Tag: Article 108 TFEU

TFEU provision on State Aid

Article 108

1. The Commission shall, in cooperation with Member States, keep under constant review all systems of aid existing in those States. It shall propose to the latter any appropriate measures required by the progressive development or by the functioning of the internal market.

2. If, after giving notice to the parties concerned to submit their comments, the Commission finds that aid granted by a State or through State resources is not compatible with the internal market having regard to Article 107, or that such aid is being misused, it shall decide that the State concerned shall abolish or alter such aid within a period of time to be determined by the Commission.

If the State concerned does not comply with this decision within the prescribed time, the Commission or any other interested State may, in derogation from the provisions of Articles 258 and 259, refer the matter to the Court of Justice of the European Union direct.

On application by a Member State, the Council may, acting unanimously, decide that aid which that State is granting or intends to grant shall be considered to be compatible with the internal market, in derogation from the provisions of Article 107 or from the regulations provided for in Article 109, if such a decision is justified by exceptional circumstances. If, as regards the aid in question, the Commission has already initiated the procedure provided for in the first subparagraph of this paragraph, the fact that the State concerned has made its application to the Council shall have the effect of suspending that procedure until the Council has made its attitude known.

If, however, the Council has not made its attitude known within three months of the said application being made, the Commission shall give its decision on the case.

3. The Commission shall be informed, in sufficient time to enable it to submit its comments, of any plans to grant or alter aid. If it considers that any such plan is not compatible with the internal market having regard to Article 107, it shall without delay initiate the procedure provided for in paragraph 2. The Member State concerned shall not put its proposed measures into effect until this procedure has resulted in a final decision.

4. The Commission may adopt regulations relating to the categories of State aid that the Council has, pursuant to Article 109, determined may be exempted from the procedure provided for by paragraph 3 of this Article.

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

/ EU State Aid, Financial Transactions, Arm’s length principle, Article 107 TFEU, Article 108 TFEU, Equal Treatment , Fiat, Ireland, Luxembourg, Principle of legal certainty, Selective advantage, Tax ruling, Transactional net margin method (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 Judgment 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)

/ EU State Aid, Arm’s length principle, Article 107 TFEU, Article 108 TFEU, Equal Treatment , Intellectual property, Ireland, Luxembourg, Principle of legal certainty, Selective advantage, Tax ruling, Transactional net margin method (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)

/ EU State Aid, Financial Transactions, Arm’s length principle, Article 107 TFEU, Article 108 TFEU, Equal Treatment , Ireland, Luxembourg, Principle of legal certainty, Selective advantage, Tax ruling, Transactional net margin method (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 Judgment of September 2019 Union , the General Court dismissed the actions brought by FFT and confirmed the validity of the ... Read more
European Commission vs Nike and the Netherlands, July 2021, General Court of the European Union, Case No T-648/19

European Commission vs Nike and the Netherlands, July 2021, General Court of the European Union, Case No T-648/19

/ EU State Aid, Article 107 TFEU, Article 108 TFEU, Converse, Equal Treatment , Intellectual property, Licence agreement, Netherlands, Nike, Royalty fee payments, Selective advantage, 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
Advocate General’s Opinion in Belgian Excess Profit Exemption Scheme case before the EU Court of Justice

Advocate General’s Opinion in Belgian Excess Profit Exemption Scheme case before the EU Court of Justice

/ EU State Aid, Advance Ruling, Aid scheme, Article 108 TFEU, Belgium, Excess profit scheme, Prohibited aid
In the Advocate General Opinion delivered 3 December 2020, in the EU Commissions “Aid scheme” case against Belgium and Magnetrol International, it is proposed that the Court of Justice set aside the 2019 judgment of the General Court, on the ground that the Commission has, contrary to the findings of the General Court, sufficiently demonstrated in its decision that the Belgian practice of making downward adjustments to profits of undertakings forming part of multinational groups meets the conditions for the existence of an ‘aid scheme’. “In conclusion, the General Court incorrectly assumed that the conditions of Article 1(d) of Regulation 2015/1589 were not met in the present case. On the contrary, in the contested decision the Commission sufficiently demonstrated that the Belgian practice of making downward adjustments of the profits of undertakings forming part of a multinational group constitutes an aid scheme within the meaning of Article 1(d) of Regulation 2015/1589. The appeal is therefore well founded.” ... Read more
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