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

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

20 September 2023 (*)

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

In Cases T‑858/16 and T‑867/16,

Dow Silicones Corp., formerly Dow Corning Corp., established in Midland, Michigan (United States),

Dow Silicones Belgium, formerly Dow Corning Europe, established in Seneffe (Belgium),

applicants in Case T‑858/16,

Vinventions, formerly Nomacorc, established in Thimister-Clermont (Belgium),

applicant in Case T‑867/16,

represented by H. Gilliams and L. Goossens, lawyers,

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 their actions under Article 263 TFEU, the applicants – in Case T‑858/16, Dow Silicones Corp., formerly Dow Corning Corp., and Dow Silicones Belgium, formerly Dow Corning Europe, and, in Case T‑867/16, Vinventions, formerly Nomacorc – seek 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        Dow Silicones Belgium and Vinventions are companies established in Belgium forming part of multinational groups of undertakings. Those companies carry out transactions with other companies within their respective groups.

5        It is apparent from the annex to the contested decision and the documents in the files in Cases T‑858/16 and T‑867/16 that, on 15 February 2011, as regards Dow Silicones Belgium, and, on 26 February 2013, as regards Vinventions, the Advance Ruling Commission adopted advance rulings on the exemption of excess profit in respect of the applicants, which had requested them following restructuring of their groups of undertakings to centralise a number of functions and services with companies established in Belgium. Those advance rulings were 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 (‘the scheme at issue’) 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.    Forms of order sought

10      The applicants claim that the Court should:

–        annul Articles 1 to 4 of the contested decision;

–        in the alternative, annul Article 2(1) of the contested decision;

–        order the Commission to pay the costs.

11      The Commission contends that the Court should:

–        dismiss the actions as unfounded;

–        order the applicants to pay the costs.

III. Law

12      It is appropriate that the present cases should be joined for the purposes of the decision closing the proceedings, in accordance with Article 68(1) of the Rules of Procedure of the General Court, the parties having been heard.

13      In support of their actions, the applicants raise, in essence, three identical pleas in law, whereas a fourth plea is raised only in Case T‑858/16, the first of the three identical pleas alleging infringement 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), on account of the classification of the advance rulings on excess profit as a ‘scheme’; the second, alleging infringement of Article 107(1) TFEU by reason of the interpretation and application of the reference system to establish the existence of a selective advantage; and the third, alleging that the Commission infringed Article 107(1) TFEU by finding that the advance rulings conferred a selective advantage, on the basis of a misunderstanding of the concept of excess profit. The fourth plea, raised only in Case T‑858/16, alleges infringement of Article 16 of Regulation 2015/1589 and breach of the principles of EU State aid law in that the Commission failed to take into account taxes already paid on excess profit outside Belgium when quantifying the amount of aid to be recovered.

14      The Court will examine, first of all, the first plea, relating to the existence of an aid scheme, and then, together, the second and third pleas, relating to the existence of a selective advantage, by which the applicants dispute, in essence (i) the determination of the reference system and (ii) the selectivity of the scheme at issue under the Commission’s subsidiary line of reasoning, the primary line of reasoning not having been challenged. Last, the Court will examine the fourth plea, concerning recovery.

A.      The existence of an aid scheme

15      By the first plea, the applicants consider, in essence, that the Commission infringed Article 1(d) of Regulation 2015/1589 by incorrectly categorising the advance rulings on excess profit as a ‘scheme’, thereby committing a number of errors of law and fact and manifest errors of assessment, and also by providing an inadequate statement of reasons.

16      That plea is in four parts. The first part alleges that the four ‘acts’ identified by the Commission as constituting a scheme are in reality only one act, namely Article 185(2)(b) of the CIR 92. The second part alleges that Article 185(2)(b) of the CIR 92 does not grant, as such, any excess profit exemption. By the third part, the applicants claim that the advance rulings on excess profit are ‘implementing measures’ within the meaning of Article 1(d) of Regulation 2015/1589, which rules out the existence of a scheme. The fourth part alleges that a consistent administrative practice cannot constitute a scheme within the meaning of Article 1(d) of Regulation 2015/1589.

17      The Commission contends that the applicants’ arguments should be rejected.

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

19      In those circumstances, the applicants’ first plea, alleging that the Commission erred in finding that there was an aid scheme, must be rejected, that plea being, in essence, similar to those of the Kingdom of Belgium and Magnetrol International, which were rejected by the Court of Justice in the judgment on appeal.

