When is a tax derogation a selective advantage? The General Court strikes down a Commission decision finding a Spanish tax provision to be a State aid

14 Nov 2014

One of the most notoriously tricky issues in State aid law is the question of when a tax provision derogating from a wider tax rule confers a selective advantage on those undertakings benefitting from it.  That tricky issue is also one of the most important in practice, since all Member States’ tax codes are full of exemptions and derogations of various kinds, and the value of such exemptions can be enormous for those undertakings that qualify.

In an interesting judgment released on 7 November 2014 (Case T-399/11 Banco Santander v Commission, available in French and Spanish but not yet available in English) the General Court (GC) held that the Commission had erred in applying the principle of selectivity to a tax derogation, and gave some useful guidance on the difference between selective and non-selective tax derogations. Its judgment should be read by both State aid and tax lawyers.

Please click to view the full Banco Santander v Commission case note