State Aid

The outlook for 2016. 

The European Commission is intending to continue its inquiries into tax rulings practices in “all EU Member States, as well as the ongoing investigations into tax rulings in Ireland, Luxembourg and Belgium”, according to Margrethe Vestager, the Commissioner for Competition. She has also indicated that more cases are to be expected if there are indications that EU State aid rules are not being complied with. The latest case, opened on 03 December 2015, supports that statement. It concerns two tax sweeteners given by Luxembourg to McDonalds. A ruling on the aid allegedly given by Ireland to Apple is due in 2016. On 27 November 2015, the Dutch Government appealed against the European Commission’s decision finding that the Netherlands had given tax advantages to Starbucks.

The General Court’s judgment in Spain and Others v Commission (Case T-515/13), which was handed down on 17 December 2015, might have an impact on the European Commission’s drive to stamp out tax sweeteners. The General Court ruled that the European Commission’s decision against Spain’s tax lease system for sea-going vessels should be annulled on the basis that Spain had granted no selective advantage. The judgment arguably acts as a reminder that selectivity is an important criterion to be fulfilled in order to prove unlawful State aid. However, it is likely that State aid in the form of favourable tax treatment is likely to feature heavily in the European Commission’s future enforcement efforts. Indeed, on 21 December 2015 the European Commission invited Greece to better target its tonnage tax and related support measures in the maritime sector. On 22 December 2015, Commissioner Vestager rejected criticisms that the Commission’s investigations into tax rulings are unfairly comparing multinationals with SMEs. The Commissioner’s view is that many tax rulings comply strictly with the rules, providing clearly documented transfer prices which relate to the market and bear external comparisons. From that perspective it is possible to craft rulings that are not selective in nature, which is what the Commission expects to see in compliant rulings.

Broadcasting also appears to be another area where there is some activity, with Denmark’s TV 2 and the European Commission going to the European Court of Justice to confirm the legality of State subsidies for the public broadcaster. On 27 November 2015, the General Court confirmed the European Commission’s decision declaring State aid to terrestrial TV broadcasters in Spain illegal. This decision may be the subject of a further appeal, although Spain has not commented on this as yet.

The European Commission is also seeking comments on the conditions under which it might in the future apply a simplified procedure for certain categories of state aid, with feedback to be provided by stakeholders by 06 April.

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