The Court of Justice of the EU (CJ) recently published its rulings in three linked appeals, upholding the European Commission’s 2005 decision ordering the recovery by France, Ireland and Italy of tax exemptions granted to certain alumina producers between February 2002 and December 2003.[1] The Commission had found that exemptions from excise duty on mineral oils granted by the three Member States to each of their sole alumina producers (Aughinish in Ireland, Eurallumina in Italy and Alcan in France) constituted unlawful State aid.[2] It held that the exemptions, “financed through State resources…confer[red] an advantage on the beneficiaries which are placed in a more favourable financial position than other undertakings using mineral oils in other industries or regions.”4

In the twelve years since 2005, France, Ireland, Italy, the three alumina producers and the Commission have been engaged in a long-running legal challenge regarding the decision’s validity. This has involved the General Court (GC) annulling the Commission’s decision twice and, on further appeal each time, the CJ referring the case back to the GC. In 2016 the GC, contrary to its two previous annulment decisions, upheld the Commission’s original decision.[3] 

On 7 December 2017 the CJ dismissed the appeals against the GC’s 2016 ruling, bringing an end to the protracted legal dispute. The practical effect of this ruling is that France, Ireland and Italy must now seek repayment of the tax exemptions granted to the three alumina producers. In dismissing the appeals, the CJ confirmed that a European Council decision authorising a Member State to introduce tax exemptions does not prevent the Commission from determining independently whether those exemptions constitute State aid. Among other things, the CJ also confirmed the GC’s judgment that the Commission’s delay in adopting its decision regarding the lawfulness of the tax exemptions did not give the parties a legitimate expectation that the Commission would not object to them.