The European Commission continues to expand the concept of selectivity – the key feature of any state aid measure – to outlaw member states' measures as state aid. It has done so in its high-profile tax rulings cases,(1) and the European Court of Justice (ECJ) refused to curtail this expansive approach in its judgment in the Spanish goodwill cases.(2)

The ECJ's judgment:

  • confirms that the commission can relatively easily find state aid at the level of general provisions of law (eg, tax exemptions);
  • clarifies the simple selectivity test for general tax measures, confirming that the decisive question is whether the measure is discriminatory; and
  • eases the commission's burden of proof regarding the selectivity of tax measures, and will likely encourage it to continue using state aid law against tax measures.

However, the ECJ's findings do not relate to the selectivity analysis of individual measures, such as tax rulings granted to individual multinational companies. The effect of this judgment on cases of individual aid measures will therefore be limited to the extent that the commission's analysis in those cases focuses on the individual measure or ruling rather than on the underlying general provisions of tax law (eg, as in the Belgian Excess Profit Ruling case).

Spanish goodwill tax measure

In 2002 Spain introduced a special tax scheme (the Spanish goodwill regime) that allowed Spanish companies which had invested in foreign companies (ie, with at least a 5% shareholding) to deduct from their corporate tax base the target companies' financial goodwill value (ie, the difference between the price paid and the market value of the underlying assets).(3) By contrast, Spanish companies acquiring shareholdings in domestic companies could not benefit from the measure.

Commission decisions

In 2007 the commission opened an investigation against the Spanish goodwill amortisation regime following allegations and a complaint that this tax scheme was unlawful aid and had distorted competition in a number of takeover bids by Spanish companies (eg, O2 by Telefónica in 2005).

In 2009(4) and 2011(5) the commission concluded that the Spanish goodwill amortisation regime constituted unlawful state aid because the scheme treated foreign acquisitions more favourably than domestic transactions without any objective reason. The commission ordered Spain to recover the incompatible aid of several billion euros from the beneficiaries.

General Court judgments

Spanish taxpayers who benefited from the Spanish goodwill regime appealed. On November 7 2014 the General Court annulled the commission decisions. It found that the commission had failed to establish the selective nature of the tax scheme, which is one of the conditions that must be met for a tax measure to be classified as state aid.(6) Even if the Spanish goodwill regime constituted an exception for acquisitions of shareholdings in foreign companies from the normal rules of Spanish taxation, the regime was not selective (and therefore not state aid) because it was available to any company. The General Court held that a tax measure would be selective only if a particular category of company could be identified that benefited from the tax measure and which could be differentiated from other companies based on specific characteristics. The Spanish goodwill regime was not aimed at any particular category of company but at a category of economic transaction. The General Court concluded that the regime did not specifically benefit a category of company.

ECJ judgment

The commission appealed the judgments to the ECJ, which set aside the first-instance judgments and referred the cases back to the General Court.

Contrary to the General Court, the ECJ considered that, in order to determine whether a measure is selective under EU state aid rules, it is unnecessary to identify a specific category of undertaking that benefits from the measure. The ECJ held that the appropriate criterion to establish the selectivity of a general measure is whether the measure favours certain undertakings over other undertakings which, in the light of the objective pursued by the general tax system concerned, are in a comparable factual and legal situation. The decisive question is therefore whether the general measure discriminates.

For further information on this topic please contact Bill Batchelor or Tarik Draidj at Baker & McKenzie by telephone (+32 2 639 36 11) or email ( or The Baker & McKenzie website can be accessed at


(1) For example, Apple, Starbucks, Amazon, and the Belgian Excess Profit Ruling scheme.

(2) ECJ (Grand Chamber), December 21 2016, in Joined Cases C-20/15 P Autogrill v Commission and C-21/15 P Banco Santander v Commission.

(3) Royal Legislative Decree 4/2004, March 5, approving the consolidated text of the Corporate Tax Law.

(4) Commission Decision 2011/5/EC, October 28 2009, on the tax amortisation of financial goodwill for foreign shareholding acquisitions C 45/07 (ex NN 51/07, ex CP 9/07).

(5) Commission Decision 2011/282/EU, January 2011, on the tax amortisation of financial goodwill for foreign shareholding acquisitions C 45/07 (ex NN 51/07, ex CP 9/07).

(6) Judgment of the General Court, November 7 2014, in Case T-219/10, Autogrill España v European Commission; and judgment of the General Court, November 7 2014, in Case T-399/11, Banco Santander v European Commission.

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