B.      The existence of a selective advantage for the purposes of Article 107(1) TFEU

20      By their second and third pleas, which it is appropriate to examine together, the applicants submit, in essence, that the Commission has not established the existence of a selective advantage granted by the scheme at issue. In that regard, they dispute, in particular, first, the interpretation and application of the reference system in the contested decision and, secondly, the conclusion as to the selectivity of the scheme at issue under the subsidiary line of reasoning. Before addressing the applicants’ claims, it is necessary to clarify the Commission’s findings in the contested decision as to the existence of a selective advantage and to recall the relevant requirements of the case-law.

21      At the outset, it must be noted that, in the analysis of the conditions set out in Article 107(1) TFEU that must be satisfied in order for a measure to constitute State aid, including that relating to the existence of a selective advantage, the concept of advantage and that of its selectivity are two separate criteria. So far as advantage is concerned, the Commission must show that the measure improves the financial situation of the recipient (see, to that effect, judgment of 2 July 1974, Italy v Commission, 173/73, EU:C:1974:71, paragraph 15). 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).

22      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).

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

24      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’, which includes both the examination of selectivity and the examination of the advantage.

25      As a preliminary point, in recital 125 of the contested decision, the Commission indicated that the excess profit exemption applied by the Belgian tax authorities was not provided for by the Belgian corporate income tax system. Furthermore, in recital 126 of the contested decision, the Commission highlighted the fact that that exemption resulted in taxation on the basis of a hypothetical profit, and not on the basis of the total profit actually recorded by the Belgian entity. 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.

26      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.

27      In recital 135 of the contested decision, the Commission recalled the case-law according to which an economic advantage could be granted through a reduction in an undertaking’s tax burden and, in particular, through a reduction in the tax base or in the amount of tax due. Thus, the Commission found that, in this instance, 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.

28      Therefore, it is apparent from the recitals of the contested decision highlighted in paragraphs 23 to 25 above that the advantage identified by the Commission consisted in the non-taxation of the excess profit of corporate beneficiaries, and in the taxation of their profit calculated on the basis of a hypothetical average profit that disregarded the total profit made by those companies and the adjustments provided for by law, in accordance with advance rulings under the scheme at issue. According to the Commission, such taxation represented a lowering of the tax burden of the beneficiaries of the scheme, in comparison with the burden that would have arisen from normal taxation, under the Belgian corporate income tax system, which would have covered all profits actually recorded, after applying the adjustments provided for by law.

29      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 Commission’s primary line of reasoning as to selectivity, based on the existence of a derogation from the general Belgian corporate income tax system. Moreover, the selectivity of the advantage represented by the excess profit exemption is also analysed in recitals 152 to 170 of the contested decision, under Section 6.3.2.2, as regards the Commission’s subsidiary line of reasoning as to selectivity, based on the existence of a derogation from the arm’s length principle.

30      In that regard, it must be stated, first, that the two lines of reasoning on the selectivity of the scheme at issue are distinct and substitutable and, secondly, that it is only in the context of the analysis of the selectivity of the scheme at issue that the Commission examined, in the alternative, the extent to which that scheme derogated from the arm’s length principle.

31      Furthermore, it must be borne in mind that, as is apparent from the case-law, the classification of a national tax measure as ‘selective’ presupposes, first of all, the prior identification and examination of the ordinary or ‘normal’ tax system applicable in the Member State concerned, that is to say, the determination of the ‘reference system’ (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 68 and the case-law cited).

1.      Identification of the reference system

32      The applicants claim, in essence, that the Commission infringed Article 107(1) TFEU by committing an error of law and a manifest error of assessment when interpreting and applying the reference system for the purposes of assessing whether the advance rulings on excess profit conferred a selective advantage. In the applications, the applicants state explicitly that they do not dispute the Commission’s identification of the reference system, namely the Belgian corporate tax system. By contrast, they submit that the Commission misinterpreted that system in the contested decision, in particular, by considering, primarily, that the taxable profit should always correspond to the accounting profit and, in the alternative, that the scheme at issue would have been inconsistent with the arm’s length principle.

33      The Commission contends that the applicants’ arguments should be rejected.

(a)    Preliminary observations

34      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).

35      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).

36      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).

37      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.

38      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).

39      In this instance, the Commission set out in recitals 121 to 129 of the contested decision its position concerning the reference system.

