Equality under State aid rules and VAT

ABSTRACT

It is often overlooked that within the EU, tax concessions and advantageous tax procedures can constitute prohibited State aid not only in the field of direct taxation, but also within the framework of the harmonised system of EU VAT. The potential for conflict has indeed increased in recent years, because the European Court of Justice (CJEU) has successively expanded the concept of selective State aid laid down in Art. 107 (1) of the Treaty on the Functioning of the EU (TFEU). This article offers a critical analysis of how the CJEU has transformed the State aid prohibition into a broad non-discrimination standard, and it explores how this affects national legislation on preferential VAT regimes. In particular, the article highlights the increased relevance of correctly identifying the guiding principles of the VAT system, and how different perceptions of those idées directrices of the European VAT influence the outcome of the equal treatment analysis inherent to Art. 107 (1) TFEU. This is exemplified, in particular, with respect to VAT grouping regimes. Finally, the interaction with other equality standards is also discussed.

KEYWORDS:

• State aid
• selectivity
• value added tax
• equality principle
• non-discrimination
• tax neutrality

Acknowledgements

The author is grateful for comments received upon a presentation of the original paper at a conference at WU Vienna, and for the comments of two anonymous reviewers.

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

1 See, e.g. CJEU 10.4.2008—Case C-309/06, Marks & Spencer, EU:C:2008:211, para. 49; 29.10.2009—Case C-174/08, NCC Construction Danmark, EU:C:2009:669, para. 41; 10.11.2011—Case C-259/10 a.o., The Rank Group, EU:C:2011:719, para. 61; 31.1.2013—Case C-643/11, LVK-56, EU:C:2013:55, para. 55; 14.6.2017, Case C-38/16, Compass Contract Services, EU:C:2017:454, para. 21; 16.11.2017—Case C-308/16, Kozuba Premium Selection, EU:C:2017:869, para. 43.

2 See, e.g. CJEU 7.3.2017—Case C-390/15, RPO, EU:C:2017:174, paras. 37 et seq.; 14.7.2017—Case C-38/16, Compass Contract Services, EU:C:2017:454, para. 24.

3 See, e.g. CJEU 10.7.1984—Case 42/83, Dansk Denkavit, EU:C:1984:254, paras. 22 et seq. (regarding what is now Art. 110 TFEU); 26.10.2010—Case C-97/09, Schmelz, EU:C:2010:632 (regarding what is now Art. 56 TFEU).

4 Commission Notice on the application of the State aid rules to measures relating to direct business taxation, OJ C 384, 10.12.1998, pp. 3–9.

5 See http://ec.europa.eu/competition/state_aid/tax_rulings/index_en.html (last accessed on 5 February 2019).

6 Regarding the Court, see, e.g. CJEU 3.3.2005—Case C-172/03, Heiser, ECR I-1627, EU:C:2005:130; CJEU 23.4.2009—Case C-460/07, Puffer, EU:C:2009:254.

7 Englisch, in Rust/Micheau (eds), State Aid and Tax Law, 2013, p. 69.

8 See, e.g. CJEU 8.11.2001—Case C-143/99, Adria-Wien Pipeline and Wietersdorfer & Peggauer Zementwerke, ECR I-8365, para. 38; 8.9.2011—Joined Cases C-78/08 to C-80/08 Paint Graphos and Others, EU:C:2011:732, para. 45.

9 See, e.g. CJEU 15.11.2011—Joined Cases C-106/09 P and C-107/09 P, Commission and Spain v Government of Gibraltar and United Kingdom, EU:C:2011:732, para. 72.

10 See, e.g. CJEU 19.9.2000—Case C-156/98, Germany/Commission, EU:C:2000:467, para. 25.

11 See, e.g. CJEU 25.7.2018—Case C-128/16 P, Commission/Spain, EU:C:2018:591, para. 34.

12 See, e.g. CJEU 12.10.2016—Case C-340/15, Nigl, ECLI:EU:C:2016:764, para. 27.

13 See, e.g. CJEU 20.6.2013—Case C-219/12, Fuchs, EU:C:2013:413, para. 25.

14 See, e.g. CJEU 16.3.2004—Joined Cases C-264/01, C-306/01, C-354/01 and C-355/01, AOK Bundesverband and Others, ECR I-2493, EU:C:2004:150, para. 46.

15 CJEU 10.1.2006—Case C-222/04, Cassa di Risparmio di Firenze, EU:C:2006:8, para. 108; 27.6.2017—Case C-74/16, Congregación de Escuelas Pías Provincia Betania, EU:C:2017:496, para. 47.

16 CJEU 27.6.2017—Case C-74/16, Congregación de Escuelas Pías Provincia Betania, EU:C:2017:496, para. 46.

17 For a more extensive discussion of the criteria that should be relied on in order to determine, in the context of an indirect tax, whether a tax relief measure presumably benefits the consumer as the final taxpayer, or the business as the taxable person, see Englisch, EC Tax Review 2013, 9.

