16 September 2021 (*1)

(Appeal – State aid – Aid scheme implemented by the Kingdom of Belgium – Excess profit exemption – Tax ruling – Consistent administrative practice – Regulation (EU) 2015/1589 – Article 1(d) – Concept of ‘aid scheme’ – Concept of ‘act’ – Concept of ‘further implementing measures’ – ‘General and abstract’ definition of beneficiaries – Cross-appeal – Admissibility – Fiscal autonomy of the Member States)

In Case C‑337/19 P,

APPEAL under Article 56 of the Statute of the Court of Justice of the European Union, brought on 24 April 2019,

European Commission, represented by P.-J. Loewenthal and F. Tomat, acting as Agents,

appellant,

the other parties to the proceedings being:

Kingdom of Belgium, represented by J.-C. Halleux, C. Pochet and M. Jacobs, acting as Agents, and by M. Segura and M. Clayton, avocates,

Magnetrol International, established in Zele (Belgium), represented by H. Gilliams and L. Goossens, advocaten,

applicants at first instance,

Soudal NV, established in Turnhout (Belgium),

Esko-Graphics BVBA, established in Ghent (Belgium), represented by H. Viaene, avocat,

Flir Systems Trading Belgium BVBA, established in Meer (Belgium), represented by T. Verstraeten and C. Docclo, avocats, and by N. Reypens, advocaat,

Anheuser-Busch InBev SA/NV, established in Brussels (Belgium),

Ampar BVBA, established in Leuven (Belgium),

Atlas Copco Airpower NV, established in Antwerp (Belgium)

Atlas Copco AB, established in Nacka (Sweden),

represented by A. von Bonin, Rechtsanwalt, W.O. Brouwer and A. Pliego Selie, advocaten, and by A. Haelterman, avocat,

Wabco Europe BVBA, established in Brussels, represented by E. Righini and L. Villani, avvocati, S. Völcker, Rechtsanwalt, and by A. Papadimitriou, avocat,

Celio International NV, established in Brussels, represented by H. Gilliams and L. Goossens, advocaten,

interveners in the appeal,

Ireland,

intervener at first instance,

THE COURT (Fourth Chamber),

composed of M. Vilaras, President of the Chamber, N. Piçarra, D. Šváby, S. Rodin and K. Jürimäe (Rapporteur), Judges,

Advocate General: J. Kokott,

Registrar: M. Longar, Administrator,

having regard to the written procedure and further to the hearing on 24 September 2020,

after hearing the Opinion of the Advocate General at the sitting on 3 December 2020,

gives the following

1.By its appeal, the European Commission asks the Court of Justice to set aside the judgment of the General Court of the European Union of 14 February 2019, Belgium and Magnetrol International v Commission (T‑131/16 and T‑263/16, EU:T:2019:91; ‘the judgment under appeal’), by which the General Court annulled Commission Decision (EU) 2016/1699 of 11 January 2016 on the excess profit exemption State aid scheme SA.37667 (2015/C) (ex 2015/NN) implemented by Belgium (OJ 2016 L 260, p. 61; ‘the decision at issue’).

2.By its cross-appeal, the Kingdom of Belgium asks the Court of Justice to set aside in part the judgment under appeal in so far as, by that judgment, the General Court rejected the first plea for annulment.

Legal context

3.Under Article 1(d) of Council Regulation (EU) 2015/1589 of 13 July 2015 laying down detailed rules for the application of Article 108 [TFEU] (OJ 2015 L 248, p. 9):

‘For the purposes of this Regulation, the following definitions shall apply:

…

(d) “aid scheme” means any act on the basis of which, without further implementing measures being required, individual aid awards may be made to undertakings defined within the act in a general and abstract manner and any act on the basis of which aid which is not linked to a specific project may be awarded to one or several undertakings for an indefinite period of time and/or for an indefinite amount’.

Article 1(e) of that regulation defines ‘individual aid’ as ‘aid that is not awarded on the basis of an aid scheme and notifiable awards of aid on the basis of an aid scheme’.

Background to the dispute and the decision at issue

5.The factual background to the dispute was set out by the General Court in paragraphs 1 to 28 of the judgment under appeal. For the purposes of the present proceedings, they may be summarised as follows.

Belgian law

The CIR 92

6.In Belgium, the rules for the taxation of income are laid down in the Code des impôts sur les revenus 1992 (Income Tax Code 1992; ‘the CIR 92’). Article 1(1) of the CIR 92 establishes, inter alia, an income tax on the total income of resident companies, namely the ‘corporate income tax’.