40      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.

41      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.

42      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.

43      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.

44      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.

45      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.

46      It should be noted at the outset that the parties are agreed on the starting point: that the ordinary Belgian corporate income tax system constitutes the reference system. However, the applicants submit that the Commission misinterpreted that system.

(b)    The requirement to identify a specific rule of reference within the general tax system

47      As regards the applicants’ claim that the case-law requires a specific rule of reference to be identified within the global reference system, it should be recalled, on the contrary, that the selectivity of a tax measure cannot be assessed on the basis of a reference framework consisting of some provisions of the national law of the Member State concerned that have been artificially taken from a broader legislative framework (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).

48      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).

49      Consequently, the Commission was not required to identify specific rules within the ‘broader reference system’. However, as is apparent from paragraphs 40 to 46 above, the Commission examined, on the basis of information submitted by the Kingdom of Belgium, the content, structure and specific effects of the rules on the taxation of corporate profits in Belgium. It thus drew the conclusion that undertakings established in Belgium were taxed on their actual profits, irrespective of their legal form or size and of whether or not they belonged to a multinational group of undertakings.

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

50      The applicants challenge the Commission’s interpretation and application of the reference system.

51      In the first place, it should be pointed out that the Commission did not exclude Article 185(2)(b) of the CIR 92 from the reference system. However, it did find 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.

52      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

53      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’).

54      First of all, in the version applicable to the present cases, Article 185(2)(b) 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.’

55      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.

56      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.

57      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.

58      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.

59      That finding is confirmed both by the Memorandum to the Law of 21 June 2004 and by the Circular of 4 July 2006, which 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

60      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.

61      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.

62      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.

63      Furthermore, the fact that the objective of that provision is to avoid potential double taxation, as the Kingdom of Belgium emphasised, cannot eliminate the condition expressly laid down, relating to the fact that the profit to be adjusted must already have been included in the profit of another company and that that profit 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. Indeed, it is precisely where the profit of a Belgian entity is already included in the profit of another company, established in another State, that the possibility of double taxation can arise.

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

64      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.

(d)    The determination of taxable corporate profits and the possibility of making adjustments to recorded profits

65      With regard to the applicants’ arguments challenging the findings of the Commission in relation to the determination of taxable corporate profits in Belgium and the possibility of making adjustments, it must be recalled that, in recital 122 of the contested decision, the Commission indicated that the total profit was established according to the rules for profit determination laid down in the provisions on calculating taxable profit as defined in Article 24 of the CIR 92.

66      Article 24 of the CIR 92 provides that the taxable income of industrial, commercial and agricultural undertakings includes all income from entrepreneurial activities such as profit from ‘all the operations handled by those undertakings or through their intermediation’ as well as profit from ‘all increases in value of their assets … or decrease in value of their liabilities … when that profit has been realised and registered in the accounts’.

67      It follows that the taxable profit, for the purposes of the application of the CIR 92, consists, fundamentally, of all profits recorded by undertakings subject to taxation in Belgium, since those profits constitute the starting point for calculating that tax.

68      Furthermore, 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.

69      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.

70      Therefore, contrary to what is claimed by the applicants, 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 applicants’ 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.

71      That finding cannot be called into question by the applicants’ argument that the Commission’s reasoning implies that any downward transfer pricing adjustment gives rise to an advantage, irrespective of whether or not that adjustment corresponds to the arm’s length principle. Not only is such an assertion not apparent either from the contested decision or from the Commission’s pleadings, but, moreover, it should be recalled that the Commission examined the application of the arm’s length principle by the Belgian tax authorities in the context of its subsidiary line of reasoning on selectivity. By contrast, in the context of the examination of the existence of an advantage, the Commission noted that the corporate beneficiaries were taxed on profits calculated on the basis of a hypothetical average profit that disregarded the total profit made by those entities and adjustments provided for, 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.

72      Consequently, unlike other undertakings subject to tax in Belgium, integrated Belgian entities that obtained an advance ruling under the scheme at issue were not taxed on profits calculated on the basis of their actual recorded profit.

73      In the replies, the applicants add that the misinterpretation of the reference system undermines the Commission’s findings on both selectivity and advantage.

74      First, as regards the findings on selectivity, the applicants claim that the erroneous classification of the advance rulings at issue as a scheme requires the Commission to demonstrate that those rulings unduly discriminate between different companies falling within the scope of Article 185(2)(b) of the CIR 92, that is to say, between multinational groups of undertakings.