18 CJEU 3.3.2005—Case C-172/03, Heiser, ECR I-1627, EU:C:2005:130.

19 As a general rule, under the harmonised EU system of VAT an input VAT credit may be claimed only to the extent that input goods and services are used for the purposes of taxed transactions, pursuant to Art. 168 of the VAT Directive 2006/112/EC.

20 CJEU 3.3.2005—Case C-172/03, Heiser, ECR I-1627, EU:C:2005:130, para. 47.

21 For an extensive discussion of the judgement, see Englisch, in Rust/Micheau (eds), State Aid and Tax Law, 2013, p. 69.

22 CJEU 21.12.2016—Joined Cases C-164/15 P and C-165/15 P, Aer Lingus and Ryanair EU:C:2016:990, para. 99.

23 CJEU 21.12.2016—Joined Cases C-164/15 P and C-165/15 P, Aer Lingus and Ryanair, EU:C:2016:990, para. 98.

24 See EGC 5.2.2015—Case T-473/12, Aer Lingus, EU:T:2015:78, para. 105; 5.2.2015—Case T-500/12, Ryanair v.Commission, EU:T:2015:73, para. 136.

25 CJEU 21.12.2016—Joined Cases C-164/15 P and C-165/15 P, Aer Lingus and Ryanair, EU:C:2016:990, para. 92.

26 See AG Mengozzi 5.7.2016—Joined Cases C-164/15 P and C-165/15 P—Aer Lingus and Ryanair, EU:C:2016:515, paras. 62 et seq.

27 A fortiori, the recovery of unlawful aid should not be (ab-)used as a deterrent for undertakings so as to avoid that they become complicit in an aid scheme that has not been notified to the Commission in compliance with the procedure laid down by Art. 108(3) TFEU; see, however, AG Mengozzi 5.7.201—Joined Cases C-164/15 P and C-165/15 P, Aer Lingus and Ryanair, EU:C:2016:515, para. 65. Businesses in competitive markets will be forced to pass (at least some of) the tax relief on to their customers.

28 See, e.g. CJEU 19.9.2000—Case C-156/98, Germany/Commission, EU:C:2000:467, paras. 22 et seq.; 13.6.2002—Case C-382/99—Netherlands/Commission, EU:C:2002:363, paras. 11, 38 and 60–66.

29 The CJEU has formulated strict standards for the protection of legitimate expectations vis-à-vis the recovery of illegal aid; see, e.g. CJEU 20.9.1990—Case C-5/89, Commission/Germany, EU:C:1990:320, para. 14; 15.12.2005—Case C-148/04—Unicredito Italiano, EU:C:2005:774, paras. 104 et seq.

30 See CJEU 28.7.2001—Case C-403/10 P, Mediaset, EU:C:2011:533, para. 81.

31 For a detailed discussion, see Englisch in Rust/Micheau (eds), State Aid and Tax Law, pp. 69 et seq.; Luja in Rust/Micheau (eds), State Aid and Tax Law, p. 107 (at p. 114); for different opinions, see Bruc, EStAL 2018, 54 (60); Dobratz in Musil/Weber-Grellet, Europäisches Steuerrecht, 2019, Art. 108 AEUV para. 80.

32 See CJEU 16.5.2002—Case C-482/99, France v Commission, EU:C:2002:294, para. 24; 20.11.2003—Case C-126/01, GEMO SA, EU:C:2003:622, para. 24; 15.7.2004—Case C-345/02, Pearle and Others, EU:C:2004:448, para. 35; CFI 5.4.2006—Case T-351/02, Deutsche Bahn v Commission, EU:T:2006:104, para. 103. Likewise Jann, Nationale Steuern und das EG-Beihilfenverbot—ein Überblick, Festschrift Baudenbacher, 2007, p. 419 (at 428).

33 See CJEU 23.4.2009—Case C-460/07, Puffer, EU:C:2009:254, para. 70; See also Commission Notice on the notion of State aid as referred to in Art. 107(1) of the TFEU, COM (2016/C 262/2), Official Journal C 262, 19.7.2016, para. 44; Commission Decision 26.10.2015—COM(2015) 7225 final, para. 29; Boeshertz, EC Tax Review 2013, 214 (217). For a similar opinion, but based on different reasoning, see Terra, ‘Value Added Tax and State Aid Law in the EU’, Intertax 2012, 101 (110), who considers the measure to be ‘justified by the nature of the general system’ of Union legislation.

34 See, regarding the harmonised system of energy taxation, CFI 5.4.2006—Case T-351/02, Deutsche Bahn v Commission, EU:T:2006:104, para. 102.

35 Arguably, the Commission shares this view, as it refers to the judgement in Notice on the notion of State aid as referred to in Art. 107(1) of the TFEU, COM (2016/C 262/2), Official Journal C 262, 19.7.2016, para. 44.