7.With regard specifically to the taxable income subject to corporate income tax, Article 185 of the CIR 92 provides that companies are to be taxed on the total amount of their profits, including distributed dividends.

The Law of 24 December 2002

8.Article 20 of the loi du 24 décembre 2002, modifiant le régime des sociétés en matière d’impôts sur les revenus et instituant un système de décision anticipée en matière fiscal (Law of 24 December 2002 amending the corporate income tax system and establishing an advance tax ruling system) (Moniteur belge of 31 December 2002, p. 58815; ‘the Law of 24 December 2002’) provides that the Service public fédéral des Finances (Belgian Federal Public Service for Finance; ‘SPF Finances’) ‘may take a position by way of an advance tax ruling on all requests relevant to the application of tax law provisions’. In addition, the concept of a ‘tax ruling’ is defined as the legal act by which SPF Finances determines, in accordance with the applicable provisions, how the law will apply to a particular situation or transaction that has not yet had tax consequences. It is also indicated that the tax ruling cannot entail exemption from or reduction of the tax.

9.Article 22 of the Law of 24 December 2002 provides that a tax ruling cannot be granted, inter alia, when the request concerns situations or transactions identical to those having already had tax consequences as regards the requesting party.

10.In addition, Article 23 of the Law of 24 December 2002 provides that, except in cases where the subject matter of the request warrants it, a tax ruling is issued for a period that may not exceed five years.

The Law of 21 June 2004

11.By the loi du 21 juin 2004, modifiant le Code des impôts sur les revenus 1992 et la loi du 24 décembre 2002 modifiant le régime des sociétés en matière d’impôts sur les revenus et instituant un système de décision anticipée en matière fiscale (Law of 21 June 2004 amending the Income Tax Code 1992 and the Law of 24 December 2002 amending the corporate income tax system and establishing an advance tax ruling system (Moniteur belge of 9 July 2004; ‘the Law of 21 June 2004’), the Kingdom of Belgium introduced new fiscal rules concerning the cross-border transactions of associated undertakings which are part of a multinational group, providing in particular for an adjustment of the profit subject to taxation, known as a ‘correlative adjustment’.

– The Explanatory Memorandum

According to the explanatory memorandum to the draft law presented by the Belgian Government before the Chambre des députés (the Chamber of Deputies, Belgium), that law is intended to amend the CIR 92 in order to include explicitly the internationally accepted ‘arm’s length’ principle. Moreover, it is intended to amend the Law of 24 December 2002 in order to grant the Service des Décisions Anticipées en matière fiscale (the Ruling Commission; ‘the SDA’) the power to issue tax rulings. The arm’s length principle was introduced into Belgian tax legislation by the addition of a second paragraph to Article 185 of the CIR 92, based on the text of Article 9 of the Model Tax Convention on Income and Capital of the Organisation for Economic Co-operation and Development (OECD). The purpose of Article 185(2) of the CIR 92 is to ensure that the tax base of companies subject to taxation in Belgium may be modified by adjustments to the profit resulting from intra-group cross-border transactions, where the transfer prices applied do not reflect market mechanisms and the arm’s length principle. In addition, the concept of an ‘appropriate adjustment’ introduced by Article 185(2)(b) of the CIR 92 is justified as a means of avoiding or undoing double taxation. It is also stated that that adjustment must be carried out on a case-by-case basis in the light of the available information provided, in particular by the taxpayer, and that a correlative adjustment should be made only if the Belgian tax authorities consider both the principle and the amount of the primary adjustment made in another State to be justified.

– Article 185(2) of the CIR 92

Article 185(2) of the CIR 92 provides as follows:

‘… For two companies that are part of a multinational group of affiliated companies and in respect of their reciprocal cross-border relationships:

(a) when two companies are, in the course of their commercial and financial relationships, linked by terms and conditions agreed upon or imposed on them which are different from those which would have been agreed upon between unaffiliated companies, the profit which – under those terms and conditions – would have been made by one of the companies but is not because of those terms and conditions, may be included in the profit of that company;

(b) when profit is included in the profit of one company which is already included in the profit of another company and the profit so included is profit which should have been made by that other company if the terms and conditions agreed between the two companies had been those which would have been agreed between unaffiliated companies, the profit of the first company is adjusted in an appropriate manner.’

