Provisional text
OPINION OF ADVOCATE GENERAL
KOKOTT
delivered on 17 October 2024 (1)
Case C‑453/23
E. sp. z o.o.
v
Prezydent Miasta Mielca,
intervener:
Rzecznik Małych i Średnich Przedsiębiorców
(Request for a preliminary ruling from the Naczelny Sąd Administracyjny (Supreme Administrative Court, Poland))
( Reference for a preliminary ruling - State aid - Selective advantage from a statutory tax exemption - Distortion of competition - Determination of the reference system - Statutory tax exemption as part of the reference system - Standard of review - Consistency - Justification on non-fiscal grounds )
I. Introduction
1. In what circumstances does a tax exemption under national property tax law constitute prohibited State aid for the purpose of Article 107(1) TFEU? This request for a preliminary ruling gives the Court an opportunity once again to examine the significance of EU law on State aid as regards the tax law of the Member States. However, unlike other cases on which the Court has ruled recently, the subject matter in the present case is not individual aid granted by means of an individual tax ruling (2) but a statutory tax exemption provision. Also atypically, rather than being about an action contesting a decision of the European Commission on State aid, it concerns a request for a preliminary ruling from a national court. Specifically, the question arising is whether a property tax exemption for land on which railway infrastructure that is actually in use is located is to be regarded as – unnotified – State aid.
2. The background to the request is the Polish law on property tax, which provides for such a tax exemption. The tax exemption was broadened with effect from 1 January 2017, since which point it applies not only to public but also to private railway infrastructure. The exemption may be used by any owner of land when making that infrastructure available for use to a rail transport undertaking. The appellant fulfils the conditions for availing itself of the tax exemption. However, the Polish tax authorities refused to grant the exemption because, in their view, it constituted unlawful State aid as provided for in Article 107(1) TFEU which, contrary to the first sentence of Article 108(1) TFEU, had not been notified.
3. The criteria developed by the Court in the abovementioned decisions on individual State aid are to be applied in the present case to a statutory tax exemption provision. In particular, it is necessary to specify how exactly the relevant reference system is to be determined for general tax exemption provisions. Clarification is required regarding the extent to which the EU Courts can scrutinise the tax exemptions introduced by national legislatures.
II. Legal framework
A. European Union law
4. The legal framework within EU legislation is Article 107 et seq. TFEU.
B. Polish law
5. In Polish law, the Ustawa z dnia 12 stycznia 1991 r. o podatkach i opłatach lokalnych (Law of 12 January 1991 on local taxes and charges, Dz. U. of 2019, item 1170, as amended; 'the Law on local taxes and charges') is of particular relevance.
6. Article 2(1) of the Law on local taxes and charges provides that land, buildings, parts of buildings, structures and parts of structures connected with the conduct of commercial activities are subject to Polish property tax.
7. Article 2(3) of the Law on local taxes and charges provides for exceptions from the scope of the property tax. Under point 4, for example, land used for public road transport is not subject to taxation. However, that exception does not apply to land connected with the conduct of commercial activities other than the maintenance of public roads or the operation of toll motorways.
8. Article 7(1)(1)(a) of the Law on local taxes and charges, in the version in force from 1 January 2017 until 31 December 2021, applicable to the main proceedings, read as follows:
'1. The following shall be exempt from property tax:
(1) Land, buildings and structures forming part of railway infrastructure within the meaning of the provisions relating to rail transport which
(a) are made available to rail transport undertakings'.
9. Since 1 January 2017 that tax exemption has been subject to the condition that the infrastructure in question must be actually made available to – that is to say, used by – a rail transport operator.
III. Facts
10. The company E. sp. z o.o. ('the appellant') owns a number of plots of land on which railway infrastructure is located in the form of what are known as sidings. The sidings connect various businesses to the main railway network. The appellant did not itself use that infrastructure, which constitutes its only asset. On the contrary, according to its submissions presented at the hearing, its commercial activities were limited to making the sidings available for use to various transport undertakings. Moreover, the appellant intended to acquire additional plots of land with similar railway infrastructure with a view to putting it to the same use.
11. The appellant argues that, from the moment when the siding is made available to a transport undertaking, an exemption from property tax can be claimed for the land on which the railway infrastructure is located. It submits that the same applies in respect of land still to be acquired. In order to establish legal certainty for its view, the appellant applied to the Mayor of the Town of Mielec ('the respondent') for an individual tax ruling.
12. The respondent issued the appellant with such an individual tax ruling on 14 June 2021. However, in it, the respondent refused to apply the property tax exemption. In the respondent's view, although the conditions for the exemption are formally met, it cannot be applied because it infringes EU provisions on State aid. The reason given for this was that the law introducing Article 7(1)(1)(a) of the Law on local taxes and charges had not been notified to the Commission.
