decision 2011/5, and in Article 1(2) and (4) and recital 210 of Decision 2011/282, that the exceptions to the cessation and recovery obligations under those decisions relate both to direct acquisitions of shareholdings, which, according to the explanation given by the Commission referred to in paragraph 21 of the present judgment, concern shareholdings in the equity of a company, and to indirect acquisitions of shareholdings, which, according to the same explanation, concern shareholdings in the equity of a second or lower level subsidiary.
95 In those circumstances, the General Court was not only entitled but was obliged to infer from the wording itself of Decisions 2011/5 and 2011/282 that those decisions related to both direct and indirect acquisitions of shareholdings. To interpret those decisions with a meaning contrary to their clear wording would infringe the principle of legal certainty recalled above and would also be incompatible with settled case-law in accordance with which, where the meaning of a provision of EU law is absolutely plain from its very wording, the Court cannot depart from that interpretation (judgments of 8 December 2005, ECB v Germany, C‑220/03, EU:C:2005:748, paragraph 31, and of 16 January 2025, DYKA Plastics, C‑424/23, EU:C:2025:15, paragraph 37).
96 Moreover, contrary to the Commission’s assertions, the General Court cannot be criticised for failing to examine the context in which Decisions 2011/5 and 2011/282 were adopted, in particular the information provided by the Spanish authorities in the letter of 4 June 2007, or the purpose of State aid rules.
97 As regards the information contained in the letter of 4 June 2007, to the effect that, according to the administrative interpretation applied at that time by the Spanish authorities, Article 12(5) of the TRLIS related only to direct acquisitions of shareholdings, it is clear that the General Court included that background information in its reasoning. It did so, for example, in paragraphs 49 to 53 of the judgment under appeal in Case C‑776/23 P, in paragraphs 55 to 59 of the judgment under appeal in Case C‑777/23 P, in paragraphs 65 to 69 of the judgment under appeal in Case C‑778/23 P, in paragraphs 56 to 60 of the judgment under appeal in Case C‑779/23 P and in paragraphs 55 to 59 of the judgment under appeal in Case C‑780/23 P.
98 As the General Court observed in those passages of the judgments under appeal, the Commission itself held, in recital 151 of the decision at issue, that the distinction between direct acquisitions of shareholdings and indirect acquisitions of shareholdings was irrelevant for the purposes of the assessment in Decisions 2011/5 and 2011/282. It therefore appears that, by those decisions, the Commission assessed Article 12(5) of the TRLIS without having regard to the administrative interpretation of the TRLIS followed by the Spanish authorities and which they had sent to it.
99 In the light of those circumstances, it is not necessary, for the purposes of interpreting Decisions 2011/5 and 2011/282, to examine the Commission’s argument that the case-law summarised in paragraph 69 of the present judgment - according to which the scope of a decision by which the Commission makes no objection to a notified aid scheme must be determined not only by reference to the text of that decision itself but also taking into account the notification made by the Member State concerned - can be transposed to the present case, even though it concerns a non-notified scheme.
100 As regards the purpose of the State aid rules, it must be held that, among the objectives pursued by those rules, the predictability of legal relationships, which forms part of the principle of legal certainty referred to in paragraph 92 of the present judgment, is of particular significance where, as in the present case, the dispute concerns more than one decision relating to the same national tax system adopted consecutively by the Commission. Since, by the decision at issue, the Commission classified the tax deductions of the financial goodwill resulting from indirect acquisitions of shareholdings as State aid and ordered their cessation and the recovery of the corresponding amounts, even though those deductions could continue to apply, provided they fulfilled the requirements set out in Article 1(2) of Decision 2011/5 and in Article 1(2) and (4) of Decision 2011/282, the General Court was in fact required to rule in the light of the general principles of EU law, including the principle of legal certainty, and did not need to conduct an exhaustive examination of the objectives of the State aid rules.
101 In the light of all the foregoing, the first ground of appeal must be rejected.
102 According to the Commission, the General Court erred in law by holding that a new administrative interpretation cannot broaden the scope of an aid scheme.
103 In that regard, the Commission recalls the case-law according to which, in an examination of whether a measure constitutes State aid, it is the effects of the measure that count (see, to that effect, judgments of 22 December 2008, British Aggregates v Commission, C‑487/06 P, EU:C:2008:757, paragraph 89, and of 21 December 2016, Commission v Aer Lingus and Ryanair Designated Activity (C‑164/15 P and C‑165/15 P, EU:C:2016:990, paragraph 69). It is also clear from the Court’s case-law that administrative circulars can dictate the effects of an aid scheme (see, to that effect, judgment of 8 November 2022, Fiat Chrysler Finance Europe v Commission, C‑885/19 P and C‑898/19 P, EU:C:2022:859, paragraph 91).
