Damp squib or shot across the bows?: the General Court gives judgment on the first of the advance ruling tax cases

The General Court today gave judgment on the first of the current round of advance tax ruling (“ATR”) cases (the most famous of which is probably the Apple/Ireland case). The case before it concerned the taxation of excess profits by Belgium (Joined Cases T-131/16 and T-263/16 Belgium and Magnetrol International v Commission ECLI:EU:T:2019:91).

As those following these cases will know, the key issue is the question of selectivity: did the treatment of the taxpayer under the ATR amount to a selective advantage?

Unfortunately for those seeking enlightenment on the General Court’s approach to that fascinating and controversial question, the General Court did not consider that issue at all. That was because it was able to quash the Commission’s decision on another point, namely the Commission’s description of the Belgian regime under which the ATRs were issued as an “aid scheme”. The key requirement of an “aid scheme” is that it sets out who is entitled to the aid and what the conditions of entitlement are, leaving the granting authority with no discretion other than to apply the technical criteria of the scheme. The General Court analysed the Belgian legislation at issue and found that it did not meet those tests: too much discretion was left to each individual ATR decision.

That aspect of the judgment is of interest to those needing to apply the general concept of “aid scheme” (and to those interested in the particular Belgian tax legislation at issue): but it does not throw any light on how the Court will approach case such as Apple/Ireland, where what is alleged is an individual aid rather than an aid scheme.

The only point which is of relevance to the Apple/Ireland and similar cases is the Court’s firm dismissal of submissions by Belgium and the beneficiary (supported, unsurprisingly, by Ireland) to the effect that the Commission’s approach to ATRs interfered with the power of Member States to determine their direct taxes. The Court repeats the general response, namely that that power nonetheless has to be exercised in conformity with the State aid rules. That is the only clue to the Court’s likely approach to Apple/Ireland – though only a very faint clue, given that the point is well-settled.

George Peretz QC

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