Tag: Article 107 TFEU

TFEU provision on State Aid

Article 107

1. Save as otherwise provided in the Treaties, 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 internal market.

2. The following shall be compatible with the internal market:

(a) aid having a social character, granted to individual consumers, provided that such aid is granted without discrimination related to the origin of the products concerned;

(b) aid to make good the damage caused by natural disasters or exceptional occurrences;

(c) aid granted to the economy of certain areas of the Federal Republic of Germany affected by the division of Germany, in so far as such aid is required in order to compensate for the economic disadvantages caused by that division. Five years after the entry into force of the Treaty of Lisbon, the Council, acting on a proposal from the Commission, may adopt a decision repealing this point.

3. The following may be considered to be compatible with the internal market:

(a) aid to promote the economic development of areas where the standard of living is abnormally low or where there is serious underemployment, and of the regions referred to in Article 349, in view of their structural, economic and social situation;

(b) aid to promote the execution of an important project of common European interest or to remedy a serious disturbance in the economy of a Member State;

(c) aid to facilitate the development of certain economic activities or of certain economic areas, where such aid does not adversely affect trading conditions to an extent contrary to the common interest;

(d) aid to promote culture and heritage conservation where such aid does not affect trading conditions and competition in the Union to an extent that is contrary to the common interest;

(e) such other categories of aid as may be specified by decision of the Council on a proposal from the Commission.

The European Commission vs Fiat Chrysler Finance Europe, November 2022, European Court of Justice, Case No C-885/19 P and C-898/19 P

The European Commission vs Fiat Chrysler Finance Europe, November 2022, European Court of Justice, Case No C-885/19 P and C-898/19 P

/ Arm's length principle, Arm’s Length Principle, Article 107 TFEU, Article 108 TFEU, Decision in favor of taxpayer, Equal Treatment , EU State Aid, European Court of Justice, European Union, Fiat, Financial Transactions, Ireland, Luxembourg, Principle of legal certainty, Selective advantage, State Aid, Tax ruling, TNMM
In 2012, the Luxembourg tax authorities issued a tax ruling in favour of Fiat Chrysler Finance Europe (‘FFT’), an undertaking in the Fiat group that provided treasury and financing services to the group companies established in Europe. The tax ruling at issue endorsed a method for determining FFT’s remuneration for these services, which enabled FFT to determine its taxable profit on a yearly basis for corporate income tax in Luxembourg. In October 2015, the Commission concluded that the tax ruling constituted State aid under Article 107 TFEU and that it was operating aid that was incompatible with the internal market. The Commission found that the Grand Duchy of Luxembourg was required to recover the unlawful and incompatible aid from FFT. FFT brought an action before the General Court for annulment of the Commission’s decision. In it’s Judgement of September 2019, the General Court dismissed the actions brought by FFT and confirmed the validity of the Commission’s decision. This decision was ... Read more
The European Commission vs. Ireland, December 2021, European Court of Justice Case, AG Opinion, No C-898/19 P (ECLI:EU:C:2021:1029)

The European Commission vs. Ireland, December 2021, European Court of Justice Case, AG Opinion, No C-898/19 P (ECLI:EU:C:2021:1029)

/ Arm's length principle, Arm’s Length Principle, Article 107 TFEU, Article 108 TFEU, Decision on interpretation of rule, Equal Treatment , EU State Aid, European Court of Justice, European Union, Intellectual property, Ireland, Luxembourg, Principle of legal certainty, Selective advantage, State Aid, Tax ruling, TNMM
At issue in this case is whether the arm’s length principle as described in the OECD Transfer Pricing Guidelines can be applied by the EU in determining if state aid had been granted. In 2012, the Luxembourg tax authorities issued a tax ruling in favour of Fiat Chrysler Finance Europe (‘FFT’), an undertaking in the Fiat group that provided treasury and financing services to the group companies established in Europe. The tax ruling at issue endorsed a method for determining FFT’s remuneration for these services, which enabled FFT to determine its taxable profit on a yearly basis for corporate income tax in the Grand Duchy of Luxembourg. In 2015, the Commission concluded that the tax ruling constituted State aid under Article 107 TFEU and that it was operating aid that was incompatible with the internal market. The Commission found that the Grand Duchy of Luxembourg was required to recover the unlawful and incompatible aid from FFT. FFT brought an action ... Read more
The European Commission vs. Fiat Chrysler Finance Europe, December 2021, European Court of Justice Case, AG Opinion, No C-885/19 P (ECLI:EU:C:2021:1028)

The European Commission vs. Fiat Chrysler Finance Europe, December 2021, European Court of Justice Case, AG Opinion, No C-885/19 P (ECLI:EU:C:2021:1028)

/ Arm's length principle, Arm’s Length Principle, Article 107 TFEU, Article 108 TFEU, Decision in favor of taxpayer, Equal Treatment , EU State Aid, European Court of Justice, European Union, Financial Transactions, Ireland, Luxembourg, Principle of legal certainty, Selective advantage, State Aid, Tax ruling, TNMM
In 2012, the Luxembourg tax authorities issued a tax ruling in favour of Fiat Chrysler Finance Europe (‘FFT’), an undertaking in the Fiat group that provided treasury and financing services to the group companies established in Europe. The tax ruling at issue endorsed a method for determining FFT’s remuneration for these services, which enabled FFT to determine its taxable profit on a yearly basis for corporate income tax in the Grand Duchy of Luxembourg. In 2015, the Commission concluded that the tax ruling constituted State aid under Article 107 TFEU and that it was operating aid that was incompatible with the internal market. The Commission found that the Grand Duchy of Luxembourg was required to recover the unlawful and incompatible aid from FFT. FFT brought an action before the General Court for annulment of the Commission’s decision. In it’s Judgement of September 2019 Union , the General Court dismissed the actions brought by FFT and confirmed the validity of the ... Read more
The European Commission vs. Nike and the Netherlands, July 2021, European Court of Justice Case No T-648/19

The European Commission vs. Nike and the Netherlands, July 2021, European Court of Justice Case No T-648/19

/ Article 107 TFEU, Article 108 TFEU, Converse, Decision on interpretation of rule, Equal Treatment , EU State Aid, European General Court, European Union, Intellectual property, Licence agreement, Netherlands, Nike, Royalty fee payments, Selective advantage, State Aid, Tax ruling
In 2016 the European Commission announced that it had opened an in-depth investigation to examine whether tax rulings (unilateral APA’s) granted by the Netherlands had given Nike an unfair advantage over its competitors, in breach of EU State aid rules. The formal investigation concerned the tax treatment in the Netherlands of two Nike group companies, Nike European Operations Netherlands BV and Converse Netherlands BV. These two operating companies develops, markets and records the sales of Nike and Converse products in Europe, the Middle East and Africa (the EMEA region). Nike European Operations Netherlands BV and Converse Netherlands BV obtained licenses to use intellectual property rights relating to Nike and Converse products in the EMEA region. The two companies obtained the licenses, in return for a tax-deductible royalty payment, from two Nike group entities, which are currently Dutch entities that are “transparent” for tax purposes (i.e., not taxable in the Netherlands). From 2006 to 2015, the Dutch tax authorities issued five ... Read more