Court of Justice of the European Communities (including Court of First Instance Decisions)

JUDGMENT OF THE GENERAL COURT (Second Chamber, Extended Composition)

20 September 2023 (*)

(State aid – Aid scheme put into effect by Belgium – Decision declaring the aid scheme incompatible with the internal market and unlawful and ordering recovery of the aid granted – Tax ruling – Taxable profit – Excess profit exemption – Advantage – Selectivity – Recovery)

In Case T‑373/16,

Victaulic Europe, established in Nazareth (Belgium), represented by N. Baeten, G. Motta, T. Selwyn Sharpe, lawyers, and E. Batchelor, Solicitor,

applicant,

v

European Commission, represented by P.‑J. Loewenthal, B. Stromsky and F. Tomat, acting as Agents,

defendant,

THE GENERAL COURT (Second Chamber, Extended Composition),

composed of A. Marcoulli, President, S. Frimodt Nielsen, V. Tomljenović (Rapporteur), R. Norkus and W. Valasidis, Judges,

Registrar: S. Spyropoulos, Administrator,

having regard to the written part of the procedure, in particular:

–        the decision of 16 February 2018 to stay the proceedings pending the decisions closing the proceedings in the cases that gave rise to the judgment of 14 February 2019, Belgium and Magnetrol International v Commission (T‑131/16 and T‑263/16, EU:T:2019:91), and to the judgment of 16 September 2021, Commission v Belgium and Magnetrol International (C‑337/19 P, EU:C:2021:741),

–        the decision of 26 April 2022 to resume the proceedings,

–        the written questions put by the Court to the parties and their replies to those questions,

having regard to the order of the President of the Second Chamber, Extended Composition, of 21 December 2022 joining Cases T‑278/16, T‑370/16, T‑373/16, T‑420/16, T‑467/16, T‑637/16, T‑681/16, T‑858/16 and T‑867/16 for the purposes of the oral part of the procedure,

further to the hearing on 13 February 2023,

gives the following

Judgment

1        By its action under Article 263 TFEU, the applicant, Victaulic Europe, seeks the annulment of 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 contested decision’).

 Background to the dispute

2        The facts of the dispute and the legal background were set out by the General Court in paragraphs 1 to 28 of the judgment of 14 February 2019, Belgium and Magnetrol International v Commission (T‑131/16 and T‑263/16, EU:T:2019:91), and by the Court of Justice in paragraphs 1 to 24 of the judgment of 16 September 2021, Commission v Belgium and Magnetrol International (C‑337/19 P, EU:C:2021:741; ‘the judgment on appeal’). For the purposes of the present proceedings, they may be summarised as follows.

3        By an advance ruling issued by the ‘service des décisions anticipées’ (Advance Ruling Commission) of the service public fédéral des finances belge (Belgian Federal Public Service for Finance) under Article 185(2)(b) of the Code des impôts sur les revenus 1992 (Income Tax Code 1992; ‘the CIR 92’), read in conjunction with 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 fiscale (Law of 24 December 2002 amending the corporate income tax system and establishing an advance tax ruling system) (Moniteur belge, 31 December 2002, p. 58817; ‘the Law of 24 December 2002’), Belgian resident companies that were part of a multinational group and Belgian permanent establishments of foreign resident companies that were part of a multinational group could reduce their tax base in Belgium by deducting what was considered to be ‘excess’ profit from the profit which they had recorded. Under that system, part of the profit made by the Belgian entities benefiting from an advance ruling was not taxed in Belgium. According to the Belgian tax authorities, that excess profit arose from the synergies, economies of scale or other benefits resulting from membership of a multinational group and, accordingly, was not attributable to the Belgian entities in question.

4        The applicant in the present case is a company established in Belgium forming part of a multinational group of undertakings. It carries out transactions with other companies within that group.

5        It is apparent from the annex to the contested decision and the documents in the file that, on 13 May 2014, the Advance Ruling Commission adopted an advance ruling in respect of the applicant, which had requested it following a group restructuring aimed at centralising a number of functions and services with the applicant which was established in Belgium. That advance ruling was valid for five years from 1 January 2012.

6        Following an administrative procedure that was initiated on 19 December 2013 with a letter by which the European Commission requested the Kingdom of Belgium to provide information on the system of excess profit advance rulings, which were based on Article 185(2)(b) of the CIR 92, the Commission adopted the contested decision on 11 January 2016.

7        By the contested decision, the Commission found that the excess profit exemption scheme that was based on Article 185(2)(b) of the CIR 92, pursuant to which the Kingdom of Belgium had issued advance rulings to Belgian entities of multinational groups of undertakings, granting those entities an exemption in respect of part of their profit, constituted a State aid scheme giving its beneficiaries a selective advantage, for the purposes of Article 107(1) TFEU, that was incompatible with the internal market.

8        Thus, the Commission argued, principally, that the scheme at issue granted beneficiaries of the advance rulings a selective advantage, since the excess profit exemption applied by the Belgian tax authorities was a departure from the ordinary Belgian corporate income tax system. In the alternative, the Commission found that the excess profit exemption could confer a selective advantage on beneficiaries of the advance rulings, in so far as that exemption was not in line with the arm’s length principle.

9        Having found that the scheme at issue had been put into effect in breach of Article 108(3) TFEU, the Commission ordered that the aid thus granted be recovered from its beneficiaries, a definitive list of which was to be drawn up by the Kingdom of Belgium following the decision.

 Forms of order sought

10      The applicant claims that the Court should:

–        declare the action for annulment admissible;

–        annul the contested decision;

–        order the Commission to pay the costs.

11      The Commission contends that the Court should:

–        dismiss the action;

–        order the applicant to pay the costs.

