Taxes
We have many years of experience in dealing with the state aid aspects of tax law. Our strong track record helps us to find customised solutions, covering state aid and tax schemes, tax rulings, parafiscal levies, tax settlements, indirect taxes and EU courts litigation.
Tax schemes
State aid and tax schemes intersect when governments use tax incentives or rebates to support businesses that may distort competition. Tax schemes favouring specific companies can trigger state aid investigations, potentially leading to the recovery of aid or a change to the tax policies.
Tax rulings
Tax rulings and state aid intersect when governments grant selective tax advantages to specific companies or sectors, potentially distorting competition and violating state aid rules. Apple, Fiat, Starbucks, Amazon – All these companies were involved in landmark rulings by the Union courts on state aid and tax rulings.
Parafiscal levies and other mandatory surcharges
State aid and parafiscal levies converge when governments impose mandatory surcharges or levies that may disproportionately benefit certain sectors or companies, leading to a potential distortion of competition. If these levies are used to fund public service obligations, they can trigger state aid scrutiny, particularly when exemptions or reductions are granted to specific industries.
Tax settlements
Tax settlements often occur in disputes between taxpayers and tax authorities over owed amounts, allowing for quicker tax recovery and avoiding lengthy legal proceedings. While Member States have competence in this area, state aid may arise if the tax amount is reduced unjustifiably or disproportionately in favour of the taxpayer. This could potentially distort competition and trigger state aid scrutiny.
Litigation before Courts
State aid and taxation often converge in litigation before EU courts when tax measures are challenged for granting selective advantages that distort competition. The European Commission initiates investigations into such tax practices, and the Court of Justice plays a key role in reviewing whether these measures violate state aid rules. Litigation focuses on determining whether the tax arrangements breach EU competition law, with the courts interpreting the legality of such practices within the framework of state aid regulation.
Indirect Taxes
The interplay between indirect taxes and state aid arises when tax measures, such as reduced rates or exemptions on certain goods and services, selectively benefit specific businesses or sectors, potentially distorting competition. These preferential tax treatments can be considered state aid if they provide an advantage to certain companies or industries over others without sufficient justification, violating state aid rules.