75      Secondly, the applicants claim that the misinterpretation of the reference system undermines the Commission’s findings on advantage.

76      The Commission contends that the complaints put forward by the applicants in the replies should be dismissed in accordance with Article 83 of the Rules of Procedure.

77      It should be noted, in that regard, that Article 83 of the Rules of Procedure provides that the application may be supplemented by a reply. Moreover, point 130 of the Practice Rules for the Implementation of the Rules of Procedure states that the framework and the pleas in law or complaints at the heart of the dispute having been set out (or disputed) in depth in the application and the defence, the purpose of the reply and the rejoinder is to allow the applicant and the defendant to make clear their position or to refine their arguments on an important issue, and to respond to new matters raised in the defence and in the reply.

78      In this instance, it should be noted that the replies set out, in part, the arguments put forward in the applications concerning the definition of the reference system, in response to the Commission’s defence.

79      However, the new complaints that are unrelated to the second plea, as set out in the applications, must for that reason be rejected as inadmissible (see, to that effect, judgment of 20 November 2017, Voigt v Parliament, T‑618/15, EU:T:2017:821, paragraph 32).

80      First, as regards the complaints raised at the reply stage, relating to the Commission’s primary line of reasoning, it must be noted that they do not seek to challenge the interpretation and application of the reference system as such; rather, they seek to challenge the Commission’s conclusion in its primary line of reasoning on selectivity.

81      In so far as the applicants do not dispute in their applications the Commission’s findings in its primary line of reasoning as regards the selectivity of the scheme at issue, those arguments, put forward at the reply stage, must be rejected as inadmissible.

82      Secondly, the same is true as regards the arguments relating to the Commission’s conclusions on the economic advantage granted under the scheme at issue to its beneficiaries, in so far as those conclusions were not disputed by the applicants in the applications initiating proceedings.

83      In those circumstances, the second plea in law put forward by the applicants must be rejected in its entirety.

2.      The selectivity of the scheme at issue under the subsidiary line of reasoning

84      The applicants claim, in the alternative, that, even if the Commission had, first, correctly established that the advance rulings on excess profit constituted an aid scheme and, secondly, correctly assessed the scheme at issue under the applicable rules of Belgian tax law, it nevertheless made various errors of fact and manifest errors of assessment by finding that that scheme was inconsistent with the arm’s length principle. Thus, in the first place, the Commission misunderstood the concept of excess profit and the intrinsic link between the excess profit exemption and the business restructuring preceding that exemption. In the second place, it misunderstood the two-step calculation of excess profit. In the third place, the Commission incorrectly stated that other countries had no jurisdiction to levy taxes on the excess profits recorded in the financial accounts of the Belgian group entity.

85      The Commission contends that the applicants’ arguments should be rejected.

86      As a preliminary point, it should be observed that, by their arguments set out in paragraph 84 above, the applicants challenge only the Commission’s subsidiary line of reasoning on the selectivity of the scheme at issue.

87      As it is, the contested decision is based on two distinct and substitutable lines of reasoning on selectivity, the first put forward as the Commission’s primary line of reasoning, the second put forward in the alternative.

88      In those circumstances, even if the Commission had incorrectly assessed the practice of the Belgian tax authorities in its subsidiary line of reasoning on selectivity, that error would not be capable of calling into question the Commission’s primary line of reasoning on selectivity. Accordingly, the applicants’ arguments in the context of the second and third pleas relating to the Commission’s subsidiary line of reasoning must be rejected as ineffective.

C.      The recovery amount

89      By the fourth plea, put forward in the alternative in Case T‑858/16, the applicants submit that the recovery ordered by the Commission in the contested decision is unlawful and disproportionate, contrary to Article 16 of Regulation 2015/1589. The Commission failed to take account of the fact that the group to which the applicants belonged, and potentially other beneficiaries, had already paid their taxes on a portion of the excess profits in question outside Belgium. That had the effect that the profits of the Belgian entity were taxed at a rate above the Belgian statutory rate, namely a rate of 35%, to which that entity would have been subject had it not obtained an advance ruling.

