Case C-453/23: Court of Justice clarifies the circumstances in which tax exemptions constitute state aid
The Court of Justice (CJEU) has rendered its judgment in Case C-453/23, concerning property tax exemptions in Poland for railway landowners.
A Polish company owning a private railway siding applied for a tax exemption by making the siding available to a rail carrier, fulfilling all national legal conditions. However, the exemption was denied on the grounds that it could constitute unlawful State aid. The company challenged the decision, leading the Polish Supreme Administrative Court to refer a preliminary ruling to the CJEU to determine whether the exemption qualifies as State aid by conferring a selective advantage and potentially distorting competition.
The CJEU has concluded that the property tax exemption does not appear to confer a selective advantage and thus does not constitute State aid. The Court began by affirming that the Polish property tax regime is the standard framework for assessing selectiveness (i.e. the reference system). Since the exemption in question is part of this general system and applies broadly to all property holders, it is considered a general and abstract tax measure which does not confer a selective advantage.
The Court found that a tax exemption could be considered selective only in two cases: if it stems from a discriminatory tax regime or if it targets a specific category of undertakings based on inherent characteristics or activities. In this case, the exemption for land used as railway infrastructure available to rail carriers does not appear discriminatory or limited to a specific type of undertaking. It is accessible to a broad and varied group, meaning it likely does not constitute selective aid under EU law.
Moreover, the CJEU noted that the tax exemption serves not only a fiscal purpose but also an environmental one and confirmed that Member States, within their fiscal autonomy, may legitimately use tax measures to pursue broader policy goals beyond revenue.
For more information, see the CJEU’s Judgment.