The Court of Justice of the European Union has overturned a 2019 EU General Court judgment (see EUROPE 12194/29) that had itself annulled the European Commission’s 2016 decision deeming the Belgian excess profits tax scheme to be unlawful State Aid, in a judgment on Thursday 16 September (Case C-337/19).
Between 2005 and 2015, the Belgian entities of 55 multinationals were able to benefit from a tax ruling from the Belgian tax authorities, if these entities could demonstrate the existence of a new situation (relocation of the central contractor to Belgium, creation of jobs or new investments). At that time, profits considered to be ‘surplus’ were exempt from corporate income tax because they exceeded the profits that would have been made by comparable standalone entities operating in similar circumstances.
In today’s judgment, the Court recalls that the classification of a State measure as an aid scheme presupposes that the following three cumulative conditions are met: - aid may be granted individually to undertakings on the basis of an “act”; - no further implementing measure is required for that aid to be granted; - undertakings to which individual aid may be granted must be defined “in a general and abstract manner”.
Based on the Advocate General’s opinion (see EUROPE 12615/30), the European judges clarify the concept of an “act”. They confirm that the term may also refer to a consistent administrative practice by the authorities of a Member State where that practice reveals a ‘systematic approach’. In their view, the General Court misapplied the term “act”.
In addition, the General Court committed a further error of law by failing to take into account that one of the essential features of the Belgian tax regime at issue was that the Belgian authorities had systematically granted the exemption for excess profits when the conditions were satisfied.
The Court therefore sets aside the judgment of the General Court of 2019 and refers the case back to it for a ruling on other aspects of the case, including the classification of the Belgian tax rulings as State Aid.
See the Court’s judgment: https://bit.ly/3EqBdgU (Original version in French by Mathieu Bion)