 Law

12      The applicant puts forward four pleas in law in support of its action. The first plea alleges errors of law, manifest errors of assessment and a failure to state reasons in so far as the contested decision found there to be an aid scheme. The second plea alleges infringement of Article 107 TFEU and a failure to state reasons, in that the Commission failed to consider whether there was an advantage. The third plea alleges infringement of Article 107 TFEU in so far as the Commission found that the measure at issue was selective. The fourth plea alleges infringement of Article 16 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) and breach of the principle of legal certainty in that the contested decision does not make it possible to determine the amount of aid for the purposes of recovery.

 Classification of the measures at issue as an aid scheme

13      The first plea alleges errors of law, manifest errors of assessment, and a failure to state reasons, in that the Commission categorised the scheme at issue as an aid scheme. In essence, first, the applicant disputes the identification of the acts on the basis of which the scheme at issue was granted. Secondly, it disputes the finding that the grant of the excess profit exemption does not require ‘implementing measures’ within the meaning of Article 1(d) of Regulation 2015/1589, and the finding that the Advance Ruling Commission had only limited discretion. Thirdly, the applicant criticises the use of a sample of 22 advance rulings and the failure to provide a statement of reasons regarding the representativeness of that sample.

14      The Commission contends that the applicant’s arguments should be rejected.

15      In that regard, it should be borne in mind that, in the judgment on appeal, the Court of Justice stated that the contested decision had established the existence of an aid scheme, within the meaning of Article 1(d) of Regulation 2015/1589, resulting from a systematic approach by the Belgian tax authorities, and thus rejected as unfounded the plea relied on by the Kingdom of Belgium and Magnetrol International, alleging a failure to state reasons and that it was incorrectly concluded that there was an aid scheme.

16      It follows that the applicant’s first plea, alleging a failure to state reasons and that the scheme at issue was allegedly incorrectly categorised as a State aid scheme, for the purposes of Article 107(1) TFEU, must be rejected, that plea being, in essence, similar to those of the Kingdom of Belgium and Magnetrol International, which were rejected by the Court of Justice in the judgment on appeal.

 The economic advantage granted by the scheme at issue

17      The second plea alleges infringement of Article 107 TFEU and failure to state reasons in that the Commission failed to assess whether the excess profit scheme actually conferred an advantage. The applicant argues that it was not sufficient for the Commission to identify selectivity alone.

18      The Commission contends that the applicant’s arguments should be rejected.

19      At the outset, it must be borne in mind that the statement of reasons for a measure adopted by the Commission must enable the persons concerned to ascertain the reasons for the measure so that they can defend their rights and ascertain whether or not the measure is well founded and so that the EU judicature can exercise its power of review. It is not necessary for the statement of reasons to go into all the relevant facts and points of law, since the question whether the statement of reasons meets the requirements of Article 296 TFEU must be assessed with regard not only to its wording but also to its context and to all the legal rules governing the matter in question (judgments of 15 June 2005, Corsica Ferries France v Commission, T‑349/03, EU:T:2005:221, paragraphs 62 and 63; of 16 October 2014, Eurallumina v Commission, T‑308/11, not published, EU:T:2014:894, paragraph 44; and of 6 May 2019, Scor v Commission, T‑135/17, not published, EU:T:2019:287, paragraph 80).

20      Moreover, it must be noted that, in the analysis of the conditions set out in Article 107(1) TFEU that must be satisfied in order for a measure to constitute State aid, including that relating to the existence of a selective advantage, the concept of ‘advantage’ and that of its ‘selectivity’ are two separate criteria. So far as advantage is concerned, the Commission must show that the measure improves the financial situation of the recipient (see, to that effect, judgment of 2 July 1974, Italy v Commission, 173/73, EU:C:1974:71, paragraph 15). In particular, in the case of tax measures, the existence of an economic advantage for the purposes of Article 107(1) TFEU may be established only when compared with ‘normal’ taxation (see, to that effect, judgment of 8 November 2022, Fiat Chrysler Finance Europe v Commission, C‑885/19 P and C‑898/19 P, EU:C:2022:859, paragraph 69). However, so far as selectivity is concerned, the Commission must show that the advantage does not benefit other undertakings that are in a factual and legal situation comparable to that of the recipient in the light of the objective of the reference system (see, to that effect, judgment of 8 September 2011, Paint Graphos and Others, C‑78/08 to C‑80/08, EU:C:2011:550, paragraph 49).

21      In that regard, it should be noted that, according to the case-law, the requirement as to selectivity under Article 107(1) TFEU must be clearly distinguished from the concomitant detection of an economic advantage, in that, where the Commission has identified an advantage, understood in a broad sense, as arising directly or indirectly from a particular measure, it is also required to establish that that advantage specifically benefits one or more undertakings (judgment of 4 June 2015, Commission v MOL, C‑15/14 P, EU:C:2015:362, paragraph 59).

22      It must however be stated that, according to the case-law of the Court of Justice, those two criteria may be examined together as a ‘third condition’ laid down by Article 107(1) TFEU, requiring there to be a ‘selective advantage’ (see, to that effect, judgment of 30 June 2016, Belgium v Commission, C‑270/15 P, EU:C:2016:489, paragraph 32).

23      In the contested decision, the Commission’s reasoning with regard to the advantage is set out in its analysis of the existence of a selective advantage, that is, in Section 6.3, entitled ‘Existence of a selective advantage’. In that context, contrary to what the applicant maintains, the Commission did in fact examine the criterion of advantage.

24      As a preliminary point, in recital 125 of the contested decision, the Commission indicated that the excess profit exemption applied by the Belgian tax authorities was not provided for by the Belgian corporate income tax system. Furthermore, in recital 126 of the contested decision, the Commission highlighted the fact that that exemption was calculated in disregard of the total profit actually recorded by the Belgian entity and the adjustments provided for by law. In recital 127 of the contested decision, it stated that although the Belgian system contained certain special provisions applicable to groups, these were aimed at putting integrated multinational group entities and standalone entities on an equal footing.

