In a Polish case, the ECJ has commented on the distinction between tax exemptions and state aid and specified under what circumstances tax exemptions may be prohibited by EU law.
The ECJ overturned an earlier judgment of the European General Court and held that the German tax legislation concerning the possibility of a loss-carry forward to future tax years despite a harmful share acquisition in cases of a rescue plan to save the company from insolvency – known as the salvage clause - is not illegitimate state aid.
Back in June 2017 we informed you of the Supreme Tax Court's referral to the European Court of Justice of the question as to whether the RETT exemption on conversions(Section 6a Real Estate Transfer Tax Act) constitutes illicit State Aid.
In a most recent judgment, the European Court of Justice (ECJ) confirmed the findings of the EU Commission in a Belgian case, namely that local tax exemptions granted by way of tax rulings to multinational companies constitutes selective and thus illicit State Aid. With this, the ECJ sets aside the first-instance decision of the European General Court and refers the case back for further review on other aspects of the case.
In a request for a preliminary ruling, the Supreme Tax Court has referred several questions to the ECJ regarding the compatibility of non-profit tax status and the prohibition of state aid under EU law. The question to be answered is whether the extension of tax relief for special-purpose entities to companies that provide services for remuneration in cooperation with a corporation that is recognized as a non-profit organization (so-called service corporation) constitutes illicit state aid in accordance with Art. 107 of the Treaty on the Functioning of the European Union (TFEU).
In a recent ruling, the Supreme Tax Court decided that companies in difficulty are not eligible for electricity tax relief as provided for in Sec. 9b and Sec. 10 Electricity Tax Act. Such relief constitutes illegal State aid as set forth in Article 107 (1) of the Treaty on the Functioning of the European Union (TFEU). The Supreme Tax Court was called for the first time to deal with this issue.
Advocate General Kokott is of the view that the Commission erred in deciding that Luxembourg had granted unauthorized state aid to Amazon in the form of tax advantages.
The ECJ has upheld a Commission ruling to the effect that the exemption from the provision for loss forfeiture on change of shareholders for troubled companies being rescued constitutes unlawful state aid.
The General Court invalidates the Commission’s decision declaring the Spanish tax scheme on the deduction for indirect acquisitions of shareholdings in foreign companies unlawful.
On 21 July 2021 Luxembourg has filed an appeal against the judgment of the General Court of 12 May 2021 in the joined cases T-516/18 and T-525/18 (Luxembourg and Engie Global LNG Holding and Others / Commission) regarding certain tax rulings concerning the transfer of business activities within the Engie group.
The European Court of Justice in its judgment on two joined cases held today that the General Court wrongly upheld the Commission’s decision on State aid as regards the “tax rulings” issued by the Luxembourg tax authorities. The General Court erred when confirming the reference framework used by the Commission to apply the arm’s length principle to integrated companies in Luxembourg but failing to consider the specific rules implementing that principle in that Member State.
