The EU General Court annuls the first two decisions of the Commission
On Friday, November 7, the General Court of the European Union delivered a judgment in the cases T-219/10, Autogrill España/Commission, and T-399/11, Banco Santander and Santusa/Comission, in which it annulled the first two decisions of the Commission on the nature of tax amortization of financial goodwill as State aid.
In these cases, which were defended by the firm as counsel for the appellants, the court resolved separate annulment actions filed against two decisions by the European Commission which considered that the possibility contained in article 12.5 of the Corporate Income Tax Law (subsequent revised text) on the tax amortization of financial goodwill generated as a result of the acquisition of shareholdings in foreign companies (within and outside the European Union) constituted illegal State aid which was incompatible with the internal market. In these decisions, which have now been annulled, the Commission had ordered, within certain limits, the recovery of that aid.
The annulment of both decisions was essentially based on the lack of selectivity of the measure. For a tax measure to be selective there must be a difference in treatment for some companies with regard to other companies in a comparable situation in the territory of the Member State in question. According to the court, the possibility of amortizing the financial goodwill was applicable to any company in any sector and of any size, with the only condition being that of performing a specific “financial transaction” (acquiring shareholdings in undertakings abroad) which is open to any company subject to the tax. The court also recalls that a tax measure does not become State aid because it entails a tax benefit for the companies in a Member State, as the selectivity should be evident within each State, and not through comparison between the applicable regime in that State and those of other Member States.
These two judgments of the General Court may be appealed to the Court of Justice of the EU within a time limit of two months.
The consequences of the annulment of these first two decisions of the Commission are complex and have implications for both national and European procedures, which is why we have compiled a document analyzing the various scenarios deriving from this case.
Garrigues Tax Department
