Vasil Stoynov[1]


The European Union is a long-term project that is rooted in the idea of deeper integration as the only road to a successful and functional internal market. This process has many hurdles and most of them are related to the disagreement of the Member States to give away their sovereignty to the EU institutions. One good example in that direction is the area of taxation, where the states are still keeping their grip on. Yet the almost uncontested sovereignty of the national legislators meets the limitations of the EU State Aid rules. In adopting tax measures of any kind, the Member States should always obey the provision of Article 107 (1) TFEU which prohibits aid that affects the competition and the trade in the internal market by conferring selective advantage on certain undertakings.

Currently we are witnessing a new development of the shifty balance between the competence of Member States for their tax systems and the proactive role of the Commission in safeguarding the competitiveness of the internal market. The authority in the person of Commissioner Vestager has started series of investigations and has already adopted negative decisions for recovery of aid granted to big international players on the market such as Apple, Starbucks and Fiat. The aid is granted by virtue of tax rulings, issued by national tax authorities exercising their discretion which raises some serious concerns for the Commission on the amount of corporate tax actually paid in the state budget. More specifically, the tax rulings endorse transfer pricing methodology that is applied between the subsidiaries of a corporate group which allegedly lowers the tax liability of the beneficiary.

The systematic assessment of the complex legal issues behind the tax rulings is a challenging task given the lack of case law specifically on this matter and the rather minor contribution from the academia on the topic. Furthermore, some aspects of the application of Article 107 (1) TFEU in tax matters are still in jurisdictional progress and not yet settled. However, those challenges are mirroring a significant potential for unification and clarification of the elements of fiscal State aid.

The importance of the tax ruling cases lies indeed in the possibility to play crucial role in evolutionary development of the state aid regime. The complexity and the political sensitivity of the matter suggest that the four negative decisions adopted so far might mark only the beginning of a new era for the Commission and the Court, as well as for the taxation policy of the Member States.

Therefore the aim of the article is to contribute to the legal debate with an interpretative analysis of the tax rulings as an example of individual fiscal state aid and to critically address the fundamental legal problems that arise in the context of Article 107 para. 1 TFEU and in particular – the application of the elements “selectivity” and “advantage”.

In order for this goal to be achieved the article firstly sheds some light on the nature of the tax rulings and the basic facts relevant in the cases. Secondly, the analysis follows the elements “advantage” and “selectivity” as the crucial aspects in the fiscal aid and in the tax rulings as well. Both concepts are summarized and explained and their particular assessment in the Commission decisions is presented. Lastly, the interpretation and the final conclusions of the authority are critically analyzed and observed from the perspective of the current proceedings for annulment before the General court. Bearing in mind the strategic relevance of the tax ruling cases some final remarks will be derived in the light of the balance between the state aid enforcement and the policy goals that need to be dealt with appropriate instruments.



Link to the article in Bulgarian language: Становищата на данъчните администрации, водещи до забранени държавни помощи – решенията на ЕК срещу Люксембург, Холандия, Ирландия и Белгия



[1] Practicing lawyer, graduated from the Sofia University “Kliment Ohridski” and LLM in European Competition and Regulatory Law from the Free University of Berlin.