Introduction
The Commission, like all EU institutions, must respect the principles of legal certainty and protection of legitimate expectations. In the field of State aid, those principles mean, among other things, that in practice the Commission cannot reopen a State aid case if there is no change in the measure in question.
On 26 June 2025, the Court of Justice of the EU, in case C-776/23 P, Commission v Spain, ruled that the Commission violated both of those principles.[1] The Commission had appealed against the judgment of the General Court in case, T-826/14, Spain v Commission, by which the General Court annulled Commission decision 2015/314 concerning the tax amortisation of financial goodwill for foreign shareholding acquisitions.
The judgment of the General Court in a related case brought by Banco Santander [T-12/15] was reviewed here on 3 November 2023. It can be accessed at: https://www.lexxion.eu/stateaidpost/whether-a-tax-measure-grants-new-aid-must-also-be-assessed-in-the-context-of-the-relevant-national-case-law/
In that case, the General Court agreed with Banco Santander that both the Commission and the Spanish tax authorities were wrong in their interpretation of the Spanish tax law. The definitive interpretation of national law is to be found in the national jurisprudence and the judgments of national courts. The Commission must respect the interpretation of national law by national courts.
In 2002, Spain adopted a tax scheme that allowed companies resident in Spain that acquired shareholdings in companies outside Spain to deduct from their tax base, by way of amortisation, the goodwill resulting from that acquisition. Goodwill is the difference between the price actually paid for a company and the value of the assets of the company.
As established by the landmark judgment in case C-51/19 P, World Duty Free v Commission, the Spanish tax law treated differently the acquisition of companies within Spain and outside Spain. The acquisition of companies, both in other EU countries and outside the EU, was subject to a more favourable tax regime. Although there was no restriction on who could acquire foreign companies, the CJEU found their tax treatment to be a selective advantage.
With respect to the tax amortisation of financial goodwill for acquisition of companies within the EU, the Commission, by decision 2011/5, found it to be incompatible State aid. However, the Commission allowed certain acquisitions to continue to be treated more favourably until the financial goodwill was fully amortised. With respect to the tax amortisation of financial goodwill for acquisition of companies outside the EU, the Commission, by decision 2011/282, reached basically the same conclusions.
Consequently, Spain adjusted the relevant tax provisions [the so-called “TRLIS”] and changed its interpretation of the related provisions in its tax law, especially those concerning the indirect acquisition of foreign companies. However, a new dispute broke out between Spain and the Commission which considered that the new interpretation did not eliminate the selective treatment and found in decision 2015/314 that it constituted new and incompatible State aid.
The scope of the review by the General Court
The Commission argued that the review of the General Court was incomplete because it limited itself to certain aspects of the Commission decision, instead of performing a comprehensive assessment of whether the contested measures constituted State aid.
First, the CJEU recalled that “(87) it is common ground that, for the purposes of determining corporate tax in Spain, Article 12(5) of the TRLIS authorised the deduction, under certain conditions, of the financial goodwill resulting from shareholdings acquired by companies that are tax resident in Spain in the capital of companies that are tax resident in other countries.”
“(88) By Decisions 2011/5 and 2011/282, the first of which applies to the acquisition of shareholdings in the capital of companies that are tax resident in a Member State of the European Union other than the Kingdom of Spain and the second, to shareholdings acquired in the capital of companies that are tax resident outside the European Union, the Commission classified Article 12(5) of the TRLIS as a State aid scheme which had been implemented unlawfully.”
“(89) In those decisions, the Commission ordered the cessation of that scheme and recovery of the sums corresponding to the tax deductions applied, while, in the interests of protecting legitimate expectations, it explicitly authorised that scheme to continue in respect of direct and indirect acquisitions of shareholdings which fulfilled the relevant conditions of the aid scheme before 21 December 2007 […] In addition, the Commission authorised the scheme to continue in respect of, in particular, majority shareholdings acquired directly or indirectly no later than 21 May 2011”.
