Today, the Court of Justice of the EU (ECJ) annulled the judgment of the General Court1 as well as the decision of the Commission2 that had decided that Luxembourg had granted the Engie group unlawful State aid in connection with restructuring operations in Luxembourg by means of various tax rulings issued by the Luxembourg tax authorities.
Following Advocate General Kokott’s opinion, the ECJ considers that the Commission made an error in the determination of the reference framework, which vitiates the whole of the analysis of the condition relating to selectivity. Indeed, the reference framework or the “normal” tax regime, from which the condition relating to selectivity must be analysed, must include the exemptions that the national tax authorities have considered applicable to a specific case as long as these exemptions are not obviously discriminatory and do not confer, in themselves, a selective advantage within the meaning of Union law. The Commission cannot therefore establish a derogation from a reference framework by limiting itself, as it did in this case, to observing that a measure deviates from a general objective of taxing all resident companies in the Member State concerned, without taking into account provisions of national law specifying how this objective is to be implemented.
For more background on AG Kokott’s opinion, please refer to our previous newsletter dated 10 July 2023.
1 Judgment of the General Court dated 12 May 2021, Luxembourg e.a./Commission, T-516/18 and T-525/18
2 Commission decision (UE) 2019/421 of 20 June 2018, on State aid SA.44888 (2016/C) (ex 2016/NN) implemented by Luxembourg in favour of ENGI
