In line with the advocate general’s earlier conclusion11, the Supreme Court has ruled that cartel fines imposed by the NMa are not deductible for corporate tax purposes.12The Supreme Court still has to rule on possible tax deductibility of cartel fines imposed by the European Commission. However, the Supreme Court is likely to follow the advocate general’s earlier conclusion and rule against tax deductibility of EU fines.
No tax deductibility of NMa fines
The Supreme Court’s ruling confirms the earlier rulings by the District Courts of Haarlem13 and Breda14 on the non-deductibility of NMa fines. Both courts had concluded that Dutch corporate income tax legislation explicitly excludes the possibility to deduct fines imposed by the NMa as a result of competition law infringements.
No tax deductibility of European Commission fines?
In contrast, the District Court of Haarlem earlier ruled15 that fines imposed by the European Commission for competition law infringements were indeed partly non-punitive in nature and thus tax deductible for that part. According to this Court, it followed from the text of Regulation 17/6216 that fines imposed by the European Commission for competition law infringements are partly non-punitive in nature and are, for that part, tax deductible.17 The European Commission intervened in the appeal against this ruling on the basis of the amicus curiae provision of Regulation 1/200318 and considered tax deductibility of EU cartel fines contrary to the member states’ Community loyalty. The advocate general states in his conclusion that the parties may have a point by claiming that cartel fines are partly of a non-punitive nature since (i) the deterrent and penalising effect by fines can only start after the fine has compensated the profits made by the competition law violation and (ii) the European Commission’s desired (civil) antitrust damages actions are still ineffective. However, since Dutch corporate tax legislation explicitly states that administrative fines, such as fines by the NMa and the European Commission, are not tax deductible, he is of the opinion that the Supreme Court should also dismiss the appeal based on the tax deductibility of EU cartel fines.
Amicus curiae intervention by European Commission
On his own motion, the advocate general considered the party’s argument that the European Commission cannot intervene in Supreme Court proceedings because the dispute predates the entry into force of the amicus curiae provision of Regulation 1/2003.19 He refers to settled EU case law, according to which procedural rules are “generally held to apply to all proceedings pending at the time when they enter into force”20, to conclude that the European Commission was authorised to intervene in appeal. The European Commission is thus authorised to intervene in Supreme Court proceedings, particularly since neither the wording nor the preamble of Regulation 1/2003 prevents the Commission from multiple interventions in the same proceeding. For the same reason, the European Commission should be granted access to the Supreme Court appeal file, even though national procedural law does not provide for third-party access.
The Supreme Court will have the final say in the matter, as it still needs to rule on this case. It is, however, generally inclined to follow the advocate general’s conclusion.