36 Regarding the benchmark formula, see CJEU 27.3.1980—Case 61/79, Denkavit italiana, EU:C:1980:100, para. 31; CFI 5.4.2006—Case T-351/02, Deutsche Bahn v Commission, EU:T:2006:104, para. 100. Regarding its application in the field of VAT, see CJEU 10.12.2013—Case C-272/12 P, Commission v Ireland and Others, EU:C:2013:812 paras. 47 et seq.: an authorisation by the Council to introduce a tax exemption (granted on a proposal from the Commission) cannot replace the State aid control procedure under Art. 108 TFEU, due to peculiarities of the latter.

37 See Englisch, EC Tax Review 2013, 9.

38 Likewise Jatzke, EWS 2000, 491 (498). See also EGC 21.3.2012—Case T-50/06 RENV, Ireland v Commission, EU:T:2012:134 paras. 73 et seq., esp. para. 84.

39 Likewise Swinkels, IVM 2005, 311 (314).

40 See Commission Notice on the notion of State aid as referred to in Art. 107(1) of the TFEU, COM (2016/C 262/2), Official Journal C 262, 19.7.2016, para. 45 seq.; Commission Decision COM(2009) 10745 of December 23, 2009 on the Slovak tax advantages applied on electricity, coal and natural gas, para. 32.

41 See Commission Report 9.2.2004, C(2004)434, para. 72.

42 See CJEU 8.5.2003—Case C-384/01, Commission v France, EU:C:2003:264, para. 27; 3.4.2008—Case C-442/05, Zweckverband Torgau-Westelbien, EU:C:2008:184, paras. 41–43; 6.5.2010—Case C-94/09, Commission v France, EU:C:2010:253, paras. 25 et seq.; 27.2.2014—Joined Cases C-454/12 and C-455/12, Pro Med Logistik, EU:C:2014:111, paras. 43–45.

43 CJEU 18.1.2018—Case C-483/16, Stadion Amsterdam CV, EU:C:2018:22.

44 See Proposal for a Council Directive amending Directive 2006/112/EC as regards rates of value added tax Brussels, 18.1.2018 COM(2018) 20 final, p. 7; and the corresponding Impact Assessment, Brussels, 18.1.2018 SWD(2018) 7 final, p. 47.

45 See Koenig/Busch, EWS 2009, 510 (514 et seq.); see also CJEU 3.3.2005—Case C-172/03, Heiser, EU:C:2005:130.

46 See, e.g. Commission Decision 11.7.2012, C(2012) 4217 final, paras. 137 et seq.

47 See, e.g. CJEU 21.12.2016—Joined Cases C-20/15 P and C-21/15 P, World Duty Free, EU:C:2016:981, para. 86; 19.12.2018—C-374/17, A Brauerei, EU:C:2018:1024, para. 22: ‘aid is selective, if … it represents discrimination against undertakings’.

48 See below at 3.1.1.

49 See below at 3.2.

50 This paper does not discuss the alleged de facto selectivity of the tax system itself where its general structure is inherently favouring certain, clearly defined categories of undertakings. See, to this effect, CJEU 21.12.2016—Joined Cases C-20/15 P and C-21/15 P, World Duty Free, EU:C:2016:981; 28.6.2018—Case C-203/16 P, Andres (faillite Heitkamp BauHolding) v Commission, EU:C:2018:505, paras. 90–93.

51 CJEU 18.7.2013—Case C-6/12, P Oy, EU:C:2013:525, para. 19; 21.12.2016—Joined Cases C-20/15 P and C-21/15 P, World Duty Free, EU:C:2016:981, para. 60.

52 CJEU 8.11.2001—Case C-143/99, Adria-Wien Pipeline and Wietersdorfer & Peggauer Zementwerke, EU:C:2001:598, para. 41; 3.3.2005—Case C-172/03, Heiser, EU:C:2005:130, para. 40; 22.6.2006—Joined Cases C-182/03 and C-217/03, Belgium and Forum 187 v Commission, EU:C:2005:266, para. 119; 6.9.2006—Case C-88/03, Portugal v Commission, EU:C:2006:511, para. 54; 11.9.2008—Cases C-428/06 to C-434/06, UGT Rioja and Others, EU:C:2008:488 to EU:C:2006:757, para. 46; 22.12.2008—Case C-487/06 P, British Aggregates v Commission, EU:C:2008:757, para. 82; 15.11.2011—Joined Cases C-106/09 P and C-107/09 P, Commission and Spain/Gibraltar and Others, EU:C:2011:732, para. 75; 21.12.2016—Joined Cases C-20/15 P and C-21/15 P, Commission v World Duty Free Group and Others, EU:C:2016:981, para. 57; 28.6.2018—Case C-203/16 P, Andres (faillite Heitkamp BauHolding) v Commission, EU:C:2018:505, para. 86.