13. The appellant then brought an action against that individual tax ruling before the Wojewódzki Sąd Administracyjny w Rzeszowie (Regional Administrative Court, Rzeszów, Poland), the court of first instance, which dismissed the action. The appellant then lodged an appeal on a point of law with the Naczelny Sąd Administracyjny (Supreme Administrative Court, Poland; 'the referring court').
14. It is common ground between the parties that the appellant meets the conditions of Article 7(1)(1)(a) of the Law on local taxes and charges. The dispute is therefore limited to the question of whether EU law on State aid precludes the application of the tax exemption. The referring court has doubts in that regard. Ultimately, the provision relates to an unlimited group of recipients. Any landowner (irrespective of region, sector or other characteristics) which possesses railway infrastructure and makes it available to a rail-transport undertaking can, the referring court argues, avail itself of the tax exemption.
IV. The proceedings before the Court and the questions referred for a preliminary ruling
15. Accordingly, the referring court decided to stay the proceedings and to refer the following questions to the Court of Justice:
'(1) In the light of Article 107(1) TFEU, does the grant by a Member State of tax relief addressed to all operators, such as that provided for in Article 7(1)(1)(a) of the Law on local taxes and charges, consisting in an exemption from tax on immovable property for land, buildings and structures forming part of railway infrastructure within the meaning of the provisions on rail transport, which is made available to rail-transport operators, distort or threaten to distort competition?
(2) If the answer to Question 1 is in the affirmative, is an operator which has availed itself of the tax exemption pursuant to the abovementioned provision of national law, introduced without following the required procedure, as laid down in Article 108(3) TFEU, read in conjunction with Article 2 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)], required to pay the outstanding tax, plus interest?'
16. In the proceedings before the Court, in addition to the appellant and respondent, the Republic of Poland, the Kingdom of Spain, the Commission and the Polish Ombudsman for Small and Medium-sized Enterprises (Rzecznik Malych), intervening in support of the appellant, submitted written observations. With the exception of the Ombudsman, they took part in the hearing held on 8 July 2024.
V. Legal assessment
17. Spain asserts that the request for a preliminary ruling is inadmissible in its entirety. It argues that the tax exemption provided for in Article 7(1)(1)(a) of the Law on local taxes and charges applies to 'railway infrastructure'. It submits that, on the basis of Directive 2012/34/EU establishing a single European railway area, (3) that term is to be understood as not encompassing the private infrastructure operated by the appellant. For that reason alone, Spain argues, the appellant must be refused the tax exemption claimed, with the result that the question referred for a preliminary ruling relates to a hypothetical situation.
18. That view cannot be accepted, however. First, Directive 2012/34 has no relevance for the definitions in a national law on property tax. Second, the European Union has no legislative competence in the area of property tax. The Polish legislature was therefore free to define the meaning of railway infrastructure independently in Article 7(1)(1)(a) of the Law on local taxes and charges to include private railway infrastructure like that owned by the appellant.
19. The preliminary ruling proceedings are therefore admissible.
A. First question referred for a preliminary ruling
20. The first question referred concerns the classification of Article 7(1)(1)(a) of the Law on local taxes and charges as State aid as provided for in Article 107(1) TFEU.
21. In accordance with to the settled case-law of the Court, classification as 'State aid' as provided for in Article 107(1) TFEU requires, first, that there must be intervention by the State or through State resources; second, that the intervention must be liable to affect trade between Member States; third, that it must confer a selective advantage on the beneficiary; and fourth, that it must distort, or threaten to distort, competition. (4)
22. In the terms in which it has been raised, the first question referred relates solely to the fourth condition, that is to say, the distortion of competition or threat thereof. However, it follows from the referring court's additional statements that the court wishes to know, in essence, whether granting the appellant the property tax exemption under Article 7(1)(1)(a) of the Law on local taxes and charges grants it a selective advantage as understood within the concept of State aid. Only if that is established will it be possible to examine whether that exemption distorts or threatens to distort competition. It is therefore necessary first to assess whether there is a selective advantage.
1. Existence of a selective advantage
23. In accordance with the settled case-law of the Court, for tax measures, selectivity must be determined in a 'three-stage test'. The first step is to identify as the 'reference system' the ordinary or 'normal' tax regime applicable in the Member State concerned. (5) The second step is to judge, on the basis of that ordinary or 'normal' tax regime, whether the tax measure at issue is a derogation from that ordinary system, in so far as it differentiates between operators which, in the light of the objective pursued by the ordinary regime, are in a comparable factual and legal situation. (6) If a derogation from 'normal taxation' has been established, the third and last step is to assess whether the derogation is justified.