25      In that context, in recital 133 of the contested decision, the Commission indicated that, under the Belgian corporate income tax system, corporate entities resident or operating through a permanent establishment in Belgium were taxed on their profit actually recorded, not on a hypothetical level of profit, which was why the excess profit exemption conferred an advantage on Belgian group entities benefiting from the scheme at issue.

26      In recital 135 of the contested decision, the Commission recalled the case-law according to which an economic advantage may be granted through a reduction in an undertaking’s tax burden and, in particular, through a reduction in the tax base or in the amount of tax due. Thus the Commission found that, in the present case, the scheme at issue allowed corporate beneficiaries of advance rulings to reduce their tax liability by deducting a so-called ‘excess’ profit from their profit that was actually recorded. That excess profit was determined by estimating the hypothetical average profit of comparable standalone undertakings, so that the difference between the profit actually recorded and that hypothetical average profit was then translated into an exemption percentage underpinning the calculation of the tax base agreed for the five years of the advance ruling’s application. In so far as that tax base, thus determined on the basis of the advance rulings granted under the scheme at issue, was lower than it would have been had those rulings not been issued, an advantage would have arisen.

27      Consequently, it is apparent from the recitals of the contested decision highlighted in paragraphs 24 to 26 above that the advantage identified by the Commission consisted in the non-taxation of the excess profit of corporate beneficiaries, and in the taxation of their profit calculated on the basis of a hypothetical average profit that disregarded the total profit made by those companies and the adjustments provided for by law, in accordance with advance rulings under the scheme at issue. According to the Commission, such taxation represented a lowering of the tax burden of the beneficiaries of the scheme, in comparison with the burden that would have arisen from normal taxation, under the Belgian corporate income tax system, which would have covered all profits actually recorded, after applying the adjustments provided for by law.

28      Next, the actual analysis of the selectivity of that advantage is set out in recitals 136 to 141 of the contested decision, under Section 6.3.2.1 of that decision, so far as concerns the Commission’s primary line of reasoning as to selectivity, based on the existence of a derogation from the general Belgian corporate income tax system. Moreover, the selectivity of the advantage represented by the excess profit exemption is also analysed in recitals 152 to 170 of the contested decision, under Section 6.3.2.2 of that decision, so far as concerns the Commission’s subsidiary line of reasoning as to selectivity, based on the existence of a derogation from the arm’s length principle.

29      It follows from the foregoing that the justifications put forward by the Commission to support its findings as to the existence of an advantage do meet the requirements of the obligation to state reasons as set out in paragraph 19 above.

30      Moreover, the fact that, in terms of form, the analysis of advantage was included in a section that also covers the examination of selectivity does not reveal a failure to carry out a substantive examination of both concepts, in so far as the existence of an advantage, on the one hand, and that of its selective nature, on the other, are in fact assessed (judgment of 24 September 2019, Netherlands and Others v Commission, T‑760/15 and T‑636/16, EU:T:2019:669, paragraph 129).

31      Accordingly, the applicant’s complaints alleging a failure to state reasons and an error of law in that the Commission confined itself merely to identifying the selectivity without first establishing the existence of an advantage must be rejected.

32      Furthermore, in the reply, the applicant claims, in the first place, that the Commission took into account only part of the operation of the scheme at issue in order to find that that scheme improved the financial position of its beneficiaries and thus to conclude that there was an advantage. The applicant submits that the Commission found that the scheme at issue followed a two-step process consisting, first, in calculating the price of transactions between the Belgian entity and its associates and allocating the residual profit to the Belgian entity and then, secondly, in correcting the residual profit. In that regard, the applicant claims that the Commission erred in finding that the residual group profit, assessed in the first step, must necessarily have been taxed in its entirety in Belgium. That argument has no factual basis.

33      First, it must be noted that, as the Court of Justice found in paragraph 151 of the judgment on appeal, in the contested decision, the Commission did not rely on the application of a two-step method as being an essential element of the scheme at issue, but, in essence, on the fact that the amount exempt under the excess profit exemption systematically corresponded to the difference between the profit actually recorded by the beneficiary concerned and a hypothetical profit generated if that beneficiary had operated independently of its group, irrespective of the method used to lead to that finding.

34      In that regard, it should be added that, as is apparent from paragraph 26 above, in recital 135 of the contested decision, the Commission found that the scheme at issue allowed corporate beneficiaries of advance rulings to reduce their tax liability by deducting from their profit that was actually recorded a so-called ‘excess profit’, which was determined by estimating the hypothetical average profit of comparable standalone undertakings, so that the difference between the profit actually recorded and that hypothetical average profit was then translated into an exemption percentage. Thus, contrary to the applicant’s contention, for the purposes of its analysis of the existence of an advantage, the Commission took account of the scheme at issue as a whole and of the fact that, following the application of that scheme, Belgian entities were not taxed on their actual recorded profit, but on a profit calculated on the basis of a hypothetical average profit.

35      Secondly, as stated in paragraph 27 above, the Commission found that the excess profit scheme represented a lowering of the tax burden of its beneficiaries, in comparison with the burden that would arise from normal taxation, under the Belgian corporate income tax system, which would have covered all profits actually recorded, after applying the adjustments provided for by law.

36      In the second place, the applicant claims that the Commission failed to consider whether the scheme at issue did in fact grant its beneficiaries an advantage and submits, in that regard, that the Commission failed to take account of the fact that the allocation of profits within a group depended on the relationships between the entities of the group and, in particular, the functions of the Belgian entity concerned.

37      In that regard, suffice it to note that, in a decision which concerns an aid scheme, the Commission is not required to carry out an analysis of the aid granted in individual cases under the scheme. It is only at the stage of recovery of the aid that it is necessary to look at the individual situation of each undertaking concerned (see, to that effect, judgments of 7 March 2002, Italy v Commission, C‑310/99, EU:C:2002:143, paragraphs 89 and 91; of 9 June 2011, Comitato ‘Venezia vuole vivere’ and Others v Commission, C‑71/09 P, C‑73/09 P and C‑76/09 P, EU:C:2011:368, paragraph 63; and of 13 June 2019, Copebi, C‑505/18, EU:C:2019:500, paragraphs 28 to 33).

38      In those circumstances, the Commission cannot be criticised for having found that the so-called excess profit exemption, under the advance rulings issued under the scheme at issue, introduced a reduction of the tax which the entities that requested those rulings would otherwise have had to pay, pursuant to the rules on corporate income tax in Belgium, and for having concluded that there was an economic advantage for those entities.

39      Accordingly, the second plea must be rejected.

 The selectivity of the scheme at issue

40      The third plea alleges infringement of Article 107(1) TFEU, manifest errors of assessment and failure to state reasons, in that the Commission categorised the scheme at issue as a selective measure. In essence, the applicant disputes the existence of a derogation from the reference system, as contended both in the Commission’s primary line of reasoning as to selectivity (first part of the third plea) and the Commission’s subsidiary line of reasoning as to selectivity (second part of the third plea).

 Preliminary observations on the identification of the reference system

41      As a preliminary point, it should be recalled that the classification of a national tax measure as ‘selective’ presupposes, first of all, the identification and prior examination of the ordinary or ‘normal’ tax regime applicable in the Member State concerned, that is to say, the determination of the ‘reference system’. Thus, that determination is of particular importance in the case of tax measures, since the existence of an economic advantage for the purposes of Article 107(1) TFEU may be established only when compared with ‘normal’ taxation. Moreover, determination of the set of undertakings which are in a comparable factual and legal situation depends on the prior definition of the legal regime in the light of whose objective it is necessary, where applicable, to examine whether the factual and legal situation of the undertakings favoured by the measure in question is comparable with that of those which are not (see judgment of 8 November 2022, Fiat Chrysler Finance Europe v Commission, C‑885/19 P and C‑898/19 P, EU:C:2022:859, paragraph 69 and the case-law cited).

42      In the present case, the Commission set out in recitals 121 to 129 of the contested decision its position concerning the reference system.

43      Thus, in recitals 121 and 122 of the contested decision, the Commission stated that the reference system was the ordinary system of taxation of corporate profits under the general Belgian corporate income tax system, which had as its objective the taxation of profit of all companies subject to tax in Belgium. The Commission noted that the Belgian corporate income tax system applied to companies resident in Belgium as well as to Belgian branches of non-resident companies. Under Article 185(1) of the CIR 92, companies resident in Belgium were liable to corporate income tax on the total amount of their profit, unless a double taxation treaty applied. Moreover, under Articles 227 and 229 of the CIR 92, non-resident companies were only taxable on specific Belgium-sourced income. The Commission also stated that, in both cases, Belgian corporate income tax was payable on the total profit, which was established according to the rules on calculating profit as defined in Article 24 of the CIR 92. Under Article 185(1) of the CIR 92, read in conjunction with Articles 1, 24, 183, 227 and 229 of the CIR 92, the total profit was calculated as corporate income, minus deductible expenses which were typically recorded in the accounts, so that the profit actually recorded formed the starting point for calculating the total taxable profit, without prejudice to the subsequent application of upward and downward adjustments provided for by the Belgian corporate income tax system.

44      In recitals 123 to 128 of the contested decision, the Commission explained that the excess profit exemption scheme applied by the Belgian tax authorities was not an inherent part of the reference system.

45      More specifically, in recital 125 of the contested decision, the Commission found that that exemption was not prescribed by any provision of the CIR 92. Article 185(2)(a) of the CIR 92 allowed the Belgian tax administration to make a unilateral primary adjustment of a company’s profits where transactions or arrangements with associated companies were concluded on terms that differed from arm’s length conditions. By contrast, Article 185(2)(b) of the CIR 92 provided for the possibility of making downward adjustments of a company’s profit from an intra-group transaction or arrangement, subject to the additional condition that the profit to be adjusted had to have been included in the profit of the foreign counterparty to that transaction or arrangement.

46      In addition, in recital 126 of the contested decision, the Commission recalled that the objective of the Belgian corporate income tax system was to tax corporate taxpayers on their actual profits, irrespective of their legal form or size and of whether or not they formed part of a multinational group of undertakings.

47      Furthermore, in recital 127 of the contested decision, the Commission noted that, for the purposes of determining taxable profit, integrated multinational group companies were required to set the prices they applied to their intra-group transactions instead of those prices being dictated by the market, which is why Belgian tax law contained certain special provisions applicable to groups, which were generally aimed at putting non-integrated companies and economic entities structured in the form of groups on an equal footing.

48      In recital 129 of the contested decision, the Commission concluded that the reference system to be taken into consideration was the Belgian corporate income tax system, which had as its objective the taxation of profits of all companies resident or operating through a permanent establishment in Belgium in the same manner. That system included the applicable adjustments under the Belgian corporate income tax system, which determined the company’s taxable profit for the purpose of levying Belgian corporate income tax.

49      In the application, the applicant expressly states that it does not dispute the identification of the reference system relevant to the examination of the scheme at issue adopted by the Commission in the contested decision.

50      In its reply to the Court’s question on case-law following the close of the written part of the procedure, the applicant submits that the Commission did not correctly identify the reference system and, in particular, that Article 185(2) of the CIR 92, as applied by the Belgian authorities, should have been included in that reference system.

51      In that respect, it should be pointed out that, under Article 84(1) of the Rules of Procedure of the General Court, no new plea in law may be introduced in the course of proceedings unless it is based on matters of law or of fact which come to light in the course of the procedure. In that regard, a judgment which merely confirms a legal position known to the appellant at the time when an appeal is brought cannot be considered as a matter allowing a new ground of appeal to be submitted (see, to that effect, judgment of 20 September 2018, Spain v Commission, C‑114/17 P, EU:C:2018:753, paragraph 39). However, a plea or an argument which may be regarded as amplifying a plea put forward previously, whether directly or by implication, in the original application and which is closely connected therewith must be declared admissible (judgment of 11 July 2013, Ziegler v Commission, C‑439/11 P, EU:C:2013:513, paragraph 46). Moreover, to be regarded as an amplification of a plea previously advanced, a new line of argument must present a sufficiently close connection with the pleas initially set out in the application in order to be considered as forming part of the normal evolution of debate in proceedings before the Court (see, to that effect, judgment of 26 November 2013, Groupe Gascogne v Commission, C‑58/12 P, EU:C:2013:770, paragraph 31).

52      In the present case, the applicant relies on the case-law subsequent to the close of the written part of the procedure in order to challenge the identification of the reference system as used by the Commission in recital 129 of the contested decision, whereas, first, in the application, it had expressly stated that it did not dispute those findings and, secondly, that case-law cannot be regarded as a matter of law which came to light in the course of the procedure. The case-law relating to the identification of the reference system referred to by the applicant in the section of its reply to the Court’s question relating to the taxation of profits under the Belgian corporate income tax system merely confirms the requirements relating to the Commission’s examination of the national taxation system in order to establish the reference system in the examination of an aid scheme. In those circumstances, the complaints raised by the applicant in its reply to the question put by the Court cannot be regarded as amplifying its third plea or as being based on new matters of law. Therefore, those complaints must be regarded as being inadmissible.

 The selective nature of the advantage as a result of a derogation from the reference system that differentiates between economic operators who are in a comparable situation

53      It must be noted that, according to the case-law, in examining the selectivity of a tax measure, after first identifying and examining the common or ‘normal’ tax regime applicable in the Member State concerned, that is to say, the reference system, it is necessary, secondly, to assess and determine whether any advantage granted by the tax measure at issue may be selective by demonstrating that the measure derogates from that common regime inasmuch as it differentiates between economic operators who, in the light of the objective assigned to the tax system of the Member State concerned, are in a comparable factual and legal situation (see judgment of 8 September 2011, Paint Graphos and Others, C‑78/08 to C‑80/08, EU:C:2011:550, paragraph 49 and the case-law cited).

54      In the contested decision, under Section 6.3.2.1, the Commission found, principally, that the Belgian excess profit exemption scheme derogated from the general Belgian corporate income tax system, in so far as that system provided for companies to be taxed on their total profit, that is, their profit actually recorded, not on a hypothetical average profit that disregarded the total profit made by those companies and the adjustments provided for by law.

55      Thus, the Commission concluded, in recital 136 of the contested decision, that Article 185(2)(b) of the CIR 92, on which the Kingdom of Belgium relied as the basis for the scheme at issue, did not have the meaning or effect suggested by that scheme and accordingly that that scheme constituted, rather, a derogation from the general rule under Belgian tax law according to which profit actually recorded was taxed. The Commission also pointed out that that scheme was not available to all entities in a similar legal and factual situation in the light of the objective of the Belgian corporate income tax system, which was to tax the profits of all companies subject to tax in Belgium.

56      The Commission then went on, in recitals 137 to 141 of the contested decision, to develop its reasons for considering that the scheme at issue differentiated between operators who, in the light of the objective assigned to the Belgian tax system, were in a comparable legal and factual situation.

57      In the first part of its third plea, concerning the Commission’s primary line of reasoning according to which the scheme at issue derogated from the reference system, the applicant specifically disputes the finding that that system differentiates between beneficiaries of the exemptions and other operators in a comparable legal and factual situation. It should be noted in that regard that, in recitals 138 to 140 of the contested decision, the Commission put forward three alternative grounds for its conclusion. It is appropriate to examine each of these in turn, for the sake of completeness.

–       Different treatment of beneficiaries forming part of a multinational group of undertakings

58      The applicant submits that the Commission incorrectly found that the beneficiaries of the advance rulings were in a comparable legal and factual situation to all companies subject to corporate income tax in Belgium, including standalone companies and companies forming part of a national group. It argues, in essence, that Article 185(2) of the CIR 92 applies only to companies belonging to a multinational group involved in cross-border transactions and that only those undertakings are in a legal and factual situation comparable to that of beneficiaries of the scheme at issue.

59      In recital 138 of the contested decision, the Commission asserted that the scheme was selective because it was only open to entities that were part of a multinational group of undertakings.

60      The applicant disputes only the finding that multinational groups are in a legal and factual situation comparable to that of standalone companies and exclusively national groups.

61      In that regard, first, it must be recalled, as stated in paragraph 48 above, that the objective of the ordinary Belgian corporate income tax system, as is apparent from recital 129 of the contested decision, is the taxation of all the taxable profits of entities subject to Belgian corporate income tax, whether they are standalone entities or form part of a multinational or national group of undertakings.

62      As is apparent from the settled case-law cited in paragraphs 41 and 53 above, it is indeed the objective of the reference system that is relevant for the purposes of comparing the situation of the operators covered by the measure at issue with that of other operators. Accordingly, the Commission was entitled to rely, in recitals 129, 136 and 138 of the contested decision, on the objective of the Belgian corporate income tax system, which is to tax the profit of all companies subject to tax in Belgium, in order to find that entities belonging to a multinational group were in a legal and factual situation comparable to that of standalone companies and entities belonging to a national group.

63      In addition, as indicated in paragraph 43 above, the Commission found that, according to the normal rules of taxation in Belgium, the starting point for the taxable profit of undertakings was all the profit realised or registered in their accounts.

64      Secondly, it must be noted that it is true that Article 185(2)(b) of the CIR 92 is intended to apply to integrated multinational group companies. However, contrary to what the applicant claims, the purpose of that article is precisely to put associated and unrelated undertakings on an equal footing for the purposes of corporate income tax.

65      Article 185(2) of the CIR 92, in the version applicable in the present case, is worded as follows:

‘Without prejudice to the second paragraph, for two companies that are part of a multinational group of associated companies and in respect of their reciprocal cross-border relationships:

…

(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 conditions agreed between the two companies had been those which would have been agreed between independent companies, the profit of the first company is adjusted in an appropriate manner.

The first paragraph applies by way of advance ruling without prejudice to the application of the Convention on the elimination of double taxation in connection with the adjustment of profits of associated enterprises (90/436) of 23 July 1990 or of a Convention for the avoidance of double taxation.’

66      It is thus apparent from the very wording of Article 185(2)(b) of the CIR 92 that the downward adjustment is applicable only if the profit that is to be adjusted is already included in the profit of the other company and if that profit is profit which should have been made by that other company if the conditions agreed between the two companies had been those which would have been agreed between independent companies and, therefore, that it tends to place entities forming part of a multinational group in the same situation as unrelated entities.

67      Such a reading is confirmed by the administrative circular of 4 July 2006 concerning Article 185(2) of the CIR 92, to which reference is made in recital 38 of the contested decision and which recalls that the corresponding downward adjustment provided for by that article is informed by the arm’s length principle, that its objective is to avoid or undo a (potential) double taxation and that it must be made in an appropriate manner, that is, that the Belgian tax authorities can make that adjustment only if both the principle and the amount of that adjustment are justified.

68      In that context, the applicant’s argument that Article 185(2)(b) of the CIR 92 cannot, by definition, produce its effects on standalone entities and entities belonging to a national group, which are not involved in intra-group cross-border transactions, does not permit the inference that they are in a different situation in the light of the objective pursued by the reference system.

69      Accordingly, the Commission cannot be criticised for having stated that the entities forming part of a multinational group which benefited from the excess profit exemption pursuant to the scheme at issue, as an adjustment which is not as such provided for by law, were treated differently from other entities in Belgium that did not benefit from it, although those entities were in a comparable factual and legal situation, in the light of the objective of the ordinary Belgian corporate income tax system, which is the taxation of all taxable profits of all companies resident or operating through a permanent establishment in Belgium.

–       Different treatment in comparison with undertakings that have not made investments, created employment or centralised activities in Belgium

70      The applicant submits that the Commission incorrectly found that the excess profit exemption scheme was conditional on the existence of a ‘new situation’, consisting in investments, an increase in activities or a relocation to Belgium. In the applicant’s view, that condition is in no way apparent from Article 185(2) of the CIR 92 and the Commission incorrectly extrapolated it from a sample of 22 advance rulings. Moreover, the very essence of an advance ruling is to determine the future tax effects of transactions, without requiring a new situation.

71      In recital 139 of the contested decision, the Commission stated that the scheme at issue was selective in so far as it was not open to companies that may have decided not to make investments, create employment or centralise activities in Belgium. The Commission noted that Article 20 of the Law of 24 December 2002 made the adoption of advance rulings conditional on the existence of a situation or of a transaction that had not had tax consequences and that an advance ruling was necessary in order to benefit from the excess profit exemption.

72      The Commission also noted that, in the sample of advance rulings granting an excess profit exemption that it had analysed, each ruling contained references to substantial investments, centralisation of activities or the creation of employment in Belgium. Accordingly, it found that the ‘new situation’ requirement that was a prerequisite for requests for advance rulings by which requesting parties sought to benefit from the excess profit exemption resulted in multinational groups that amended their business model by establishing new operations in Belgium being treated differently from any other economic operators, including multinational groups that continued to operate under their existing business models in Belgium.

73      In that regard, it should be recalled that, in paragraphs 142 to 144 of the judgment on appeal, the Court of Justice confirmed that the choice of a sample consisting of 22 advance rulings, issued in 2005, 2007, 2010 and 2013, was appropriate and sufficiently representative.

74      It should also be noted that Article 20 of the Law of 24 December 2002 defines an ‘advance ruling’ as the legal act by which the Federal Public Service for Finance 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. Moreover, Article 22 of that law makes clear that an advance ruling cannot be issued, in particular, when the request concerns situations or transactions identical to those having already had tax consequences as regards the requesting party.

75      Admittedly, it cannot be inferred from the provisions referred to in paragraph 74 above that the making of investments, creation of employment or centralisation of activities in Belgium is explicitly required as a condition for obtaining an advance ruling.

76      However, it is apparent from the sample of advance rulings analysed by the Commission in the contested decision that those rulings were in fact granted following requesting parties’ proposals to invest, to relocate certain operations or to create a certain number of jobs in Belgium. Indeed, the three examples described in footnote 80 to the contested decision, in which the parties requesting the advance rulings in question described their plans for investment and for recentralisation of activities in Belgium, show that, in practice, the condition for the issue of an advance ruling, that there should be a situation that had not had tax consequences, was satisfied by investments, by the centralisation of activities or by the creation of employment in Belgium.