53 CJEU 8.11.2001—Case C-143/99, Adria-Wien Pipeline and Wietersdorfer & Peggauer Zementwerke, EU:C:2001:598, para. 42; 15.12.2005—Case C-148/04, Unicredito Italiano, EU:C:2005:774, para. 51; 6.9.2006—Case C-88/03, Portugal v Commission, EU:C:2006:511, para. 52; 22.12.2008—Case C-487/06 P, British Aggregates v Commission, EU:C:2008:757, para. 83; 8.9.2011—Case C-279/08 P, Commission v Netherlands, EU:C:2011:551, para. 62; 15.11.2011—Joined Cases C-106/09 P and C-107/09 P, Commission and Spain/Gibraltar and Others, EU:C:2011:732, para. 145; 21.6.2012—Case C-452/10 P, BNP Paribas and BNL v Commission, EU:C:2012:366, para. 101; 18.7.2013—Case C-6/12—P Oy, EU:C:2013:525, para. 22; 8.9.2001—Joined Cases C-78/08 to C-80/08, Paint Graphos and Others, EU:C:2011:550, paras. 64 and 65; 29.3.2012—Case C-417/10, 3M Italia, EU:C:2012:184, para. 40.

54 See landmark case CJEU 6.9.2006—Case C-88/03, Portugal v. Commission, ECR I-7115, EU:C:2006:511, para. 81. Some commentators are critical of this restriction, see, e.g. Pinto, Tax Competition and EU Law, 2003, pp. 144 et seq.; Strüber, Steuerliche Beihilfen, 2005, p. 108 and pp. 354 et seq.; Szudoczky, EStAL 2016, p. 357 (at p. 374). In the author's view, the Court's has, in principle, rightfully limited the available justifications; see Englisch in Schaumburg/Englisch (eds.), Europäisches Steuerrecht, 2nd ed. 2019, para. 9.33; likewise Piernas López, EStAL 2018, p. 274 (at pp. 279 et seq.).

55 See to that effect, e.g. CJEU 18.7.2013—Case C-6/12, P Oy, EU:C:2013:525, para. 18.

56 CJEU 29.3.2012—Case C-417/10, 3M Italia, EU:C:2012:184, para. 42, and 21.12.2016—Joined Cases C-20/15 P and C-21/15, Commission v World Duty Free Group and Others, EU:C:2016:981, para. 59; 28.6.2018—Case C-203/16 P, Andres (faillite Heitkamp BauHolding) v Commission, EU:C:2018:505, para. 94.

57 See, e.g. CJEU 15.6.2006—Case C-393/04, Air Liquide Industries Belgium,, EU:C:2006:403, paras. 31–32; 15.12.2005—Case C-148/04, Unicredito Italiano, EU:C:2005:774, paras. 48–50.

58 See CJEU 19.9.2000—Case C-156/98, Germany v Commission, EU:C:2000:467, paras. 22–23.

59 Shi, ET 2016, 371 (372); Szudoczky, EStAL 2016, 357 (359 et seq.); Dobratz in Musil/Weber-Grellet, Europäisches Steuerrecht, 2019, Art. 107 AEUV paras. 77–78. See also AG Wahl 22.1.2015—Case C-15/14 P, Commission v MOL, EU:C:2015:32, para. 53; CJEU 4.6.2015—Case No. C-15/14 P, Commission/MOL, EU:C:2015:362, para. 61; AG Wahl 15.9.2016—Case C-524/14 P, Hansestadt Lübeck, EU:C:2016:693, paras. 74–76.

60 See CJEU 9.10.2014—Case .C-522/13, Ministerio de Defensa and Navantia, EU:C:2014:2262, para. 33 seq.; 21.12.2016—Joined Cases C-20/15 P and C-21/15 , World Duty Free, EU:C:2016:981, para. 54 et seq.; 26.4.2018—Joined Cases C-236/16 and C-237/16, ANGED, EU:C:2018:291, para. 32; 25.7.2018—Case C-128/16 P, Commission v Spain and Others, EU:C:2018:591, paras. 69 et seq.; AG Wathelet, 28.7.2016—Case C-20/15 P and C-21/15 P, World Duty Free, EU:C:2016:624, para. 92. Concurring with the CJEU: CFE Opinion Statement, ET 2017, 354 (357); Rossi-Maccanico in Rust/Micheau (eds.), State Aid and Tax Law, 39 (40); Rossi-Maccanico in Weber (Hrsg.), EU Income Tax Law: Issues for the Years Ahead, 2013, 123 (133); Szudoczky, The Sources of EU Law and their Relationships: Lessons for the Field of Taxation, 581; Ismer/Piotrowski, Intertax 2015, 559 (562 et seq.).

61 See AG Kokott, 9.11.2017—Joined Cases C-236/16 and C-237/16, ANGED, EU:C:2017:854, para. 85; see also Kokott, Das Steuerrecht der Europäischen Union, 2018, § 3 para. 165.

62 CJEU 21.12.2016—Joined Cases C-20/15 P and C-21/15, World Duty Free, EU:C:2016:981.

63 CJEU 19.12.2018—C-374/17, A Brauerei, EU:C:2018:1024, para. 27.

64 As explained above at I., and further below at 2., tax benefits that have been introduced by a Member State exercising its the tax and economic policy discretion will normally fulfil all other criteria of the State aid concept laid down in Art. 107(1) TFEU.