The Circular of 4 July 2006

14.The Circulaire du 4 juillet 2006 sur l’application du principe de pleine concurrence (Circular of 4 July 2006 on the application of the arm’s length principle; ‘the Circular of 4 July 2006’) was sent to officials of the general tax administration (Belgium), on behalf of the Minister for Finance, in order to provide guidance on, inter alia, the insertion of paragraph 2 to Article 185 of the CIR 92 and the corresponding amendments to that code. The Circular of 4 July 2006 underlines that those amendments, in force since 19 July 2004, are intended to transpose the arm’s length principle into Belgian tax law and constitute the legal basis enabling the adjustment, in the light of that principle, of the taxable profit resulting from intra-group cross-border relationships between affiliated companies that are part of a multinational group.

15.Thus, first, the Circular of 4 July 2006 states that the upward adjustment provided for in Article 185(2)(a) of the CIR 92 allows the profit made by a resident company that is part of a multinational group to be increased in order to reflect the profit that the resident company would have made from a transaction carried out at arm’s length.

Secondly, the Circular of 4 July 2006 states that the downward correlative adjustment, provided for in Article 185(2)(b) of the CIR 92, is intended to avoid or undo a double taxation. That circular states that no criteria may be established in that respect, since that adjustment must be carried out on a case-by-case basis in the light of the available information provided, in particular, by the taxpayer. It is also noted that a correlative adjustment should be made only if the Belgian tax authorities or the SDA consider both the principle and the amount of the primary adjustment to be justified. Moreover, it is specified that Article 185(2)(b) of the CIR 92 does not apply if the profit made in the partner State is increased such that it is greater than the profit that would have been obtained had the arm’s length principle been applied.

The replies given by the Minister for Finance to parliamentary questions on the application of Article 185(2)(b) of the CIR 92

17.On 13 April 2005, in response to parliamentary questions concerning the excess profit exemption, the Minister for Finance, first of all, confirmed that Article 185(2)(b) of the CIR 92 concerned the situation in which a tax ruling was issued concerning a method intended to arrive at an arm’s length profit. Next, he confirmed that the profit recorded in the Belgian financial reports of an international group active in Belgium which exceeded an arm’s length profit should not be taken into account in the determination of the profit taxable in Belgium. Lastly, he approved the position that it was not for the Belgian tax authorities to determine which foreign companies should include that excess profit in their profit.

18.On 11 April 2007, in response to a further series of parliamentary questions concerning the application of Article 185(2)(a) and (b) of the CIR 92, the Minister for Finance stated that only requests for a downward adjustment had thus far been received. In addition, he stated that in determining the method for establishing the arm’s length profit of a Belgian entity, in the context of tax rulings, account was taken of the tasks performed, the risks assumed and the assets used in activities that had not yet had tax consequences in Belgium. Thus, the profit recorded in Belgium in the Belgian financial reports of a multinational group which exceeded the arm’s length profit should not be included in the taxable profit in Belgium. Lastly, the Minister for Finance stated that, since it was not for the Belgian tax authorities to determine to which foreign companies the excess profit ought to be attributed, it was not possible to exchange information with foreign tax administrations in that regard.

19.Lastly, on 6 January 2015, the Minister for Finance confirmed that the principle behind the tax rulings was to tax the profit corresponding to the arm’s length profit of the company concerned and endorsed the replies given by his predecessor, on 11 April 2007, concerning the fact that the Belgian tax authorities did not have to establish to which foreign companies the excess profit not taxed in Belgium ought to be attributed.

The decision at issue

20.Article 20 of the loi du 24 décembre 2002, modifiant le régime des sociétés en matière d’impôts sur les revenus et instituant un système de décision anticipée en matière fiscal (Law of 24 December 2002 amending the corporate income tax system and establishing an advance tax ruling system) (Moniteur belge of 31 December 2002, p. 58815; ‘the Law of 24 December 2002’) provides that the Service public fédéral des Finances (Belgian Federal Public Service for Finance; ‘SPF Finances’) ‘may take a position by way of an advance tax ruling on all requests relevant to the application of tax law provisions’. In addition, the concept of a ‘tax ruling’ is defined as the legal act by which SPF Finances determines, in accordance with the applicable provisions, how the law will apply to a particular situation or transaction that has not yet had tax consequences. It is also indicated that the tax ruling cannot entail exemption from or reduction of the tax.