90      In the first place, the applicants submit that the recovery order is unlawful because it leads to double taxation. Part of the excess profit was taxed in the United States under Subpart F of the US Internal Revenue Code. Without the Belgian entity’s advance ruling on excess profit, that amount would have been taxed in Belgium, while the US group entity would have been entitled to US tax credits that would have offset the taxes paid in Belgium on that amount. The US entity would no longer be able to claim US tax credits for those additional taxes in Belgium that the Belgian entity would now be required to pay.

91      In the second place, the applicants submit that the recovery breaches the principle of the prevention of double taxation, which forms an integral part of EU law, in order to avoid distortions in the internal market. In State aid matters in particular, the Commission had acknowledged that even selective tax measures do not constitute State aid where they are necessary to avoid double taxation.

92      In the third place, the applicants claim that the recovery is aimed at removing the advantage and that it should not be punitive. Repayment should thus be limited to the amount of aid received minus the taxes paid as a result of the grant of the aid. The recovery order therefore, in their view, infringes Article 16 of Regulation 2015/1589 and breaches the principle of proportionality.

93      In the fourth place, according to the applicants, the recovery order is inconsistent since it is addressed to the group as a whole, whereas the methodology for calculating the recovery amount does not take account of taxes already paid by other companies in the group in respect of excess profit. Accordingly, Article 2(1) of the contested decision, which provides that the Kingdom of Belgium must first recover the alleged aid from the Belgian entities that have obtained an advance ruling on excess profit, is inconsistent and unlawful.

94      The Commission contends that the applicants’ arguments should be rejected.

1.      The risk of double taxation as a result of the recovery ordered

95      As regards the applicants’ argument that the recovery order leads to the risk of double taxation of profits exempted under the scheme at issue, it should be recalled, first, that, in the context of a tax measure, the existence of an advantage is determined by reference to the rules of normal taxation, so that the tax rules of another Member State are not relevant (see, to that effect, judgment of 11 November 2004, Spain v Commission, C‑73/03, not published, EU:C:2004:711, paragraph 28). Consequently, the analysis should be limited to the tax rules applicable in the Member State where the recipient undertaking in question is established, namely Belgium. Thus, if it is established that the Belgian group entity has benefited from unlawful aid, recovery of that aid must be ordered, irrespective of the tax burden of the other undertakings in the group to which it belongs.

96      Secondly, it must be recalled that, in recital 203 of the contested decision, the Commission rejected the Kingdom of Belgium’s argument that recovery could lead to double taxation because the excess profit exemption concerned a unilateral adjustment that was not granted in response to the prior taxation of the same profit in another tax jurisdiction. As is apparent from paragraph 64 above, the excess profit exemption was the result of a unilateral adjustment that was not correlative and, therefore, in the absence of a corresponding primary adjustment, there could be no double taxation. The applicants’ arguments in no way call those findings into question.

97      Therefore, the applicants’ argument that the contested decision leaves no room for a reduction of the amount to be recovered where a transfer pricing adjustment has been made in another country cannot succeed. In particular, if Dow Silicones Belgium’s profit, which was exempted from tax in Belgium pursuant to the advance ruling that it sought from the Belgian authorities, was taxed twice as a result of the recovery ordered by the contested decision, which Dow Silicones Belgium has, moreover, failed to demonstrate, that would be the result of its particular situation and would not be a general characteristic of the scheme at issue that would be capable of calling into question the finding of the existence of an aid scheme.

2.      The prevention of double taxation

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

99      At the outset, it should be recalled, as has just been stated in paragraphs 96 and 97 above, that the recovery ordered by the contested decision does not concern situations where a correlative adjustment would have been applied in another State.

100    Furthermore, as regards the applicants’ claim as to the existence of a general EU-law principle of prevention of double taxation, it must be noted that, in the judgment of 12 May 1998, Gilly (C‑336/96, EU:C:1998:221), relied on by the applicants, the Court of Justice had held that, whilst abolition of double taxation within the European Union was one of the objectives of the Treaty, it was nonetheless necessary to note that, apart from the Convention on the elimination of double taxation in connection with the adjustment of profits of associated enterprises (OJ 1990 L 225, p. 10), no unifying or harmonising measure for the elimination of double taxation had yet been adopted at EU level, nor had the Member States yet concluded any multilateral convention to that effect (judgment of 12 May 1998, Gilly, C‑336/96, EU:C:1998:221, paragraph 23).