65 This development has several supporters in literature; e.g. Lenaerts in Kanninen (ed.), EU Competition Law in Context, 2009, 291 (299); M. Lang, IStR 2010, 570 (577); M. Lang, EStAL 2012, 411 (420); Ezcurra, Intertax 2013, 340 (343 seq.); Azizi in Rust/Micheau (eds), State Aid and Tax Law, pp. XV et seq.; Blumenberg/Kring, Europäisches Beihilferecht und Besteuerung, 2011, p. 18.

66 Under Art. 107(2) TFEU, certain justifications must be accepted by the Commission and it has no political discretion in this regard; however, the provision covers only marginal aspects of fiscal State aid and has furthermore been narrowly interpreted by the Commission and the Court, see, e.g. CJEU 19.9.2000—Case C-156/98, Germany/Commission, EU:C:2000:467, paras. 49 et seq.

67 See, in this regard, Commission Decision 27.7.2017, C(2017) 5176, para. 77.

68 See also AG Kokott, 9.11.2017—Joined Cases C-236/16 and C-237/16, ANGED, EU:C:2017:854, para. 82: ‘consistency test’.

69 See AG Kokott, 16.4.2015—Case C-66/14, Finanzamt Linz, EU:C:2015:242, paras. 85 and 109 et seq., in particular para. 113 (need to preserve Member State sovereignty); AG Kokott, 9.11.2017—Joined Cases C-236/16 and C-237/16, ANGED, EU:C:2017:854, para. 84.

70 AG Wathelet 28.7.2016—Case C-20/15 P, Commission v World Duty Free Group, EU:C:2016:624, para. 84.

71 CJEU 21.12.2016—Case C-20/15 P, Commission v World Duty Free Group, EU:C:2016:981, paras. 70–71.

72 AG Wathelet 28.7.2016—Case C-20/15 P, Commission v World Duty Free Group, EU:C:2016:624.

73 AG Saugmandsgaard Øe 19.9.2018—Case C-374/17, A-Brauerei, EU:C:2018:741, paras. 61 et seq.

74 See CJEU 19.12.2018—C-374/17, A Brauerei, EU:C:2018:1024, paras. 25–27.

75 See CJEU 19.12.2018—C-374/17, A Brauerei, EU:C:2018:1024, paras. 20–24.

76 Likewise Forrester, EC Tax Review 2018, 19 (26); for a different opinion in support of the CJEU, see Merola, 39 World Competition 2016, 533 (548 et seq.).

77 See Cremer in Calliess/Ruffert⁴, Art. 107 AEUV para. 25, with further references.

78 For the sake of the argument, it should be assumed that the allowance could be converted into a refundable tax credit in a loss situation.

79 Regarding those criteria, cf. CJEU 20.12.2017—Case C-70/16 P, Comunidad Autónoma de Galicia and Retegal / Commission, EU:C:2017:1002, para. 61, with further references.

80 See, e.g. CJEU 15.6.2006—Joined Cases C-393/04 and C-41/05, Air Liquide Industries Belgium, EU:C:2006:403, para. 29; 19.3.2013—Joined Cases C-399/10 P and C-401/10 P, Bouygues and Bouygues Télécom v Commission, EU:C:2013:175, para. 101 and 9.10.2014—Case C-522/13, Ministerio de Defensa and Navantia, EU:C:2014:2262, para. 22.

81 However, it is possible to formulate abstract criteria for this distinction which increase legal certainty, see Englisch in Schaumburg/Englisch (eds), Europäisches Steuerrecht, 2015, para. 9.30.

82 Regarding the comparability criterion, the Court itself has recently shown a tendency to (implicitly) adapt its level of scrutiny to the degree of specificity of the measure, and concede a significant margin of appreciation in case of measures that affected a variety of businesses from different sectors of the economy; see CJEU 26.4.2018—Joined Cases C-236/16 and C-237/16, ANGED, EU:C:2018:291, paras. 37 et seq.

83 See, also regarding the following, Lang, EstAL 2012, 411 (419).

84 Lang, EstAL 2012, 411 (420); in a similar vein, albeit critical of the view that it is not possible to rationally determine the reference system, see Hey, StuW 2015, 331 (343). See also AG Bobek 21.4.2016—Case C-270/15 P, Belgium v Commission, EU:C:2016:289, para. 34; Micheau, EC Tax Review 2008, 276 (281–282 and 283).

85 See, in general, Englisch in Tipke et al. (eds), Gestaltung der Steuerrechtsordnung, Festschrift für Joachim Lang, 2010, p. 167; and regarding State aid control in particular, Englisch in Schaumburg/Englisch (eds), Europäisches Steuerrecht, 2015, para. 9.29.