It may be noted at this stage that, by its judgment in World Duty Free, the CJEU dismissed definitively the appeals against Commission decisions 2011/5 and 2011/282.
“(92) As regards the interpretation of the scope of [decisions 2011/5 and 2011/282], the General Court correctly held, […], that the principle of legal certainty, which requires that rules of law be clear and precise and predictable in their effect, so that interested parties can ascertain their position in situations and legal relationships governed by EU law and take steps accordingly, applies when the Commission adopts a decision on State aid.”
“(93) The foregoing is true, in particular, of negative decisions by which the Commission orders the cessation and recovery of aid. The Member State to which a decision requiring the recovery of illegal aid is addressed is obliged, under the fourth paragraph of Article 288 TFEU, to take all measures necessary to ensure implementation of that decision. In accordance with the principle of legal certainty, a decision of that nature must therefore indicate clearly, precisely and predictably the aid that is to be recovered”.
“(94) In the present case, it is expressly stated [in the Commission decisions], that the exceptions to the cessation and recovery obligations under those decisions relate both to direct acquisitions of shareholdings, […], and to indirect acquisitions of shareholdings”.
“(95) In those circumstances, the General Court was not only entitled but was obliged to infer from the wording itself of Decisions 2011/5 and 2011/282 that those decisions related to both direct and indirect acquisitions of shareholdings. To interpret those decisions with a meaning contrary to their clear wording would infringe the principle of legal certainty recalled above and would also be incompatible with settled case-law in accordance with which, where the meaning of a provision of EU law is absolutely plain from its very wording, the Court cannot depart from that interpretation”.
Then the CJEU agreed that, as observed by the General Court, “(98) the distinction between direct acquisitions of shareholdings and indirect acquisitions of shareholdings was irrelevant for the purposes of the assessment in Decisions 2011/5 and 2011/282. It therefore appears that, by those decisions, the Commission assessed Article 12(5) of the TRLIS without having regard to the administrative interpretation of the TRLIS followed by the Spanish authorities and which they had sent to it.”
“(100) Since, by the decision at issue, the Commission classified the tax deductions of the financial goodwill resulting from indirect acquisitions of shareholdings as State aid and ordered their cessation and the recovery of the corresponding amounts, even though those deductions could continue to apply, provided they fulfilled the requirements set out in Article 1(2) of Decision 2011/5 and in Article 1(2) and (4) of Decision 2011/282, the General Court was in fact required to rule in the light of the general principles of EU law, including the principle of legal certainty, and did not need to conduct an exhaustive examination of the objectives of the State aid rules.”
The CJEU rejected the first plea of the Commission.
Administrative practice and the scope of State aid measures
The Commission’s second plea alleged that the General Court erred by holding that a new administrative interpretation could not broaden the scope of an aid scheme. The General Court considered that the new administrative interpretation was binding only on the Spanish authorities and was not capable of broadening the scope of an aid scheme.
The CJEU, first, reiterated that “(111) the General Court was not only entitled, but was obliged, to find that Decisions 2011/5 and 2011/282 concerned both direct acquisitions of shareholdings and indirect acquisitions of shareholdings.”
“(112) Accordingly, as the General Court correctly held, EU law, of which the principle of legal certainty forms part, precluded the Commission from classifying the tax deduction of the financial goodwill resulting from indirect acquisitions of shareholdings as a new State aid scheme which had been implemented unlawfully.”
The CJEU rejected the second plea of the Commission and added that it “(114) cannot call into question the validity of the judgments under appeal, even were it to be found that the General Court erred in law by failing to find that a new administrative interpretation may, in certain circumstances, broaden the scope of an aid scheme.”
In other words, since the initial Commission decisions referred to both direct and indirect foreign acquisitions, the Commission could not, through decision 2015/314, examine again the same State aid measure on the grounds that its scope had been widened by a new interpretation of Spanish authorities. Revisiting the same measure would be contrary to the principle of legal certainty.
On the basis of the above reasoning, the CJEU dismissed the appeal of the Commission.
[1] The full text of the judgment can be accessed at:
