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)

In Case T‑637/16,

ZF CV Systems Europe, formerly Wabco Europe, established in Watermael-Boitsfort (Belgium), represented by E. Righini, S. Völcker and K. Beikos-Paschalis, lawyers,

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, ZF CV Systems Europe, formerly Wabco 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’).

I.      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 in the present case that, on 20 November 2012, the Advance Ruling Commission adopted the advance ruling in respect of the applicant, which had requested it following a reorganisation aimed at increasing and strengthening its role as central entrepreneur in Belgium. That advance ruling was valid for five years.

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 tax 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.

II.    Procedure and forms of order sought

10      The applicant claims that the Court should:

–        declare the action for annulment admissible;

–        annul the contested decision in whole or in part;

–        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.

III. Law

12      The applicant puts forward six pleas in law in support of its action. The first plea alleges an error of law and a manifest error of assessment in so far as the contested decision alleges the existence of an aid scheme. The second plea alleges errors of law and manifest errors of assessment in so far as the contested decision classifies the alleged scheme as selective. The third plea alleges errors of law and fact in that the Commission found that the scheme at issue conferred an advantage and in so far as it established its own arm’s length principle. The fourth plea, which is divided into four parts, alleges an inadequate statement of reasons and contradictory reasoning in the contested decision. The fifth plea alleges breach of the principle of good administration. The sixth plea alleges misuse of powers in that the Commission established its own arm’s length principle.

13      The Court considers it appropriate to examine, first, the first plea and the first part of the fourth plea, seeking to dispute the existence of an aid scheme; next, the second, third, fourth and sixth pleas, which dispute in essence the Commission’s findings as to the existence of a selective advantage granted by the scheme at issue; and, lastly, the fifth plea, alleging breach of the principle of good administration.

A.      The existence of an aid scheme

14      The first plea and the first part of the fourth plea allege errors of law and fact, as well as a failure to provide an adequate statement of reasons, in that the Commission classified the measure at issue as an aid scheme. In essence, the applicant disputes, first, the identification of the acts on the basis of which that scheme was granted; secondly, the analysis that the scheme at issue did not require further implementing measures; and, thirdly, the finding that the requirement that the beneficiaries be identified in a general and abstract manner was met.

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

16      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 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), 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.

17      In those circumstances, the first plea in law and the first part of the fourth plea, seeking to challenge the Commission’s findings concerning the classification of the measures at issue as a State aid scheme for the purposes of Article 107(1) TFEU and Article 1(d) of Regulation 2015/1589, must be rejected, 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.

B.      The existence of an aid measure conferring a selective advantage

18      The arguments raised by the applicant in its second, third and sixth pleas and in the second to fourth parts of its fourth plea seek to challenge the Commission’s findings as to the existence of an advantage granted by the scheme at issue and its selectivity.

19      Specifically, the second plea and the second part of the fourth plea allege errors of law and manifest errors of assessment, as well as a failure to provide an adequate statement of reasons, in that the Commission classified the scheme at issue as selective. In essence, the applicant disputes the definition of the reference system and the finding that the scheme at issue derogated from that reference system.

20      The third plea, the third part of the fourth plea and the sixth plea allege errors of law and fact, failure to provide an adequate statement of reasons and misuse of powers in that the Commission found that the measure conferred an advantage and established its own arm’s length principle.

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

22      In this case, it is appropriate to begin by examining the applicant’s arguments challenging the identification of the reference system against which the existence or non-existence of an advantage must be assessed, as well as the possible selectivity of such an advantage. The Court will then go on to consider the applicant’s arguments challenging the Commission’s findings in relation to both the existence of an advantage and the selective nature of that advantage because of the existence of a derogation from the reference system.

1.      Identification of the reference system

23      The first part of the second plea alleges a manifest error of assessment in the identification of the reference system. In essence, the applicant claims that the Commission did not actually examine the general corporate income tax system and merely found that the reference system consisted in taxing accounting profits. The applicant complains that the Commission did not take account of the fact that the corporate tax base was not determined solely on the basis of recorded profits and that adjustments could be made, which were also covered by the reference system. In addition, the applicant submits that the Commission incorrectly found that Article 185(2) of the CIR 92 required that the excess profit of the Belgian entity be included in the tax base of an associated entity established in another country.

(a)    Preliminary observations

24      As a preliminary point, it must be recalled that the determination of the reference system 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. Thus, 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).

25      In that context, it has been held that the determination of the reference system, which must be carried out following an exchange of arguments with the Member State concerned, must follow from an objective examination of the content, the structure and the specific effects of the applicable rules under the national law of that State (see judgment of 6 October 2021, World Duty Free Group and Spain v Commission, C‑51/19 P and C‑64/19 P, EU:C:2021:793, paragraph 62 and the case-law cited).

26      In addition, it is apparent from settled case-law that, while the Member States must thus refrain from adopting any tax measure liable to constitute State aid that is incompatible with the internal market, the fact remains that outside the spheres in which EU tax law has been harmonised, it is the Member State concerned which determines, by exercising its own competence in the matter of direct taxation and with due regard for its fiscal autonomy, the characteristics constituting the tax, which define, in principle, the reference system or the ‘normal’ tax regime, from which it is necessary to analyse the condition relating to selectivity. This includes, in particular, the determination of the basis of assessment and the taxable event (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, paragraphs 65 and 73 and the case-law cited).

27      It follows that only the national law applicable in the Member State concerned must be taken into account in order to identify the reference system for direct taxation, that identification being itself an essential prerequisite for assessing not only the existence of an advantage, but also whether it is selective in nature.

28      Furthermore, in order to determine whether a tax measure has conferred a selective advantage on an undertaking, it is for the Commission to carry out a comparison with the tax system normally applicable in the Member State concerned, following an objective examination of the content, the structure and the specific effects of the applicable rules under the national law of that State. Parameters and rules external to the national tax system at issue cannot therefore be taken into account in the examination of the existence of a selective tax advantage within the meaning of Article 107(1) TFEU and for the purposes of establishing the tax burden that should normally be borne by an undertaking, unless that national tax system makes explicit reference to them (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, paragraphs 92 and 96).

(b)    The Commission’s reasoning for the purposes of identifying the reference system

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

30      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.

31      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.

32      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.

33      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.

34      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.

35      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.

36      It follows from the foregoing that, contrary to what the applicant implies, the Commission did not consider that the reference system consisted solely of the rule of taxing the recorded profits. Nor did it exclude the rules on the adjustment of the corporate tax base; rather, it found that the corporate income tax system as a whole constituted the relevant reference system for examining the scheme at issue.

(c)    Taking national law into account

37      Contrary to the applicant’s contention, for the purposes of identifying the reference system, the Commission relied on the tax rules applicable in Belgium and did examine the general corporate income tax system in detail.

38      It must be noted that, for the purpose of establishing what the ordinary or ‘normal’ tax system applicable in Belgium is, the Commission relied on the legal provisions applicable, in particular the CIR 92, as is apparent from paragraphs 29 to 35 above. Indeed, on the basis of the information provided by the Kingdom of Belgium in the context of the administrative procedure, the Commission described the legislative framework applicable and set out, in particular in recitals 23 to 28 of the contested decision, the Belgian corporate income tax system, as laid down by the CIR 92. Specifically, as stated in paragraph 30 above, the Commission expressly referred to Articles 1, 24, 183 and 185 of the CIR 92.

(d)    Consideration of the purpose of the scheme at issue

39      The applicant complains that the Commission did not correctly assess the purpose of the scheme at issue or take it into account in order to determine the reference system.

40      In that regard, it must be noted that, as the applicant submits, it is apparent from the case-law that the delimitation ratione materiae of the reference system is, in principle, in line with the measure at issue (judgment of 15 November 2018, World Duty Free Group v Commission, T‑219/10 RENV, EU:T:2018:784, paragraph 98).

41      However, it is important to note that the Commission did take account of the purpose of the measures at issue and the legal framework of which they formed part. First, as is apparent from recitals 127 and 129 of the contested decision, the Commission did analyse, with a view to identifying the reference system, the purpose of the scheme at issue, namely the determination of the taxable profits in order to levy corporate income tax in Belgium. Secondly, as is apparent from recitals 121, 122 and 125 to 128 of the contested decision (see paragraphs 30 to 35 above), the Commission examined in detail the legal framework in which the scheme at issue was implemented. The Commission noted, in particular, that, under the Belgian corporate income tax system, the special provisions applicable to groups were aimed at putting standalone companies and entities forming part of groups on an equal footing. It follows that, contrary to what the applicant claims, the Commission’s analysis for the purposes of identifying the reference system meets the requirements laid down in the case-law.

(e)    The possibility of making adjustments to the profit recorded by taxable companies

42      The applicant claims that the Commission failed to take into account the fact that companies’ recorded profits merely formed the starting point for calculating taxable profit.

43      In that regard, it must be noted that it is apparent from the information provided by the Commission in recital 123 of the contested decision that it took into consideration the fact that the basis for calculating taxable profit was the total profit recorded by the entity in question, which was subject to the downward and upward adjustments provided for by the Belgian corporate income tax system.

44      More specifically, the Commission noted in recital 125 of the contested decision that the upward and downward adjustments laid down in Article 185(2)(a) and (b) of the CIR 92 were special tax provisions applicable to situations in which the conditions agreed for a transaction or an arrangement differed from those that would have been agreed between independent companies.

45      Therefore, contrary to what is claimed by the applicant, the Commission did take into account the fact that, in the tax system applicable in Belgium, specifically as regards the taxable base for the taxation of corporate profit, it was possible to make upward and downward adjustments to the profits recorded. For the same reasons, the applicant’s claims that the Commission disregarded the fact that there was a difference in the Belgian tax system between the accounting profit and the taxable profit cannot be upheld.

(f)    The non-inclusion of the excess profit scheme in the reference system

46      The applicant submits that the Commission incorrectly excluded the excess profit scheme from the reference system.

47      In the first place, it should be pointed out that, contrary to the applicant’s claims, the Commission did not exclude Article 185(2)(b) of the CIR 92 from the reference system. It is apparent from a combined reading of recitals 122 and 125 of the contested decision (see paragraphs 30 and 32 above) that the Commission did in fact find that Article 185(2)(b) of the CIR 92 formed part of the reference system. However, the Commission found that the excess profit scheme applied by the Belgian tax authorities was not laid down by that provision and, therefore, did not form part of the reference system. Thus, contrary to what the applicant claims, the Commission’s finding that the excess profit scheme constitutes a misapplication of Article 185(2)(b) of the CIR 92 is not inconsistent with the reference system that it identified.

48      In the second place, in order to determine whether the Commission correctly concluded that the excess profit scheme was not provided for by Article 185(2)(b) of the CIR 92, it is necessary to examine, on the one hand, the scope of that provision and, on the other, the excess profit scheme as applied by the Belgian tax authorities.

(1)    The scope of Article 185(2) of the CIR 92

49      It must be noted that the Commission based its analysis of Article 185(2) of the CIR 92 on the wording of that provision and the texts that accompanied its entry into force. In recitals 29 to 38 of the contested decision, the Commission described in detail, first, the text of Article 185(2) of the CIR 92, introduced by the loi du 21 juin 2004, modifiant le [CIR 92] et la loi du 24 décembre 2002 (Law of 21 June 2004 modifying the CIR 92 and the Law of 24 December 2002) (Moniteur belge, 9 July 2004, p. 54623; ‘the Law of 21 June 2004’); secondly, the explanatory memorandum to the draft of that law, presented to Belgium’s Chamber of Representatives by the Belgian Government on 30 April 2004 (‘the Memorandum to the Law of 21 June 2004’); and, thirdly, the circular of 4 July 2006 concerning Article 185(2) of the CIR 92 (‘the Circular of 4 July 2006’).

50      First of all, in the version applicable to the present case, Article 185(2) of the CIR 92, to which reference is made in recital 29 of the contested decision, 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.’

51      Next, the Memorandum to the Law of 21 June 2004, referred to in recital 34 of the contested decision, states that Article 185(2)(b) of the CIR 92 provides for an appropriate correlative adjustment in order to avoid or undo a (potential) double taxation and that a correlative adjustment should be made only if the tax administration or the Advance Ruling Commission considers both the principle and the amount of the primary adjustment to be justified.

52      Moreover, the Memorandum to the Law of 21 June 2004 makes clear that that provision does not apply if the profit made in the partner State is increased in such a way that it is greater than the profit that would have been obtained had the arm’s length principle been applied, since the Belgian tax authorities are not obliged to accept the consequences of an arbitrary or unilateral adjustment in the partner State.

53      Lastly, the Circular of 4 July 2006, referred to in recital 38 of the contested decision, reiterates that such a downward adjustment does not apply in cases where the primary upward adjustment in another tax jurisdiction is exaggerated. That circular, moreover, largely reproduces the text of the Memorandum to the Law of 21 June 2004, in that it recalls that the corresponding downward adjustment 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.

54      Accordingly, it is apparent from the wording of Article 185(2)(b) of the CIR 92 that the downward adjustment is envisaged in the context of cross-border relationships between two associated companies and that it must be a correlative adjustment, in the sense that it is applicable only if the profit that is to be adjusted is already included in the profit of the other 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.

55      In that regard, it should be noted that both the Memorandum to the Law of 21 June 2004 and the Circular of 4 July 2006 make clear that both the principle and the amount of the correlative adjustment must be appropriate and that that adjustment should not be made if the profit made in another State is increased in such a way that it is greater than the profit that would have been obtained had the arm’s length principle been applied. Those texts indicate that the downward adjustment provided for by Article 185(2)(b) of the CIR 92 requires a correlation between the profit adjusted downwards in Belgium and profit included in another group company established in another State.

(2)    The excess profit scheme

56      The Commission describes the excess profit scheme, as applied by the Belgian tax authorities, in recitals 13 to 22 of the contested decision. In addition, in recitals 39 to 42 of the contested decision, the Commission took into account the replies given by the Belgian Minister for Finance on 13 April 2005, 11 April 2007 and 6 January 2015 to parliamentary questions on the application of Article 185(2)(b) of the CIR 92. Those replies explain the administrative practice of the Belgian tax authorities relating to excess profit.

57      It is apparent from those replies that, in the context of the excess profit scheme applied by the Belgian tax authorities, the downward adjustment of profit enabling that excess profit to be deducted from the tax base was not conditional upon the exempted profit having been included in the profit of another company and that profit being profit which should have been made by that other company if the conditions agreed between them had been those which would have been agreed between independent companies.

58      It is, moreover, apparent from the explanations given by the Kingdom of Belgium, as set out in particular in recitals 15 to 20 of the contested decision, that the exemption applied by the Belgian tax authorities under the scheme at issue was based on an exemption percentage, calculated on the basis of a hypothetical average profit for the Belgian entity, obtained using a profit level indicator derived from a comparison with the profit of comparable standalone companies and fixed as a point in the interquartile range of the chosen profit level indicator of a set of comparable standalone companies. That exemption percentage would have been applicable for a number of years, that is to say, during the period of validity of the advance ruling. Thus, the resulting starting point for the taxation of Belgian entities was not the full profit actually recorded, within the meaning of Articles 1, 24, 183 and Article 185(1) of the CIR 92, to which the adjustments provided for by law in the case of groups of undertakings would have been applied under Article 185(2) of the CIR 92; rather, it was a hypothetical profit that disregarded the total profit made by the Belgian entity in question and the adjustments provided for by law.

(3)    Conclusion on the non-inclusion of the excess profit scheme in the reference system

59      It follows from the above that, while Article 185(2)(b) of the CIR 92 requires, for the purposes of a downward adjustment, that the profit to be adjusted should already have been included in the profit of another company and be 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 excess profit scheme was applied by the Belgian tax authorities without those conditions being taken into consideration.

60      Accordingly, contrary to the applicant’s contention, the Commission was right to find that the excess profit exemption applied by the Belgian tax authorities under the scheme at issue did not form part of the reference system.

61      In those circumstances, the Court must reject all of the applicant’s arguments challenging the Commission’s identification of the reference system in the contested decision.

2.      The existence of an advantage as a result of the scheme at issue

62      The third plea, the third part of the fourth plea and the sixth plea allege errors of law and fact, failure to provide an adequate statement of reasons and misuse of powers in that the Commission found that the measure conferred an advantage and established its own arm’s length principle.

63      In essence, the applicant complains that the Commission failed to establish the advantage allegedly granted by the scheme at issue, and that it jointly analysed the requirements of advantage and selectivity, whereas the case-law required an individual analysis of those two requirements. In addition, the applicant criticises the Commission for establishing its own arm’s length principle and imposing it in the examination of the existence of an advantage within the meaning of Article 107 TFEU, without explaining the basis or implications thereof.

64      In its reply to the written questions put by the General Court concerning the recent case-law of the Court of Justice and the General Court, the applicant claims that the Commission did not discharge its burden of proving the existence of an advantage, in so far as it failed to conduct a functional analysis of the Belgian entities. It adds that the excess profit exemption is in accordance with the arm’s length principle and that, in any event, the identification of methodological errors is not sufficient to establish the existence of an advantage.

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

(a)    Identification of the advantage granted by the scheme at issue

66      As a preliminary point, as noted in paragraphs 32 to 34 above, it should be recalled that, 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.

67      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.

68      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 it 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 advance rulings not been issued, an advantage would have arisen.

69      In those circumstances, it should be noted that the contested decision discloses the factors which the Commission took into account in considering the existence of an advantage. The recitals highlighted, notably in paragraphs 66 to 68 above, make it possible to understand 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.

70      Moreover, first, 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, 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. Secondly, 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, 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. Consequently, it is necessary to reject the applicant’s arguments that there are not two lines of reasoning in the contested decision and that it was only by combining the selectivity analysis from the primary line of reasoning and the examination of advantage in the subsidiary line of reasoning that the Commission arrived at a complete assessment of the selective advantage.

(b)    The joint analysis by the Commission concerning the criteria of advantage and selectivity

71      At the outset, it should be borne in mind that selectivity and advantage 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). 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).

72      In that regard, 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).

73      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 in 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).

74      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, as has just been noted in paragraphs 66 to 69 above, the Commission did indeed consider the advantage criterion. 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, so far as concerns the reasoning as to selectivity put forward by the Commission as part of its principal case, based on the existence of a derogation from the general Belgian corporate income tax system. Moreover, selectivity is also analysed in recitals 152 to 170 of the contested decision, under Section 6.3.2.2, 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.

75      Accordingly, 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 the existence of its selective nature, on the other, are in fact assessed (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).

(c)    The existence of an advantage favouring the beneficiaries of the scheme at issue

76      It should be noted that, according to settled case-law, measures which, whatever their form, are likely directly or indirectly to favour certain undertakings or which fall to be regarded as an economic advantage that the recipient undertaking would not have obtained under normal market conditions are regarded as State aid (see judgment of 2 September 2010, Commission v Deutsche Post, C‑399/08 P, EU:C:2010:481, paragraph 40 and the case-law cited, and judgment of 9 October 2014, Ministerio de Defensa and Navantia, C‑522/13, EU:C:2014:2262, paragraph 21).

77      In the case of tax measures, the very existence of an advantage may be established only when compared with ‘normal’ taxation (judgment of 6 September 2006, Portugal v Commission, C‑88/03, EU:C:2006:511, paragraph 56). Therefore, such measures confer an economic advantage on their recipients if the measures mitigate the burdens normally included in the budget of an undertaking and, accordingly, without being subsidies in the strict meaning of the word, are similar in character and have the same effect (judgment of 9 October 2014, Ministerio de Defensa and Navantia, C‑522/13, EU:C:2014:2262, paragraph 22).

78      Consequently, in order to determine whether there is a tax advantage, the position of the recipient as a result of the application of the measure at issue must be compared with the recipient’s position in the absence of that measure, and under the normal rules of taxation (see judgment of 24 September 2019, Netherlands and Others v Commission, T‑760/15 and T‑636/16, EU:T:2019:669, paragraph 147 and the case-law cited).

79      Furthermore, in the case of an aid scheme, the Commission need only demonstrate that the tax scheme at issue is such as to favour its beneficiaries, by ascertaining that the scheme, taken as a whole, is, given its particular characteristics, capable of resulting, at the time of its adoption, in the tax liability being lower than it would have been if the general tax regime had been applied (see, to that effect, judgment of 2 February 2023, Spain and Others v Commission, C‑649/20 P, C‑658/20 P and C‑662/20 P, EU:C:2023:60, paragraph 63 and the case-law cited).

80      In the present case, as indicated in paragraphs 66 to 69 above, the Commission noted in recitals 125 to 127 and 133 to 135 of the contested decision that, following the advance rulings issued under the scheme at issue, the Belgian entities that were part of a multinational group and that had requested it had been able to reduce their corporate tax liability in Belgium by deducting from their tax base a percentage of their profit, as ‘excess’ profit, for the five years of the advance rulings’ validity.

81      First of all, as stated in paragraph 69 above, the scheme at issue was designed as a system which consisted in the non-taxation of part of the profit recorded by Belgian entities that were part of a multinational group. Furthermore, it is not disputed that, under Article 2 of the Law of 21 June 2004, it is only through an advance ruling issued by the Advance Ruling Commission in response to a request made by the Belgian entities concerned that part of the profit of those entities could be classified as excess profit under Article 185(2)(b) of the CIR 92 and that the exemption percentage in question could be applied to the tax base of those entities, so that only part of that tax base was taxed.

82      Next, it should be recalled that it is apparent from Article 185(1) of the CIR 92 that resident companies in Belgium are to be taxed on the total amount of their profit. Moreover, as the Commission correctly pointed out in recital 122 of the contested decision, it is apparent from Article 24 of the CIR 92 that the taxable profit of undertakings is, fundamentally, all profit realised or registered in the accounts, in so far as it forms the starting point for calculating corporate income tax in Belgium.

83      Lastly, as indicated in paragraphs 49 to 55 above, it is apparent from Article 185(2)(b) of the CIR 92 that the tax base can be adjusted downwards where the profit of the company in question is already included in the profit of another company of the same group and it is profit which should have been made by that other company if the conditions agreed between them had been those which would have been agreed between independent companies.

84      Consequently, under the normal rules of taxation in Belgium, Belgian entities were taxed on all of their profit, as registered in their accounts, subject to any adjustments, such as that provided for in Article 185(2)(b) of the CIR 92. In those circumstances, it must be noted that, in so far as the Commission correctly found that the scheme at issue consisted in an exemption of ‘excess’ profit for which, as noted in paragraph 60 above, no provision was made in Article 185(2)(b) of the CIR 92, the Commission demonstrated to the requisite legal standard that that scheme was capable of resulting in 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.

85      In the circumstances, the Commission cannot be criticised for having found that the tax scheme at issue was such as to favour its beneficiaries, in so far as that scheme, taken as a whole and given its particular characteristics, was capable of resulting in the tax liability being lower than it would have been if the normal rules of corporate taxation in Belgium had been applied.

86      None of the applicant’s other arguments is such as to call that finding into question.

87      First, contrary to what the applicant claims, the Commission did not have to verify whether the tax rulings did indeed grant an advantage to each of the beneficiaries individually. When considering whether there was an advantage that had been conferred by an aid scheme, the Commission was not required to carry out an analysis of the individual situation of each beneficiary or to calculate the gap between the tax burden of the Belgian entities which had obtained an advance ruling and the tax burden which they would have had to bear in the absence of such rulings. 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). For the same reasons, the applicant’s arguments relating to its individual situation, according to which, having regard to the application of other tax rules and in particular the rules on carrying losses forward, it would not, in any event, have had any tax liability even if no excess profit exemption had been granted to it, are not capable of invalidating the Commission’s reasoning as regards the existence of an advantage deriving from the scheme at issue.

88      Secondly, as regards the applicant’s arguments, developed in the context of the first part of the third plea and the third part of the fourth plea, seeking to challenge the Commission’s finding that the advantage flowed from the gap between the taxable profit, based on the arm’s length principle arising from Article 107 TFEU, accepted by the Commission, and the taxable profit determined in accordance with the arm’s length principle as laid down by Belgian legislation, it should be noted that it is only in the context of the analysis of the selectivity of the scheme at issue that the Commission considered, in the alternative, the extent to which that scheme derogated from the arm’s length principle. Those arguments are, therefore, entirely irrelevant in the context of the examination of the Commission’s assessment of the existence of an advantage. For the same reasons, the applicant’s arguments that the Commission misused its powers in establishing its own arm’s length principle are not such as to invalidate the Commission’s findings relating to the existence of an advantage.

89      In addition, it is necessary to reject the applicant’s arguments that, in order to establish the existence of an advantage, the Commission was required to examine whether the arm’s length principle had been correctly applied under the scheme at issue. As is apparent from paragraphs 84 and 85 above, the Commission’s reasoning in recital 135 of the contested decision, which was not based on the arm’s length principle, was sufficient to establish that the scheme at issue was capable of leading to a reduction in the tax that the entities which requested those rulings would otherwise have had to pay, under the Belgian corporate income tax rules. For the same reasons and for the reasons set out in paragraph 87 above, according to which the Commission was not required to carry out an analysis of the individual situation of each beneficiary, it is also necessary to reject the applicant’s arguments criticising the Commission for not having carried out a functional analysis of the various beneficiaries and for not having submitted a calculation establishing that the excess profit exemption departed from the arm’s length principle.

90      In those circumstances, the Court must reject all of the applicant’s arguments concerning the existence of an advantage as a result of the scheme at issue.

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

91      The second plea and the second part of the fourth plea allege errors of law and manifest errors of assessment, as well as a failure to provide an adequate statement of reasons, in that the Commission classified the measure at issue as selective. In addition, the third plea and the third and fourth parts of the fourth plea seek to challenge the reasoning as to selectivity put forward in the alternative by the Commission, which is based on the existence of a derogation from the arm’s length principle.

92      In essence, the applicant disputes, first, the finding that the scheme at issue derogates from the reference system; secondly, the failure to identify a category of undertakings benefiting from the alleged aid scheme; thirdly, the finding that all companies subject to tax are in the same legal and factual situation and the finding that the scheme at issue is selective because it benefits only entities belonging to a multinational group; fourthly, the finding that the scheme at issue is conditional on the existence of a new situation; fifthly, the finding that the scheme at issue is available to large groups only; and, sixthly, the finding that the scheme at issue derogates from the arm’s length principle.

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

94      In that regard, 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).

95      In the contested decision (Section 6.3.2.1), the Commission found, principally, that the Belgian excess profit exemption scheme conferred a selective advantage on its beneficiaries by derogating 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.

96      Thus, the Commission concluded, in recital 136 of the contested decision, that Article 185(2)(b) of the CIR 92 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 is 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.

97      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.

(a)    The existence of a derogation from the reference system

98      In essence, the applicant complains that the Commission erred in finding that the excess profit scheme constituted a derogation from the reference system and not merely an application of that system.

99      It should be recalled at the outset that what the Commission regarded as not forming part of the reference system and thus derogating from it is the excess profit scheme, that is to say, the downward adjustment, as applied by the Belgian tax authorities to a certain part of the taxable profit, referred to as the ‘excess’.

100    However, as indicated in paragraphs 59 and 60 above, in the light of the wording of Article 185(2)(b) of the CIR 92, the downward adjustment of the taxable profit is conditional on the profit of a given company that is to be deducted having already been included in the profit of another company, and that profit being profit which should have been made by that other company if the conditions agreed between them had been those which would have been agreed between independent companies. By contrast, the Belgian tax authorities’ practice of making a unilateral downward adjustment without the need to establish that the profit that is to be adjusted has already been included in the profit of another company and that it is profit which would have been made by that other company if the relevant transactions had been between independent companies is not provided for in Article 185(2)(b) of the CIR 92.

101    In fact, as the Court of Justice confirmed in the judgment on appeal, even though the tax rulings formally invoked Article 185(2)(b) of the CIR 92, the excess profit exemption scheme, which the Commission classified as a State aid scheme, was based on the Belgian tax authorities’ consistent administrative practice. As has just been established in paragraph 100 above, that practice differed from what was provided for in Article 185(2)(b) of the CIR 92.

102    Accordingly, the Commission was right to find that the excess profit exemption, as applied by the Belgian tax authorities, constituted a derogation from the reference system accepted by the Commission, that is to say, the ordinary Belgian corporate income tax system, which included, in particular, Article 185(2)(b) of the CIR 92, as has been noted in paragraph 47 above.

103    Furthermore, the applicant submits that the fact that the profits are not taxed anywhere is irrelevant for the purposes of examining selectivity, since Member States are free to adjust their tax rules independently of taxation in other Member States. Such an argument must be rejected, since it is based on a misreading of the contested decision. The Commission does not base its analysis on the failure of Belgian law to take account of taxation in other Member States giving rise to double non-taxation, but on the fact that the excess profit scheme derogates from Article 185(2)(b) of the CIR 92.

(b)    Taking account of the objective pursued by the reference system and identifying undertakings in a comparable legal and factual situation

104    In essence, the applicant complains that the Commission identified the undertakings in a legal and factual situation comparable to that of the beneficiaries of the scheme at issue solely on the basis of the objective of the reference system. It submits that the Commission should have taken into account other factors such as the objective pursued by the measure at issue and the examination of the situation of the other entities subject to tax.

105    In that regard, it should be noted that, first, it is apparent from the settled case-law cited in paragraphs 24 and 71 above that it is indeed the objective of the reference system that is relevant for the purposes of comparing the situation of the operators at whom the measure at issue is directed 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 are in a legal and factual situation comparable to that of standalone companies and entities belonging to a national group. The analysis carried out by the Commission thus meets the requirements laid down by the case-law.

106    Secondly, contrary to what the applicant claims, the mere fact that the Commission referred to the objective of the reference system does not mean that it examined the selectivity of the scheme at issue in relation to the objective alone.

107    It is apparent from Section 6.3.2.1 of the contested decision that the Commission examined the extent to which the Belgian tax authorities’ application of Article 185(2) of the CIR 92 in the context of advance rulings derogated from the Belgian corporate income tax system described in Section 6.3.1 of the contested decision, which refers to Section 2 of that decision, in which the provisions of the CIR 92 concerning the Belgian corporate income tax system are described. Thus, contrary to the applicant’s contention, it is precisely by reference to the provisions of applicable Belgian tax law, including Article 185(2) of the CIR 92, that the Commission examined whether the application of those provisions by the Belgian tax authorities derogated from that system.

108    Furthermore, contrary to what the applicant claims and as is apparent from paragraph 41 above, the Commission did take account of the objective of the scheme at issue for the purposes of examining whether it was selective.

(c)    Whether there is differentiation, as a result of the derogation from the reference system, between economic operators who are in a comparable situation

109    As regards the Commission’s finding that the scheme at issue differentiates between the beneficiaries of the exemptions and other operators who are in a comparable situation, it should be noted that, in recitals 138 to 140 of the contested decision, the Commission put forward three alternative grounds for its conclusion as to selectivity as part of its principal case. It is appropriate to examine each of these in turn, for the sake of completeness.

(1)    Different treatment of beneficiaries forming part of a multinational group of undertakings

110    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.

111    In the present case, 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.

112    In that regard, first, it must be recalled that, as stated in paragraph 35 above, 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. In addition, as stated in paragraph 82 above, according to the normal rules of taxation in Belgium, the starting point for the taxable profit of undertakings is all the profit realised or registered in their accounts.

113    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, the purpose of that article is precisely to put associated and unrelated undertakings on an equal footing for the purposes of corporate income tax. In that context, the applicant’s argument that only undertakings belonging to a multinational group carry out cross-border intra-group transactions and are subject to issues of international taxation does not permit the inference that they are in a different situation in the light of the objective pursued by the reference system.

114    By contrast, the excess profit exemption applied by the Belgian tax authorities, in so far as it derogates from Article 185(2) of the CIR 92, granted a tax reduction to the beneficiaries concerned, on the ground that they were part of a multinational group of undertakings, by allowing them to deduct part of their recorded profit from their tax base, without that exempted profit having been included in the profit of another group company.

115    It follows from the foregoing that, first, the Commission correctly found that undertakings belonging to a multinational group were in a legal and factual situation comparable to that of standalone entities or entities belonging to a national group, having regard to the objective of the reference system as identified in paragraph 105 above, without it having been necessary to carry out a more detailed comparison of their situation.

116    In addition, it is necessary to reject the applicant’s arguments that it is apparent from the case-law of the Court of Justice that entities belonging to a multinational group are in a different situation from that of standalone entities and entities belonging to national groups. In paragraphs 32, 33 and 46 to 50 of the judgment of 27 November 2008, Papillon (C‑418/07, EU:C:2008:659), and in paragraphs 42, 55 and 65 of the judgment of 21 January 2010, SGI (C‑311/08, EU:C:2010:26), relied on by the applicant, the Court of Justice held that the differences in treatment between entities belonging to a multinational group and standalone entities or entities belonging to national groups did indeed constitute restrictions on the freedom of establishment, which were, however, justified in the circumstances of each case. Those judgments therefore tend, on the contrary, to show that the specific characteristics of companies belonging to a multinational group are not sufficient for them necessarily to be regarded as being in a different situation from that of standalone companies.

117    Secondly, the Commission was right to find that entities forming part of a multinational group which benefited under the scheme at issue from an excess profit exemption, in the form of an exemption percentage 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, would be treated differently from other standalone entities or entities forming part of a group of undertakings which would have been taxed in accordance with the normal Belgian rules of corporate income tax on their total profit actually recorded, where appropriate, in the case of integrated entities, after adjustment pursuant to Article 185(2)(b) of the CIR 92 and under the conditions laid down in that provision.

118    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.

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

119    At the outset, as regards the applicant’s arguments that the contested decision does not contain information making it possible to ascertain the criteria used by the Commission in order to find that, in practice, the scheme at issue applied to undertakings that satisfied the ‘new situation’ condition, it must be noted 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).

120    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.

121    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.

122    In those circumstances, the applicant’s arguments concerning the statement of reasons for the contested decision must be rejected.

123    As regards the merits of the Commission’s analysis, 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.

124    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.

125    Admittedly, it cannot be inferred from the provisions referred to in paragraph 124 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.

126    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.

127    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.

128    The applicant’s argument that, in its own case, the advance ruling was granted in the absence of new investments or relocation cannot call into question the Commission’s analysis.

129    It must be recalled 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 (the judgment on appeal, paragraph 77). Accordingly, the Commission cannot be criticised for not having taken into account the applicant’s individual situation as regards, more specifically, the excess profit exemption granted to it by the Belgian authorities.

130    Moreover, in any event, the applicant has not established that the advance ruling concerning it would have been granted to it in the absence of new investments, relocation or restructuring. The applicant itself states that the group to which it belongs was restructured in 2011, with the introduction, in 2012, of new global functions, which it performed as central entrepreneur in Brussels (Belgium). In addition, as is apparent from the extracts from the request for an advance ruling reproduced in the application, the applicant relied on those organisational changes and on a future new acquisition before the Belgian authorities. Contrary to what the applicant claims, the fact that it had already decided to amend its business model prior to the issuing of the advance ruling does not in any way call into question the finding that that advance ruling, which was issued in November 2012, followed the restructuring of the group and the increase in its activities in Belgium, implemented between 2011 and 2012, factors which produced new facts from a tax perspective, in accordance with the conditions of the scheme at issue.

131    The conditionality whereby the grant of advance rulings is contingent on a change in business model identified by the Commission is linked to a ‘new situation’, and not specifically to a ‘future’ change in the business model, after the advance ruling has been granted. It is the future profits that will be made following the implementation of the change to the business model that are covered by the excess profit exemption granted by the advance ruling, which, contrary to what the applicant claims, is consistent with the fact that, as is apparent from paragraph 124 above, advance rulings can apply only to a particular situation or transaction that has not yet had tax effects.

132    In those circumstances, the Commission cannot be criticised 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.

133    That conclusion cannot be called into question by the applicant’s argument that the Commission could not validly conclude that the scheme at issue was de jure selective. Irrespective of the classification of the scheme at issue as de jure or de facto selective, the Commission succeeded in establishing the selectivity of that scheme, since it demonstrated that it favoured entities that changed their business model as compared with other taxpayers, even though they were in a comparable legal and factual situation in the light of the objective pursued by the reference system.

(3)    Different treatment in comparison with undertakings that are part of a small group

134    In the present case, the Commission stated, in recital 140 of the contested decision, 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.

135    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.

136    In that regard, 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. Moreover, the applicant does not substantiate the claim that advance rulings relating to excess profit were granted to small undertakings and does not adduce any conclusive evidence to show that the undertakings that it identified were indeed part of a small group.

137    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 group.

138    That conclusion cannot be called into question by the applicant’s argument that the Commission reversed the burden of proof, in that it merely found that the Kingdom of Belgium had not produced examples of advance rulings granted to entities forming part of a small group.

139    It must be borne in mind that, in the context of State aid control, it is, in principle, for the Commission to provide, in the contested decision, proof of the existence of such aid (see, to that effect, judgments of 12 September 2007, Olympiaki Aeroporia Ypiresies v Commission, T‑68/03, EU:T:2007:253, paragraph 34, and of 25 June 2015, SACE and Sace BT v Commission, T‑305/13, EU:T:2015:435, paragraph 95). In that context, it is required to conduct a diligent and impartial examination of the measures at issue, so that it has at its disposal, when adopting a final decision establishing the existence and, as the case may be, the incompatibility or unlawfulness of the aid, the most complete and reliable information possible (see, to that effect, judgments of 2 September 2010, Commission v Scott, C‑290/07 P, EU:C:2010:480, paragraph 90, and of 3 April 2014, France v Commission, C‑559/12 P, EU:C:2014:217, paragraph 63).

140    However, the apportionment of the burden of proof in State aid cases is subject to compliance with the procedural obligations incumbent upon the Commission and the Member State in the course of the exercise by that institution of its powers to cause the Member State to provide it with all the necessary information (see judgment of 28 November 2008, Hotel Cipriani and Others v Commission, T‑254/00, T‑270/00 and T‑277/00, EU:T:2008:537, paragraph 232 and the case-law cited). In particular, it is for the Member State concerned, by virtue of its duty to cooperate with the Commission, and for the interested parties duly invited to submit their observations in accordance with Article 108(2) TFEU, to put forward their arguments and to provide the Commission with all the information likely to enlighten it on all the facts of the case (see judgment of 6 April 2022, Mead Johnson Nutrition (Asia Pacific) and Others v Commission, T‑508/19, EU:T:2022:217, paragraph 105 and the case-law cited).

141    In the present case, as is apparent from recital 140 of the contested decision, the Commission did not base its analysis solely on the finding that the Belgian authorities had not provided an example of advance rulings granted to undertakings belonging to a small group, but used that argument to illustrate and confirm its analysis according to which the scheme at issue was, in fact, available only to undertakings forming part of a large or medium-sized group. Furthermore, since the Commission requested the Kingdom of Belgium to produce examples of advance rulings and the Kingdom of Belgium was unable to provide it with a single example, it must be held that the Commission sought to have at its disposal the most complete and reliable evidence and that it thus carried out a diligent examination of the case. It follows that, in the light of the case-law set out in paragraphs 139 and 140 above, the Commission was entitled to take the view, having regard to the information available and without reversing the burden of proof, that the scheme was available only to undertakings forming part of a large or medium-sized group.

142    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.

143    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 110 to 118 and 119 to 132 above.

(d)    Failure to identify a category of undertakings benefiting from the aid scheme at issue

144    In essence, in the third part of the second plea and the second part of the fourth plea, the applicant submits that the Commission made a manifest error of assessment and vitiated the contested decision with a failure to state reasons owing to the failure to identify a category of undertakings benefiting from the scheme at issue.

145    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 (see paragraph 119 above).

146    In addition, it must be noted that it is apparent from the case-law of the Court of Justice that it is not necessary to define a particular category of undertakings favoured by a tax measure in order to be able to establish that it is selective (see, to that effect, judgment of 21 December 2016, Commission v World Duty Free Group and Others, C‑20/15 P and C‑21/15 P, EU:C:2016:981, paragraph 93). The Commission cannot therefore be criticised for having failed to comply with the obligation to state reasons, or for having made a manifest error of assessment by not identifying, in the contested decision, a particular category of undertakings benefiting from the scheme at issue, or for having failed to explain how those beneficiaries were capable of constituting such a category of undertakings.

147    Furthermore, the applicant’s argument that the scheme at issue was available to all undertakings and did not favour certain undertakings or the production of certain goods must be rejected. As is apparent from paragraphs 118, 132 and 142 above, the Commission cannot be criticised for having found that there were three alternative grounds for its conclusion that the scheme at issue favoured its beneficiaries over other undertakings in a comparable legal and factual situation.

(e)    Conclusion on the existence of a selective advantage, identified by the Commission in its primary line of reasoning

148    In the light of the above, the Commission did not err in stating, after setting out its primary line of reasoning, that the excess profit exemption scheme derogated from the ordinary Belgian corporate income tax system. Moreover, the Commission did not err when it 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.

149    In those circumstances, it is not necessary to examine the merits of the arguments raised by the applicant in the context of the third, fourth and sixth pleas, seeking, in essence, to challenge the subsidiary line of reasoning which the Commission set out in Section 6.3.2.2 of the contested decision.

150    Furthermore, it must be noted that, in its reply to the written questions of the General Court concerning the recent case-law of the Court of Justice and of the General Court, the applicant claimed that selectivity had to be excluded on the basis of an objective justification put forward by the Kingdom of Belgium.

151    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. 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, the 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).

152    In the present case, the applicant did not dispute, in the application, the Commission’s findings in the contested decision relating to the lack of justification. In those circumstances, the complaints raised by the applicant in its reply to the written questions put by the Court cannot be regarded as amplifying a plea raised by the applicant in its application. Therefore, those complaints must be regarded as being inadmissible.

153    Similarly, in the fourth part of the fourth plea, the applicant complains that the Commission failed to provide an adequate statement of reasons for the assertion, made in recital 19 of the contested decision, that the actual existence of profits attributable to synergies and economies of scale is not verified once the taxpayer has obtained an advance ruling.