86 Likewise Szudoczky, The Sources of EU Law and their Relationships: Lessons for the Field of Taxation, 2013, p. 566; Bartosch, BB 2016, 855 (859); Hey, StuW 2015, 331 (339–340).

87 As a caveat, it should be mentioned that this might be different in case of carve-outs from special anti-avoidance rules, which frequently serve to better target abusive schemes and exclude transactions where there is no or only a low risk of abuse and where the application of the general rule is therefore acceptable. In this regard, special presumptions as to whether such carve-outs derogate from, or rather correspond to, the benchmark taxation are needed; for further details, see Englisch in Schaumburg/Englisch (eds), Europäisches Steuerrecht, 2019, para. 9.29, forthcoming.

88 See also CJEU 16.7.1998—Case C-298/96, Oelmühle Hamburg, EU:C:1998:372, para. 37.

89 Likewise Rossi in Weber (ed.), EU Income Tax Law: Issues for the Years Ahead, 2013, 123 (128–129).

90 See, e.g. Commission Decision 28.10.2009, C 10/07, paras. 109 et seq. But see also the clear rejection of such an approach, precisely for the reason mentioned above, in Commission Decision 23.3.2015—C(2015) 66 final, para. 153. This will be discussed more in detail below.

91 See, e.g. CJEU 8.9.2011—Joined Cases C-78/08 to C-80/08, Paint Graphos and Others, EU:C:2011:732, as discussed in one of the next paragraphs.

92 See also Lyal, Fordham Int’l Law Journal 2015, 1017 (1035).

93 CJEU 28.6.2018—Case C-203/16 P, Andres (faillite Heitkamp BauHolding) v Commission, EU:C:2018:505, para. 86.

94 CJEU 28.6.2018—Case C-203/16 P, Andres (faillite Heitkamp BauHolding) v Commission, EU:C:2018:505, paras. 88–89.

95 CJEU 8.9.2011—Joined Cases C-78/08 to C-80/08, Paint Graphos and Others, EU:C:2011:732.

96 See CJEU 8.9.2011—Joined Cases C-78/08 to C-80/08 Paint Graphos and Others, EU:C:2011:732, paras. 50–51.

97 See CJEU 8.9.2011—Joined Cases C-78/08 to C-80/08 Paint Graphos and Others, EU:C:2011:732, paras. 60–61.

98 Likewise Lyal, Fordham Int’l Law Journal 2015, 1017 (1035).

99 Cf. Commission Decision 27.7.2017, C(2017) 5174, para. 104; and Commission Decision 27.7.2017, C(2017) 5176, para. 74.

100 See, e.g. CJEU 8.11.2001—Case. C-143/99, Adria-Wien Pipeline and Wietersdorfer & Peggauer Zementwerke, ECR I-8365 EU:C:2001:598, para. 41; 8.9.2011—Case C-279/08 P, Commission v Netherlands, ECR I-7671, EU:C:2011:551, para. 52; Commission Decision 28.10.2009—C 10/07, paras. 109 et seq.

101 Likewise Szudoczky, The Sources of EU law and their Relationships: Lessons for the Field of Taxation, 559; Shi, ET 2016, 371 (372); See also Commission Decision 20.6.2018—C(2018) 3839 final (‘Engie—formerly GDF Suez’), paras. 178 et seq. Still in favour of such an approach is Mang, ET 2015, 78 (81); and a similar tendency is inherent to the approach by Ismer/Karch, IStR 2014, 130 (134), who argue that the reference system should be determined as the ‘smallest system possible’ rather than by virtue of the fundamental principles underlying the tax system as a whole.

102 Cf. CJEU 6.9.2006—Case C-88/03, Portugal v. Commission, ECR I-7115, EU:C:2006:511, paras. 81 et seq.

103 See Commission Notice on the notion of State aid as referred to in Art. 107(1) of the TFEU, COM (2016/C 262/2), Official Journal C 262, 19.7.2016, para. 138.

104 See Commission Notice on the notion of State aid as referred to in Art. 107(1) of the TFEU, COM (2016/C 262/2), Official Journal C 262, 19.7.2016, para. 138.

105 Cf. CJEU 29.4.2004—Case C-372/97, Italy v. Commission, ECR I-3679, EU:C:2004:234, para. 44; 15.12.2005—Case C-148/04, Unicredito Italiano, ECR I-11137, EU:C:2005:774, para. 54; 15.6.2006—Case C-393/04, Air Liquide Industries Belgium, ECR I-5293, EU:C:2006:403, para. 34.

106 See, for instance, also Commission Decision COM(2010)8948 of 14 December 2010 on the Danish Online Gaming Duties, para. 96.

107 See, e.g. CJEU 15.12.2005—Case C-148/04, Unicredito Italiano, EU:C:2005:774, para. 57; 14.1.2015—Case C-518/13, Eventech, EU:C:2015:9, para. 67; 27.6.2017—Case C-74/16, Congregación de Escuelas Pías Provincia Betania, EU:C:2017:496, para. 79; see also AG Trstenjak 9.6.2011—Case C-71/09 P et al.—Comitato ‘Venezia vuole vivere’ et al./Commission, EU:C:2010:771, para. 162: ‘The requirements … are not very demanding’.