101    Moreover, the judgments of 21 September 1999, Saint-Gobain ZN (C‑307/97, EU:C:1999:438), and of 19 January 2006, Bouanich (C‑265/04, EU:C:2006:51), relied on by the applicants, concerned potential conflicts of taxation between two EU Member States in the context of which the Court of Justice stated that, in the absence of unifying or harmonising measures at EU level for the elimination of double taxation, the Member States retained competence for determining the criteria for taxation on income and wealth with a view to eliminating double taxation by means, inter alia, of international agreements. In those circumstances, the Member States remained at liberty to determine the connecting factors for the allocation of fiscal jurisdiction by means of bilateral agreements (judgments of 21 September 1999, Saint-Gobain ZN, C‑307/97, EU:C:1999:438, paragraph 57, and of 19 January 2006, Bouanich, C‑265/04, EU:C:2006:51, paragraph 49).

102    Therefore, the complaint alleging breach of the general EU-law principle of prevention of double taxation as a result of the recovery order in the contested decision must be rejected.

3.      The allegedly punitive nature of the recovery ordered by the contested decision

103    It should be recalled that, in recital 202 of the contested decision, the Commission found that, in so far as the excess profit exemption corresponded to a percentage of pre-tax profit applied to the Belgian group entity’s profit actually recorded, all that was needed to eliminate the selective advantage granted by the measure at issue was the repayment of the difference between the tax due on the profit actually recorded and the tax effectively paid as a result of the scheme at issue plus the cumulated interest on that amount as from the moment that the aid was granted.

104    In that regard, it is apparent from the case-law that abolishing unlawful aid by means of recovery is the logical consequence of a finding that it is unlawful. Accordingly, the recovery of such aid, for the purpose of restoring the previously existing situation, cannot in principle be regarded as disproportionate to the objectives of the provisions of the FEU Treaty relating to State aid (see judgment of 11 March 2010, CELF and ministre de la Culture et de la Communication, C‑1/09, EU:C:2010:136, paragraph 54 and the case-law cited).

105    Therefore, as the applicants acknowledge, the recovery ordered by the contested decision is intended to eliminate the selective advantage granted by the Belgian tax authorities and is proportionate to the objective pursued by State aid control, namely to preserve competition between undertakings.

106    Furthermore, it should be noted that the comparison made by the applicants between their situation and that of a third-party undertaking that has obtained an advance ruling in another EU Member State, and which the Commission has ordered to repay only the net tax received, cannot be used to call into question the lawfulness of the recovery order as regards the scheme at issue. Accordingly, that argument is ineffective in the context of the present actions.

107    In any event, in the context of an aid scheme, the Commission is not required to carry out an analysis of the aid granted in individual cases under the scheme, since that verification falls within the scope of the obligations incumbent on the Member State concerned (see, to that effect, judgment 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).

108    As regards a breach of the principle of proportionality, it is settled case-law that that principle, which is one of the general principles of EU law, requires that the acts of the institutions should not exceed the limits of what is appropriate and necessary in order to achieve the aim pursued, and that where there is a choice between several appropriate measures recourse must be had to the least onerous (judgment of 9 September 2004, Spain and Finland v Parliament and Council, C‑184/02 and C‑223/02, EU:C:2004:497, paragraph 57; see also, to that effect, judgments of 11 July 2002, Käserei Champignon Hofmeister, C‑210/00, EU:C:2002:440, paragraph 59, and of 7 July 2009, S.P.C.M. and Others, C‑558/07, EU:C:2009:430, paragraph 41).

109    As is apparent from the case-law cited in paragraph 104 above, the recovery of unlawful aid is proportionate to the objective pursued in the context of State aid control. In so far as the Commission correctly found, in this instance, that the scheme at issue had granted its beneficiaries State aid that was incompatible with the internal market and unlawful, the recovery of aid, as ordered by the contested decision, cannot constitute a breach of the principle of proportionality.

110    Accordingly, the complaint alleging, first, that the recovery ordered by the contested decision was punitive in nature and, secondly, breach of the principle of proportionality, must be rejected.

4.      The determination of the recovery amount at the level of the group to which the Belgian entity belongs

111    In this instance, the Commission indicated, in recital 183 of the contested decision, that the Belgian entities that had obtained an advance ruling enabling them to deduct profit considered to be excess profit, for the purpose of determining their taxable profit, were the beneficiaries of the State aid at issue.