(a) Determination of the reference system
(1) Principle: the binding nature of the determination by the Member State of the characteristics constituting a tax
24. I have already stated my opinion elsewhere on the standard of review for determining the reference system. (7) Not every provision in a general law which benefits the taxpayer can constitute State aid as provided for in the Treaties. Even if such an interpretation were covered by the wording of Article 107(1) TFEU, that outcome would contradict the standard of review developed by the Court for State aid schemes in the form of general tax laws. (8)
25. The Court has emphasised that, given the current state of harmonisation of EU tax law, the Member States are free to establish the system of taxation which they deem most appropriate. (9) That must also be taken into account in the area of monitoring State aid. (10) That discretion enjoyed by the Member States extends to determining the characteristics constituting each tax. (11)
26. Outside the spheres in which EU tax law has been harmonised, it is therefore for the Member State concerned, by virtue of its fiscal autonomy, to determine the characteristics constituting the tax which define the 'normal' reference system or the 'normal' tax regime. In accordance with the recent case-law of the Court, that now applies in respect of, 'in particular, the determination of the basis of assessment, the taxable event and any exemptions to which the tax is subject'. (12) In the same vein, the Court has also established that the selectivity of a tax measure cannot be assessed on the basis of a reference framework consisting solely of some provisions of the national law of the Member State concerned which have been artificially taken from a broader legislative framework. (13)
27. It follows that, in principle, 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. Accordingly, as the Court ruled recently, (14) tax exemptions provided for in that law (such as Article 7(1)(1)(a) of the Law on local taxes and charges in the present case) are also, in principle, part of the reference system.
28. The concern expressed by the Commission at the hearing that that recent case-law and the inclusion of any exemption in the reference system would render the so-called three-stage test (see point 23 above) obsolete is unfounded. First, the three-stage test is not an end in itself but serves to determine whether a selective advantage is being granted. If a tax exemption provided for by law is to be considered part of the reference system, it follows logically that examination of the other two stages becomes redundant. If the tax exemption is not part of the reference system, the three-stage test continues. In that regard, it is only in the case of a general tax law that the first stage is weighted and examined differently than hitherto. That is due simply to the binding nature of the determination by the Member State of the characteristics constituting a tax – and thus to its fiscal sovereignty.
29. Second, that case-law does not allow Member States to introduce exemptions of whatever kind. While the Court did find in the Engie case that tax exemptions are, in principle, part of the reference system, (15) it stated soon afterwards (16) that that conclusion 'is, however, without prejudice to the possibility of finding, as in the case that gave rise to the judgment of 15 November 2011, Commission and Spain v Government of Gibraltar and United Kingdom (C‑106/09 P and C‑107/09 P, EU:C:2011:732), that the reference framework itself, as it results from national law, is incompatible with EU law on State aid, since the tax system at issue has been configured according to manifestly discriminatory parameters intended to circumvent that law'. (17)
30. In respect of statutory tax exemptions which are to be considered part of the reference system, it therefore remains to be assessed whether the tax system relevant to them (including the tax exemption) has been configured according to manifestly discriminatory parameters.
31. The nature of the tax exemption is not decisive for that assessment. At the hearing, the attempt was made to differentiate between fiscal and non-fiscal or between systemically vital and systemically non-vital tax exemptions. However, for the aforementioned reasons, there is no need to differentiate by the nature of tax exemptions – indeed, in my view, it would be almost impossible to make clear-cut distinctions. First, even the Commission was unable to identify any clear-cut demarcation criteria; second, the decisive question is not what systemic quality the tax exemption possesses.
32. In principle, both systemically vital and systemically non-vital tax exemptions are covered by national legislative sovereignty in the area of non-harmonised taxes in the same way as both fiscally and non-fiscally motivated tax exemptions are, provided that they form a consistent part of the reference system. The sole decisive factor for the monitoring of State aid is whether the national legislature selected manifestly discriminatory criteria in exercising its legislative powers in order to grant a selective advantage in circumvention of the rules on State aid.
33. For the question of whether a statutory tax exemption is part of the reference system, however, it is irrelevant – contrary to the apparent view of the Commission at the hearing – whether the grounds for that exemption are fiscal or non-fiscal. Non-fiscally motivated tax exemptions are not always derogations from the reference system and therefore requiring justification. It is recognised that each legislature can also use tax law to pursue non-fiscal objectives (such as environmental protection). Such objectives are also relevant in the rules on State aid. (18)
34. General statutory differentiations within the framework of the reference system can therefore constitute selective measures only if they have no rational basis in the light of the objective of the legislation. (19) Such a rational basis may be derived from fiscal, non-fiscal, systemically vital and systemically non-vital grounds.