108 See Englisch, EC Tax Review 2013, 9; the following paragraph is copied from this publication.

109 See, for instance, Commission Decision COM(2010)2219 of 9 April 2010 on the Bulgarian tax reduction for biofuels, para. 29; and Commission Decision concerning State aid SA.26798 of September 12, 2011 on the Italian excise duty exemption for vegetal oil, para. 24.

110 For a similar line of reasoning for a possibly different opinion, see Schön in Hancher et al. (eds.), EU State Aids 2012, 321 (327): State aid control should nevertheless be carried out.

111 See, in general terms, Kube/Reimer/Spengel, EC Tax Review 2016, 247 (256).

112 According to the CJEU, an exclusion of holding companies and other non-taxable persons is only admissible—if at all—to prevent tax evasion or avoidance, as laid down in Art. 11(2) VAT Directive; see CJEU 9.4.2013—C-85/11, Commission/Ireland, EU:C:2013:217; paras. 35 et seq.; 25.4.2013—C-95/11, Commission/Denmark, EU:C:2013:268, paras. 35 et seq., read together with CJEU 16.7.2015—Case C-108/14 und C-109/14, Larentia + Minerva, EU:C:2015:496, para. 41.

113 See landmark case CJEU 20.6.1991—C-60/90, Polysar Investments Netherlands, EU:C:1991:268; settled case law.

114 See Commission notice on the notion of State aid as referred to in Art. 107(1) of the TFEU, COM (2016/C 262/2),Official Journal C 262, 19.7.2016, para. 138.

115 See, e.g. CJEU 21.11.2018—Case C-664/16, Vădan, EU:C:2018:933, para. 37 (emphasis added), with further references.

116 CJEU 12.4.2018—Case C-8/17, Biosafe, EU:C:2018:249, para. 28 (emphasis added), with further references; see also, e.g. CJEU 15.9.2016—Case C-518/14, Senatex, EU:C:2016:691, para. 26; 21.3.2018—Case C-533/16, Volkswagen, EU:C:2018:204, para. 38.

117 See also Herbain, VAT Neutrality, 2015, p. 129.

118 See, e.g. CJEU 9.7.2015—Case C-183/14, Salomie and Oltean, EU:C:2015:454, para. 57 (emphasis added), with further references; 21.11.2018—Case C-648/16, Fortunata, EU:C:2018:932, para. 39; 21.11.2018—Case C-664/16, Vădan, EU:C:2018;933, para. 38.

119 See landmark decision CJEU 1.4.1982—Case 89/81, Hong Kong Trade, EU:C:1982:121.

120 See German Federal Tax Court 2.12.2015—V R 67/14; see also the Opinion of AG Sharpston 6.12.2018—Case C-566/17, Związek Gmin Zagłębia Miedziowego w Polkowicach, EU:C:2018:995, paras. 57–58; Reiß, in Englisch/Nieskens (eds), USt-Kongress-Bericht 2010, 195 (205); Pfeiffer, in Lang et al. (eds), ECJ—Recent Developments in Value Added Tax, 2014, 61 (104).

121 For a detailed discussion, see Englisch in Weber (ed.), Traditional and Alternative Routes to European Tax Integration, 2010, 231 (239 ff.).

122 See CJEU 19.12.2018—C-374/17, A Brauerei, EU:C:2018:1024, para. 39.

123 CJEU 19.12.2018—C-374/17, A Brauerei, EU:C:2018:1024, para. 50.

124 According to the relevant German RETT provisions, a controlling company's acquisition of at least 95% of the capital or business assets of a dependent company that owns real estate is deemed to be equivalent to a direct transfer of the real estate itself.

125 See landmark case CJEU 6.9.2006—Case C-88/03, Portugal v. Commission, ECR I-7115, EU:C:2006:511, para. 81.

126 To avoid any misunderstandings, the author believes that this should indeed be assumed to be the case, if for nothing else than due to fairness and consistency requirements that by virtue of Art. 20 EuCh must be assumed to constitute binding guidance to the EU legislator; however, it is the Court that normally favours, in its settled case law, a more narrow understanding of the neutrality principle underlying the harmonised system.

127 See, e.g. CJEU 22.12.2008—Case C-487/06 P, British Aggregates, EU:C:2008:757, para. 85.

128 See Commission 23.3.2015—C(2015) 66 final, paras. 134–139 and para. 144.

129 For a discussion of this question, see above at I.4.

130 See, e.g. Commission 4.7.2016, C(2016) 4049 final (Hungarian health contribution of tobacco industry businesses), para. 44; 19.9.2016, C(2016) 5596 final (Polish retail sales tax), para. 24.

131 Commission 4.7.2016, C(2016) 4049 final, para. 44.

132 For a more generous position regarding the plausibility of such a reasoning by national governments, see General Court, 16 May 2019, Joined Cases T-836/16 and T-624/17, Poland/Commission, EU:T:2019:338, paras. 75–76 and para. 91.