77      In that regard, it should be borne in mind that, in the present case, it is precisely the administrative practice of the Belgian tax authorities – consisting in exempting profits by advance rulings – that has been considered to derogate from what is provided for in Article 185(2)(b) of the CIR 92. As a result of those advance rulings, their beneficiaries obtained an advantage consisting in a reduction in their tax base, because of the exemption of ‘excess’ profit. By contrast, entities that did not amend their business model in order to create new tax situations – which, in the light of that practice, consisted systematically in investments, centralisation of activities or creation of employment in Belgium – and therefore did not request an advance ruling were taxed on all of their taxable profits. Consequently, the scheme at issue resulted in companies that were in a comparable factual and legal situation being treated differently, in the light of the objective of the ordinary Belgian corporate income tax system.

78      Furthermore, the applicant’s argument that the Commission disregarded the fact that the grant of advance rulings was not conditional on the existence of a ‘new situation’, but related only to an operation that had not yet had tax consequences, which also included ongoing arrangements, must be rejected. As is apparent from paragraph 77 above, the Commission’s analysis is based on the finding that, in practice, the grant of the benefit of the scheme at issue was systematically conditional on the existence of a situation related to the making of investments, the centralisation of activities or the creation of employment in Belgium, which was taken into account in the advance rulings, on which the beneficiaries could rely for each tax year from the entry into force of those rulings and during their period of validity.

79      In those circumstances, the Commission cannot be criticised, first, for having stated, in recital 139 of the contested decision, that the system at issue was selective because it was not open to companies that had decided not to make investments, centralise activities or create employment in Belgium and, secondly, for having disregarded the nature of the advance rulings.

–       Different treatment in comparison with undertakings that are part of a small group

80      The applicant disputes the Commission’s assertion that only entities belonging to a large multinational group have an incentive to request advance rulings and submits that the Commission does not adduce any evidence in support of that claim.

81      In the present case, in recital 140 of the contested decision, the Commission stated that the scheme at issue was selective since only Belgian entities forming part of a large or medium-sized multinational group could effectively benefit from the excess profit exemption.

82      Indeed, in recital 140 of the contested decision, the Commission indicated that only entities belonging to a sufficiently large multinational group had an incentive to obtain an advance ruling, given that it was only within large corporate groups that synergies, economies of scale and other benefits were likely to generate a significant profit that would justify the request for an advance ruling. The Commission also noted that the process for obtaining such a ruling required a detailed request presenting the new situation that justified the exemption together with excess profit studies, which was more cumbersome for small corporate groups than for large corporate groups.

83      In that regard, it is not disputed that, within the sample of 22 advance rulings under the scheme at issue that was reviewed by the Commission, as described in recital 65 of the contested decision, and which was considered appropriate and representative in paragraphs 142 to 144 of the judgment on appeal, none of those rulings concerned entities belonging to small groups of undertakings.

84      Furthermore, as indicated in recital 66 of the contested decision, it is undisputed that, during the administrative procedure, following that finding by the Commission on the basis of the sample of 22 advance rulings and in response to a request by the Commission to that effect, the Kingdom of Belgium was unable to substantiate its claim that the exemption had also been granted to undertakings belonging to small corporate groups.

85      Consequently, in the light of the administrative practice referred to by the Commission, it is undertakings forming part of large and medium-sized groups that relied on the excess profit exemption scheme, to the exclusion of undertakings forming part of a small corporate group.

86      That conclusion cannot be called into question by the applicant’s arguments that the Commission had not established that small groups were not able to benefit from the scheme at issue, but had merely confirmed, at most, that such small groups had not benefited from it.

87      In that regard, it must be noted that selectivity can be established in cases where, although the formal criteria for the application of the measure at issue are formulated in general and objective terms, the structure of that measure is such that its effects significantly favour a particular group of undertakings (see, to that effect, judgment of 15 November 2011, Commission and Spain v Government of Gibraltar and United Kingdom, C‑106/09 P and C‑107/09 P, EU:C:2011:732, paragraphs 101 to 107).

88      Moreover, the selectivity of a measure may be established where the terms of that measure have been proposed selectively by the State to one or more operators rather than on the basis of objective criteria, laid down by a text of general application, applicable to any operator (see, to that effect, judgment of 12 November 2013, MOL v Commission, T‑499/10, EU:T:2013:592, paragraph 66).

89      In the present case, the factors referred to in paragraphs 82 to 84 above are such as to establish that, in practice, the Belgian tax authorities granted advance rulings relating to the profit exemption only to companies belonging to a large or medium-sized group, so that only those undertakings actually benefited from the scheme at issue.

90      In those circumstances, the Commission cannot be criticised for having stated, in recital 140 of the contested decision, that the system at issue was selective because it was not open to undertakings that were part of a small group.

91      In any event, even if the Commission had erred in relying on that ground relating to different treatment in comparison with undertakings forming part of a small group, that would not affect the validity of the other two grounds put forward by the Commission, which have been examined, respectively, in paragraphs 59 to 69 and in paragraphs 70 to 79 above.

 Conclusion on the selectivity of the scheme at issue

92      It is apparent from the foregoing that, in its primary line of reasoning, the Commission correctly identified the reference system as being the ordinary system of taxation of corporate profits under the general Belgian corporate income tax system, which has as its objective the taxation of profit of all companies subject to tax in Belgium and of which Article 185(2)(b) of the CIR 92 forms part. Furthermore, the Commission was right to conclude that the excess profit exemption scheme did not require that profit to be included in the profit of another company, and thereby derogated from the reference system and treated beneficiaries differently in relation to other entities in a similar legal and factual situation, in the light of the objective of the system.

93      Accordingly, the present plea in law must be rejected in so far as it challenges the Commission’s conclusion, as part of its primary line of reasoning, that the scheme at issue granted those beneficiaries a selective advantage, for the purposes of Article 107 TFEU.