154    At the outset, it must be borne in mind that the obligation to state reasons established by the second paragraph of Article 296 TFEU is an essential procedural requirement which must be distinguished from the question as to whether the reasons are well founded, which is concerned with the substantive legality of the measure at issue. The reasoning of a decision consists in a formal statement of the grounds on which that decision is based. If those grounds are vitiated by errors, the latter will affect the substantive legality of the decision, but not the statement of reasons in it, which may be adequate even though it sets out reasons which are incorrect. It follows that objections and arguments intended to establish that a measure is not well founded are irrelevant in the context of a ground of appeal alleging an inadequate statement of reasons or a lack of such a statement (see judgment of 18 June 2015, Ipatau v Council, C‑535/14 P, EU:C:2015:407, paragraph 37 and the case-law cited).

155    In the present case, the applicant does not seek, by its arguments, to criticise the lack of reasoning as regards the assertions contained in recital 19 of the contested decision, but rather the merits of those assertions. In essence, it claims that the Commission failed to take account of the fact that the Belgian tax authorities had mechanisms for carrying out checks on the beneficiaries of the advance rulings. It follows that the applicant’s complaint that the statement of reasons for the lack of subsequent checks by the Belgian authorities was inadequate must be rejected.

156    In any event, the arguments raised by the applicant in the fourth part of the fourth plea can be rejected as ineffective. It is not apparent from the contested decision that the Commission based its finding of a selective advantage on the absence of ex post checks of the advance rulings. Recital 19 of the contested decision concerns the presentation of the excess profit scheme and not the analysis as such of the existence of an aid measure. The analysis contained in Section 6.3 of the contested decision, entitled ‘Existence of a selective advantage’, makes no reference to that recital.

4.      Conclusion on the existence of an aid measure conferring a selective advantage

157    It is apparent from the findings made in paragraphs 61, 90 and 148 above that the contested decision is not vitiated by a failure to state reasons and that the Commission did not err in concluding, first, that the reference system was the ordinary system of taxation of corporate profits and that it did not include the excess profit scheme applied by the Belgian tax authorities and, secondly, that that scheme granted its beneficiaries an advantage, which was selective. Moreover, as is apparent from paragraph 149 above, there is no need to examine the applicant’s arguments seeking to challenge the subsidiary line of reasoning as to selectivity.

158    Accordingly, the second, third, fourth and sixth pleas in law, alleging infringement of Article 107 TFEU, manifest errors of assessment, failure to state reasons and misuse of powers, in that the Commission considered that the excess profit system constituted a State aid measure, must be rejected.

C.      Breach of the principle of good administration

159    The fifth plea alleges breach of the principle of good administration in that the Commission failed to assess all the elements of the case carefully and impartially. In essence, the applicant complains that the Commission based its analysis on a sample of advance rulings, without conducting a case-by-case analysis of the 66 advance rulings, or taking into account anything that did not confirm its analysis.

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

161    In that regard, as is apparent from the case-law, according to the principle of good administration, the Commission is required to conduct a diligent and impartial examination of the measures at issue, so that it has at its disposal, when adopting the final decision establishing the existence and, as the case may be, the incompatibility or unlawfulness of the aid, the most complete and reliable information possible for that purpose (see, to that effect, judgments of 2 September 2010, Commission v Scott, C‑290/07 P, EU:C:2010:480, paragraph 90; of 3 April 2014, France v Commission, C‑559/12 P, EU:C:2014:217, paragraph 63; and of 26 March 2020, Larko v Commission, C‑244/18 P, EU:C:2020:238, paragraph 67).

162    The information ‘available’ to the Commission includes that which seemed relevant to the assessment to be carried out for the purposes of establishing the existence of an aid scheme and which could have been obtained, upon request by the Commission, during the administrative procedure (see, to that effect, judgment of 20 September 2017, Commission v Frucona Košice, C‑300/16 P, EU:C:2017:706, paragraph 71).

163    First, it should be noted that, as set out in paragraph 87 above, in the context of the examination of the existence of an aid scheme, the Commission is not required to carry out an analysis of the individual situation of each beneficiary or to calculate the gap between the tax burden of the Belgian entities which obtained an advance ruling and the tax burden which they would have had to bear in the absence of such rulings.

164    Secondly, as the Court of Justice held in paragraphs 142 to 146 of the judgment on appeal, the Commission was fully entitled to rely on the sample of 22 advance rulings, which was representative of the systematic practice of the Belgian tax authorities, for the purposes of examining, in the present case, the existence of an aid scheme.

165    It follows from the foregoing that the Commission cannot be criticised for failing to carry out an examination of individual cases, since those elements are not relevant for the purposes of examining the existence of an aid scheme.

166    Moreover, in so far as the applicant complains that the Commission did not take into account evidence obtained during the administrative procedure that did not confirm its analysis, it must be noted that the applicant does not identify that evidence.

167    Accordingly, the fifth plea must be rejected.

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

IV.    Costs

169    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 ZF CV Systems 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

I. Background to the dispute

II. Procedure and forms of order sought

III. Law

A. The existence of an aid scheme

B. The existence of an aid measure conferring a selective advantage

1. Identification of the reference system

(a) Preliminary observations

(b) The Commission’s reasoning for the purposes of identifying the reference system

(c) Taking national law into account

(d) Consideration of the purpose of the scheme at issue

(e) The possibility of making adjustments to the profit recorded by taxable companies

(f) The non-inclusion of the excess profit scheme in the reference system

(1) The scope of Article 185(2) of the CIR 92

(2) The excess profit scheme

(3) Conclusion on the non-inclusion of the excess profit scheme in the reference system

2. The existence of an advantage as a result of the scheme at issue

(a) Identification of the advantage granted by the scheme at issue

(b) The joint analysis by the Commission concerning the criteria of advantage and selectivity

(c) The existence of an advantage favouring the beneficiaries of the scheme at issue

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

(a) The existence of a derogation from the reference system

(b) Taking account of the objective pursued by the reference system and identifying undertakings in a comparable legal and factual situation

(c) Whether there is differentiation, as a result of the derogation from the reference system, between economic operators who are in a comparable situation

(1) Different treatment of beneficiaries forming part of a multinational group of undertakings

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

(3) Different treatment in comparison with undertakings that are part of a small group

(d) Failure to identify a category of undertakings benefiting from the aid scheme at issue

(e) Conclusion on the existence of a selective advantage, identified by the Commission in its primary line of reasoning

4. Conclusion on the existence of an aid measure conferring a selective advantage

C. Breach of the principle of good administration

IV. Costs

*      Language of the case: English.

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