133 See the Commission notice on the notion of State aid as referred to in Art. 107(1) of the TFEU, COM (2016/C 262/2), Official Journal C 262, 19.7.2016, para. 138.

134 The CJEU has consistently ruled that the principle of neutrality is only relevant for the interpretation of EU legislation on VAT, but that it cannot be relied on to question the compatibility of such legislation with primary Union law, or to extend the scope of provisions of the VAT Directive that do not comply with neutrality requirements; see, e.g. CJEU 29.10.2009—Case C-174/08, NCC Construction, EU:C:2009:669, paras. 42–43; 19.7.2012—Case C-44/11, Deutsche Bank, EU:C:2012:484, para. 45; 19.12.2012—Case C-310/11, Grattan, EU:C:2012:822, para. 9; 9.3.2017—Case C-573/15, Oxycure Belgium, EU:C:2017:189, para. 32. For a criticism of this case law, see, e.g. Englisch, in Weber (ed.), Traditional and Alternative Routes to European Tax Integration, 2010, p. 231 (239 et seq.).

135 See, for example, CJEU 3.5.2001—C-481/98, Commission/France, EU:C:2001:237, paras. 21–22; 10.4.2008—C-309/06, Marks & Spencer, EU:C:2008:211, para. 31; 28.7.2011—C-274/10, Commission/Hungary, EU:C:2011:530, para. 45; 11.9.2014—C-219/13, K Oy, EU:C:2014:2207, para. 29. See also the pending preliminary ruling request made by the German Federal Tax Court on 2.8.2018—V R 33/17 (not yet registered in the CJEU database).

136 See, e.g. CJEU 10.4.2008—C-309/06, Marks & Spencer, EU:C:2008:211, para. 49, with further references.

137 See above at footnote 126.

138 CJEU 10.4.2008—C-309/06, Marks & Spencer, EU:C:2008:211, para. 63.

139 See, e.g. CJEU 21.12.2016—Joined Cases C-164/15 P and C-165/15 P, Aer Lingus und Ryanair, EU:C:2016:990, para. 116, with further references.

140 See, e.g. CJEU 8.11.2011—Case C-143/99, Adria-Wien Pipeline, EU:C:2001:598, paras. 25 et seq., with further references.

141 See, e.g. CJEU 15.6.2006—Case C-393/04 u.a., Air Liquide Industries Belgium, EU:C:2006:403, paras. 43 et seq.

142 CJEU 21.12.2016—Joined Cases C-164/15 P and C-165/15 P, Aer Lingus und Ryanair, EU:C:2016:990, para. 69.

143 See CJEU 6.10.2015—Case C-66/14, IFN, EU:C:2015:661, especially para. 22 seq.; thereby implicitly rejecting the contrary Opinion of AG Kokott 16.4.2015—Case C-66/14, IFN, EU:C:2015:242 paras. 25 et seq.

144 See Englisch in Schaumburg/Englisch (eds), Europäisches Steuerrecht, 2015, para. 9.54 and Rossi-Maccanico, EC Tax Review 2013, 19 (24); Staes, Intertax 2014, 106 (120); Grube, Der Einfluss des unionsrechtlichen Beihilfeverbots auf das deutsche Steuerrecht, 2014, pp. 94 et seq. For a different opinion, see Luja in Rust/Micheau (eds), State Aid and Tax Law, p. 107 (133); Szudoczky, The Sources of EU Law and their Relationships: Lessons for the Field of Taxation, pp. 703–704; Engelen/Gunn in Rust/Micheau (eds), State Aid and Tax Law, p. 137 (148–149).

145 See CJEU 2 May 2019, C-598/17, A-Fonds, EU:C:2019:352, paras. 43 et seq.

146 See, regarding directives in general, landmark case CJEU 26.2.1986—Case C-152/84, Marshall, EU:C:1986:84, para. 48; and regarding EU tax directives, in particular, see e.g. CJEU 5.7.2007—C-321/05, Kofoed, EU:C:2007:408, para. 42, with further references.

147 See above at I.4.

148 See, e.g. CJEU 20.9.1990—Case C-5/89, Commission/Germany, EU:C:1990:320, par. 14; 11.11.2004—Case C-183/02 P u. C-187/02 P, Demesa, EU:C:2004:701, paras. 44–45; 15.12.2005—Case C-148/04, Unicredito Italiano, EU:C:2005:774, paras. 104 et seq.

149 See, e.g. the deliberations of AG Sharpston regarding the Polish administrative practice to grant an overly generous input VAT deduction for mixed supplies: Opinion of AG Sharpston 6.12.2018—Case C-566/17, Związek Gmin Zagłębia Miedziowego w Polkowicach, EU:C:2018:995.

150 See, e.g. CJEU 27.3.1980—Case 61/79—Denkavit italiana, ECR 1980, 1205, para. 31.