112    In addition, in recital 184 of the contested decision, the Commission recalled that, in matters of State aid, separate legal entities could be considered to form one economic unit, which was capable of being considered to be the beneficiary of the aid. It thus found that, in this instance, the Belgian entities benefiting from the aid at issue had operated as central entrepreneurs for the benefit of other entities within their corporate groups which they often controlled. It also noted that the Belgian entities were, in turn, controlled by the entity managing the corporate group as a whole. The Commission thus inferred from this that the multinational group as a whole could be seen as the beneficiary of the aid measure.

113    Moreover, in recital 185 of the contested decision, the Commission stated that it was the group as a whole, irrespective of the fact that it was organised in different legal entities, that would have taken the decision to centralise certain activities in Belgium and to make the necessary investments there in order to benefit from advance rulings.

114    Thus, in recital 186 of the contested decision, it concluded that, in addition to the Belgian entities that had been allowed to benefit from the scheme at issue, the multinational groups to which those entities belonged had to be considered beneficiaries of the aid scheme within the meaning of Article 107(1) TFEU.

115    First of all, 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. 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).

116    Thus, it has been held that the Commission was entitled to consider, for the purpose of assessing the beneficiaries of State aid and the appropriate conclusions to be drawn from a decision ordering recovery of that aid, that there was an economic unit among a number of separate legal entities, in particular where they were linked by a relationship of control (see, to that effect, judgments of 14 November 1984, Intermills v Commission, 323/82, EU:C:1984:345, paragraph 11, and of 16 December 2010, AceaElectrabel Produzione v Commission, C‑480/09 P, EU:C:2010:787, paragraph 64).

117    In recitals 184 to 186 of the contested decision, the Commission highlighted the fact that, in the context of the scheme at issue, there were links of control between the Belgian entity and the other entities of the group to which they belonged. Thus, the Commission noted the fact that the Belgian entity performed core functions for other entities of the group, which were often controlled by that entity. Moreover, the Commission pointed out that the decisions within the multinational corporate groups regarding the structures that gave rise to the exemptions in question, namely the centralisation of activities in Belgium or investments made in Belgium, were taken by entities within the group and were necessarily taken by those which controlled the group. Furthermore, it is apparent from the Kingdom of Belgium’s description of the excess profit scheme, as set out in particular in recital 14 of the contested decision, that the excess profit exempted was supposedly generated by synergies and economies of scale as a result of the Belgian entities’ membership of a multinational corporate group.

118    It follows that, in the contested decision, the Commission highlighted elements that supported its conclusion that there were, in principle, links of control within the multinational corporate groups to which the Belgian entities that had obtained advance rulings belonged. In the light of those elements of the scheme at issue, it cannot be concluded that the Commission exceeded the limits of its discretion when, in Article 2(2) of the contested decision, it ordered the recovery of any sums not recovered from the recipients thus described in Article 2(1) of that decision from the groups to which those recipients belonged.

119    Accordingly, it must be concluded that the fourth plea in Case T‑858/16, alleging that the recovery ordered by the contested decision is disproportionate, must be rejected in its entirety.

120    Since all of the pleas put forward by the applicants have been rejected, the actions must be dismissed in their entirety.

 Costs

121    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 applicants in the present cases have been unsuccessful, they must be ordered to bear their 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.      Orders that Cases T‑858/16 and T‑867/16 be joined for the purposes of the present judgment;

2.      Dismisses the actions;

3.      Orders Dow Silicones Corp. and Dow Silicones Belgium to bear their own costs and to pay those incurred by the European Commission in Case T‑858/16;

4.      Orders Vinventions to bear its own costs and to pay those incurred by the Commission in Case T‑867/16.

Delivered in open court in Luxembourg on 20 September 2023.

Table of contents

I. Background to the dispute

II. Forms of order sought

III. Law

A. The existence of an aid scheme

B. The existence of a selective advantage for the purposes of Article 107(1) TFEU

1. Identification of the reference system

(a) Preliminary observations

(b) The requirement to identify a specific rule of reference within the general tax system

(c) 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

(d) The determination of taxable corporate profits and the possibility of making adjustments to recorded profits

2. The selectivity of the scheme at issue under the subsidiary line of reasoning

C. The recovery amount

1. The risk of double taxation as a result of the recovery ordered

2. The prevention of double taxation

3. The allegedly punitive nature of the recovery ordered by the contested decision

4. The determination of the recovery amount at the level of the group to which the Belgian entity belongs

Costs

*      Language of the case: English.

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