Thread by @ProfRuthMason

THREAD 1/ GenCt ANNULS Commission’s decision that Belgian Excess Profits regime was state aid. GC decision has few implications for Apple and other cases but significant impact on EC’s ability to use state aid to fight tax competition. #taxtwitter
curia.europa.eu/juris/document…

https://twitter.com/EUCourtPress/status/1095973020991188992

2/ General Court held that the EC did not carry its burden to show that the Belgian regime was an “aid scheme.” This does NOT mean that individual rulings issued under the regime did not confer illegal aid.

3/ Commission has a choice between tactics: It can challenge the individual rulings as “individual aid” (costly), or the whole ruling regime as a an “aid scheme” (efficient).

4/ But the Commission’s burden to show an “aid scheme” is high. All the legal elements of the regime have to be clear in the law and add up to state aid. This includes beneficiaries, nature of the aid, etc.

5/ And any administrative involvement (e.g., granting a ruling) cannot involve exercise of significant discretion. It has to be a mechanical application of the “scheme.”

6/ Commission had alleged, supporting its argument with evidence from rulings, that Belgium exempted “excess profits” for only certain companies (multinationals with new business in Belgium).

7/ The “excess profit” was calculated as the difference between the routine and residual profits as calculated under TNMM, with the same company assumed to be the untested party first and then the tested party (!!!)

8/ But that ‘double TNMM’ trick wasn’t written down in Belgian law. So the GC said that the EC couldn’t say it was part of the “aid scheme” (tho presumably the EC could point to this in an individual aid case)

9/ EC also tried to show w evidence from rulings, that the beneficiaries of the excess-profits regime were selected (MNEs, conducted new business in Belgium, etc). But the selection wasn’t written down in Belgian law, either, so it couldn’t count towards the “aid scheme.”

10/ And so on… See where I’m going with this? The GenCt did NOT hold that Belgium granted no illegal aid. It just held that the Commission hadn’t carried its burden to show that Belgium had an aid “scheme.”

11/ Conceivably, even if the CJEU affirms, the Commission can open dozens of individual aid cases against Belgium for individual rulings issued under the excess-profits regime (there’s no stare decisis or re judicata for the EC on state aid in general anyway).

12/ Larger implications if affirmed: Commission will have trouble making “scheme” claims if any part of the scheme involves administrative involvement or depends on calculations or judgments not precisely described in written law.

13/ Implications: MSs should not include obvious aid in their statutes, but they still may be able to get away with a lot in rulings.

14/ Implications for Apple if affirmed: Not much. The GenCt did not reach the merits of any issue. It did recite that allocation rules are not the exclusive province of MSs, but we already knew that.

15/ Money quotes on allocation, paras 64-7:

para 64 … it falls within the competence of the Member States to designate tax bases and to spread the tax burden across the different factors of production and economic sectors …

para 65 However, that does not mean that every tax measure which affects inter alia the tax base … falls outside the scope of Article 107 TFEU. If such a measure in practice discriminates … and thereby grants the beneficiaries of the measure selective advantages …

para 67 It follows … the Commission … cannot be accused of having exceeded its powers by examining the measures comprising the alleged scheme at issue in order to determine whether they constituted State aid …