104 In the judgments under appeal, the General Court acknowledged that, prior to the new administrative interpretation, the Spanish authorities applied the tax scheme under Article 12(5) of the TRLIS only to direct acquisitions of shareholdings. It also acknowledged that the new interpretation was binding on those authorities and that, since introduction of the new interpretation, they had applied that scheme to indirect acquisitions of shareholdings. In those circumstances, it is clear, according to the Commission, that the General Court should have found that the new administrative interpretation had broadened the scope of the scheme in question.
105 Given that the General Court reached the opposite conclusion, on the ground that the new administrative interpretation could not broaden the scope of the aid scheme because it was not binding on the taxpayers concerned, the Commission submits that the fact that a number of companies may have interpreted that scheme differently and accordingly applied the tax deduction in cases of indirect acquisitions of shareholdings before adoption of the new administrative interpretation - a circumstance which may, in certain cases, have fallen outside the scope of inspection by the authorities, as a result of the system of self-assessment for Spanish corporate tax - does nothing to alter the scope of that scheme.
106 Moreover, according to the Commission, the very fact that every company can interpret the scope of an aid scheme differently and that it is ultimately for the courts to clarify that scope illustrates the extent to which it is necessary, in the administrative procedure leading to the Commission’s decision on that scheme, to take account of the information provided by the Member State. It notes, in that regard, that the aid scheme under Article 12(5) of the TRLIS came into force on 1 January 2002. The Commission could obviously not wait until the national courts made a final ruling on the scope of that scheme.
107 The claimants at first instance assert that the second ground of appeal is inadmissible because, although no distortion is claimed, it is seeking a re-examination of the General Court’s interpretation of national law, which is a matter of fact, and is based on a misreading of the judgments under appeal.
108 Banco Santander, Santusa, Abertis, Axa and SGAB submit that the second ground of appeal is, furthermore, ineffective, because the discussion before the General Court consisted not in determining whether the new administrative interpretation had modified the aid scheme under Article 12(5) of the TRLIS, but in determining whether Decisions 2011/5 and 2011/282 concerned both direct acquisitions of shareholdings and indirect acquisitions of shareholdings.
109 The Commission claims that a rejection of the first ground of appeal would not mean that the Court of Justice is confirming that Decisions 2011/5 and 2011/282 covered both direct acquisitions of shareholdings and indirect acquisitions of shareholdings, but merely that the General Court did not make an error by not applying the case-law arising from the judgment of 16 December 2010, Kahla Thüringen Porzellan v Commission (C‑537/08 P, EU:C:2010:769). The second ground of appeal is therefore, in its opinion, not ineffective.
110 By the second ground of appeal, the Commission submits that, by holding that a new administrative interpretation that is binding only on the authorities cannot broaden the scope of an aid scheme, the General Court disregarded the case-law of the Court of Justice referred to in paragraph 103 of the present judgment, according to which the classification of a measure as State aid depends not on its form but on its effects. Contrary to the arguments of the claimants at first instance, the Commission is not seeking, without alleging any distortion, to dispute the General Court’s interpretation of national law, but is claiming an error of law. The second ground of appeal is, therefore, admissible.
111 That being so, as is apparent from examination of the first ground of appeal, in the light of the principles governing the interpretation of EU acts, the General Court was not only entitled, but was obliged, to find that Decisions 2011/5 and 2011/282 concerned both direct acquisitions of shareholdings and indirect acquisitions of shareholdings.
112 Accordingly, as the General Court correctly held, EU law, of which the principle of legal certainty forms part, precluded the Commission from classifying the tax deduction of the financial goodwill resulting from indirect acquisitions of shareholdings as a new State aid scheme which had been implemented unlawfully.
113 In the light of the foregoing outcome of the examination of the first ground of appeal, it is apparent that the premiss on which the second ground of appeal is based, that the new administrative interpretation had the effect of broadening the tax scheme laid down in Article 12(5) of the TRLIS to a category of shareholdings, that is to say, indirect shareholdings, which was not covered by Decisions 2011/5 and 2011/282, is incorrect.
114 The second ground of appeal therefore cannot call into question the validity of the judgments under appeal, even were it to be found that the General Court erred in law by failing to find that a new administrative interpretation may, in certain circumstances, broaden the scope of an aid scheme.
115 It follows that the second ground of appeal is ineffective.
116 The Commission recalls that, in recital 190 of the decision at issue, it stated that the legitimate expectations recognised in Decisions 2011/5 and 2011/282 could not relate to indirect acquisitions of shareholdings, because those acquisitions were not covered by the scope of Article 12(5) of the TRLIS at the time those decisions were adopted. It observes, in that regard, that legitimate expectations can be based only on factual elements known at the moment of the adoption of a decision and not on uncertain future events, such as, in the present case, the introduction of a new administrative interpretation.