94      In those circumstances, it is not necessary to examine the merits of the arguments raised by the applicant, in connection with the second part of the third plea in law and in the context of its reply to the Court’s question on the case-law subsequent to the close of the written part of the procedure, against the Commission’s conclusion as to the existence of a selective advantage, as part of its subsidiary line of reasoning with regard to selectivity, set out in Section 6.3.2.2 of the contested decision.

 Infringement of Article 16 of Regulation 2015/1589 and breach of the principle of legal certainty as a result of the recovery ordered by the contested decision

95      The fourth plea alleges infringement of Article 16 of Regulation 2015/1589 and breach of the principle of legal certainty in that the Commission ordered the recovery of the aid from its beneficiaries. In essence, the applicant submits, first, that the contested decision does not indicate what advantage is granted to the beneficiaries of the scheme at issue and, secondly, that it does not make it possible to determine the amount of aid.

96      The Commission contends that the applicant’s arguments should be rejected.

97      Under Article 16 of Regulation 2015/1589, where the Commission finds that there is State aid that is incompatible with the internal market and unlawful, it is to decide that the Member State concerned is to take all necessary measures to recover the aid from the beneficiary, unless this would be contrary to a general principle of EU law.

98      It is established case-law that the principle of legal certainty requires that EU legislation must be certain and its application foreseeable by those subject to it (see judgment of 21 July 2011, Alcoa Trasformazioni v Commission, C‑194/09 P, EU:C:2011:497, paragraph 71 and the case-law cited).

99      In the present case, the applicant merely asserts that the Commission does not indicate what advantage is supposed to be obtained by the beneficiaries concerned.

100    In that regard, it must be stated, first, as is apparent from paragraphs 26 and 27 above, that the Commission did identify the advantage in recital 135 of the contested decision. More specifically, it is apparent from that recital that the advantage consists in the possibility of corporate beneficiaries of the scheme at issue being able to reduce their tax liability by deducting a so-called ‘excess’ profit from their profit that was actually recorded. That excess profit was determined by estimating the hypothetical average profit of comparable standalone undertakings, so that the difference between the profit actually recorded and that hypothetical average profit was then translated into an exemption percentage underpinning the calculation of the tax base agreed for the five years of the advance ruling’s application.

101    Secondly, it must be observed that, according to settled case-law, no provision of EU law requires the Commission, when ordering the recovery of aid declared incompatible with the internal market, to fix the exact amount of the aid to be recovered. It is sufficient for the Commission’s decision to include information enabling the recipient itself to work out that amount without overmuch difficulty (judgments of 12 October 2000, Spain v Commission, C‑480/98, EU:C:2000:559, paragraph 25, and of 24 September 2019, Fortischem v Commission, T‑121/15, EU:T:2019:684, paragraph 167).

102    Moreover, as is clear from the case-law referred to in paragraph 37 above, in a decision concerning an aid scheme, the Commission is not required to carry out an analysis of the aid granted in individual cases under the scheme.

103    In the present case, the contested decision meets those requirements, since, in recitals 207 to 211 of the contested decision, the Commission provided explanations as to the method of calculating the aid to be recovered. Thus, the Commission indicated that it was necessary to calculate the amount of the tax which should have been paid if the excess profit exemption had not been granted, taking into account the amount of tax saved as a consequence of all advance rulings delivered to the beneficiary concerned and the cumulated interest on that amount calculated as from the moment the aid was granted, that is to say, the date on which the tax saved would have been due in each tax year in the absence of the advance ruling. In addition, information was included on making the adjustments corresponding to the various deductions applicable. Lastly, it was noted that the amount to be recovered could be further refined subsequently in correspondence between the Kingdom of Belgium and the Commission.

104    Furthermore, contrary to what the Commission claims in the rejoinder, in the light of the case-law set out in paragraph 51 above, the applicant’s argument that the Commission did not identify the advantage, since it examined only the second step of the excess profit calculation, does not constitute a new plea in law, but at most an amplification of the fourth plea, as set out in the application initiating proceedings, which is closely linked to it. Nevertheless, that argument must be rejected as unfounded, since, as has already been stated in paragraph 33 above, for the purposes of its analysis of the existence of an advantage, the Commission took account of the scheme at issue as a whole and of the fact that, following the application of that scheme, the Belgian entities were taxed on a hypothetical average profit.

105    For those reasons, the fourth plea in law must be rejected.

106    Since all of the pleas put forward by the applicant have been rejected, the action must be dismissed in its entirety.

 Costs

107    Under Article 134(1) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the applicant has been unsuccessful, it must be ordered to bear its own costs and to pay those incurred by the Commission, in accordance with the form of order sought by the Commission.

On those grounds,

THE GENERAL COURT (Second Chamber, Extended Composition),

hereby:

1.      Dismisses the action;

2.      Orders Victaulic Europe to bear its own costs and to pay those incurred by the European Commission.

Delivered in open court in Luxembourg on 20 September 2023.

Table of contents

Background to the dispute

Forms of order sought

Law

Classification of the measures at issue as an aid scheme

The economic advantage granted by the scheme at issue

The selectivity of the scheme at issue

Preliminary observations on the identification of the reference system

The selective nature of the advantage as a result of a derogation from the reference system that differentiates between economic operators who are in a comparable situation

– Different treatment of beneficiaries forming part of a multinational group of undertakings

– Different treatment in comparison with undertakings that have not made investments, created employment or centralised activities in Belgium

– Different treatment in comparison with undertakings that are part of a small group

Conclusion on the selectivity of the scheme at issue

Infringement of Article 16 of Regulation 2015/1589 and breach of the principle of legal certainty as a result of the recovery ordered by the contested decision

Costs

*      Language of the case: English.

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