117 In that regard, the Commission notes that, according to the case-law of the General Court, in particular the judgment of 15 November 2018, Deutsche Telekom v Commission (T‑207/10, EU:T:2018:786, paragraph 98), application of the principle of the protection of legitimate expectations concerns the continuity of an existing situation which, by definition, arose before the act giving rise to the expectation in its continuity.
118 In its view, the General Court disregarded that case-law, thereby making an error of law in the interpretation and application of the principle of the protection of legitimate expectations by finding, in the judgments under appeal, that until 21 December 2007, the date of the decision to initiate the formal investigation procedure, the beneficiaries of the tax scheme laid down in Article 12(5) of the TRLIS had legitimately been able to take the view, on the basis of the Commission’s answers to the parliamentary questions referred to in paragraph 5 of the present judgment, that the scheme in question did not constitute State aid in so far as concerned either direct acquisitions of shareholdings or indirect acquisitions of shareholdings, and by inferring from that finding that the Commission had made an error of law by refusing to acknowledge, in the decision at issue, that those beneficiaries had legitimate expectations in respect of their indirect acquisitions of shareholdings.
119 Banco Santander, Santusa, Abertis, Axa, SGAB, Telefónica, Iberdrola, Ferrovial, Serveo Servicios, Amey UK and Arcelormittal Spain dispute that line of argument.
120 According to those parties, the third ground of appeal is based on the incorrect premiss that indirect acquisitions of shareholdings do not fall within the scope of Decisions 2011/5 and 2011/282.
121 Consequently, if the Court of Justice were to find, when examining the first two grounds of appeal, that the General Court was correct to find that the scope of those decisions includes indirect acquisitions of shareholdings, the third ground would become ineffective.
122 As is apparent from examination of the first ground of appeal, in view of their clear wording, Decisions 2011/5 and 2011/282 must be understood as meaning that the legitimate expectations recognised by the Commission in those decisions relate to both direct acquisitions of shareholdings and to indirect acquisitions of shareholdings.
123 Accordingly, even assuming that the General Court erred in law in the interpretation or application of the principle of the protection of legitimate expectations by finding that the beneficiaries of the tax scheme laid down in Article 12(5) of the TRLIS could legitimately believe until 21 December 2007, on the basis of the Commission’s answers to the parliamentary questions referred to in paragraph 5 of the present judgment, that that scheme did not constitute a State aid scheme, the fact would remain that in Decisions 2011/5 and 2011/282 the Commission itself found that such legitimate expectations existed, which it did explicitly both as regards direct acquisitions of shareholdings and as regards indirect acquisitions of shareholdings.
124 As a result, the General Court’s alleged error in the interpretation or application of the principle of the protection of legitimate expectations, invoked in the third ground of appeal, is not such as to vitiate the annulment of the decision at issue on the basis of the infringement of the principle of legal certainty that has been confirmed on examination of the first ground of appeal.
125 Since the present ground of appeal is therefore ineffective, it must be rejected.
126 Since none of the grounds of appeal can be upheld, the appeals must be dismissed.
127 Under Article 184(2) of the Rules of Procedure of the Court of Justice, where the appeal is unfounded, the Court is to make a decision as to costs.
128 Article 138(1) of the Rules of Procedure, which is applicable to appeal proceedings by virtue of Article 184(1) thereof, provides that the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings.
129 Since the Kingdom of Spain, Banco Santander, Santusa, Abertis, Axa, SGAB, Telefónica, Iberdrola, Ferrovial, Serveo Servicios, Amey UK and Arcelormittal Spain have applied for costs and the Commission has been unsuccessful, the Commission must be ordered to bear its own costs and to pay those incurred by the Kingdom of Spain, Banco Santander, Santusa, Abertis, Axa, SGAB, Telefónica, Iberdrola, Ferrovial, Serveo Servicios, Amey UK and Arcelormittal Spain in the appeal proceedings. 1. Dismisses the appeals in Cases C‑776/23 P to C‑780/23 P; 2. Orders the European Commission to bear its own costs and to pay the costs incurred by the Kingdom of Spain, Banco Santander SA, Santusa Holding SL, Abertis Infraestructuras SA, Axa Mediterranean Holding SA, Sociedad General de Aguas de Barcelona SA, Telefónica SA, Iberdrola SA, Ferrovial SE, Serveo Servicios SA, Amey UK Ltd and Arcelormittal Spain Holding SL in relation to the appeals.