(2) Limit to the legislative margin of discretion: manifest inconsistency
35. That discretion enjoyed by the Member States in determining the reference system is exceeded (only) if they abuse their tax law in order to grant advantages to individual undertakings in circumvention of the rules on State aid. (20) Such an abuse of fiscal autonomy can be assumed when tax law is configured in a manifestly inconsistent manner. (21) Differentiation between various categories of taxpayer is manifestly inconsistent and therefore discriminatory if it cannot be plausibly explained to a third party, such as the Commission or the EU Courts. In such situations, the discrimination is equally evident to the taxpayer concerned. (22)
36. Thus restricting the review of statutory differentiation to the monitoring of manifest inconsistency prevents, first, the Commission and the EU Courts becoming overburdened with correctly interpreting 27 different tax regimes in detail. (23) The Court is therefore not required to undertake the interpretation in detail of the meaning and context of a provision of national tax law. Rather, the Court only has to review the tax law in question for manifest inconsistency. That is because a provision which is not manifestly inconsistent, that is to say which at first glance appears to fit consistently into the national tax system, can hardly constitute a circumvention of the prohibition of State aid by granting a selective advantage.
37. Second, that approach prevents the Commission becoming overwhelmed in its monitoring of State aid. If every statutory differentiation in a general tax law may potentially form the basis of State aid, the Member States, for reasons of consistency, would have to notify the Commission of every differentiation in a tax law (and every Member State has large numbers of such provisions). It would hardly be possible for the Commission to review all those provisions within a reasonable amount of time. Moreover, that approach would, by the back door, make tax laws (in the area of non-harmonised taxes) to some extent subject to 'permission' from the Commission.
38. Finally, the advantage of a standard of review guided by the manifest inconsistency of a tax exemption can be seen in the legal consequences of assuming the existence of an aid scheme. Under Article 16 of the State aid Procedural Regulation, (24) unlawfully granted State aid must be recovered from the beneficiaries. In order to do that, it would be necessary retroactively to levy a tax which was not provided for in that form by law.
39. In tax law, however, the principles of legality and non-retroactivity apply. The Court recently explicitly emphasised the principle of legality of taxation in connection with the monitoring of national tax laws for State aid under EU law. (25) Both principles are also at the heart of the constitutional law of the Member States. In the rules on State aid, retroactivity therefore always needs to strike a balance between the purpose of the recovery (to eliminate the competitive advantage gained from the State aid) (26) and the confidence which the taxpayer can legitimately have in the binding nature of parliamentary law.
(3) Intermediate conclusion
40. Not least in the light of the recent case-law cited above (point 26 et seq.), I therefore take the view (27) that a provision in law such as a statutory tax exemption should be reviewed on the basis of a standard of review that is limited to a plausibility check. That will mean that only if a provision is a manifest derogation in favour of the taxpayer from the reference system encompassing the rest of national tax law will it constitute a selective advantage. Derogations from the applicable national reference system are manifest if they cannot be plausibly explained to a third party, such as the Commission or the EU Courts, and are therefore equally evident to the taxpayer concerned.
41. In assessing whether Article 7(1)(1)(a) of the Law on local taxes and charges constitutes a derogation from the reference system (tax liability for all land, Article 2(1) of the Law on local taxes and charges), the Court must therefore only examine whether the tax exemption is manifestly inconsistent. Only if there is manifest inconsistency has a derogation from the general reference system occurred. In the absence of that, a statutory tax exemption is part of the (national) reference system and therefore cannot constitute a selective advantage. A provision is not manifestly inconsistent in that sense where it is understandable, that is to say, where it was not configured according to manifestly discriminatory parameters intended to circumvent the rules on State aid.
(b) Existence of a derogation from the reference system
42. While it is for the national court to determine whether that is so, the Court can give the referring court useful guidance for answering that question. From the Court's point of view and on the basis of that standard of review, it seem likely that the tax exemption provided for in Article 7(1)(1)(a) of the Law on local taxes and charges was not configured according to manifestly discriminatory parameters.
43. The referring court explains that the tax exemption was introduced in the context of a comprehensive amendment of the Ustawa o transporcie kolejowym (Law on railway transport). The objective of that amendment was to develop the railway by liberalising the existing rules and introducing specific support measures.
44. The version in force since 1 January 2017 of the tax exemption provided for in Article 7(1)(1)(a) of the Law on local taxes and charges is consistent with the rest of that amendment in that it also exempts from property tax land, buildings and structures which are part of the railway infrastructure and are made available to rail transport operators. According to the statements of the referring court, that was intended to create incentives for the landowners concerned to use rail transport, which is safer and less polluting.
45. The tax exemption therefore appears understandable and, consequently, not manifestly discriminatory. That is because the tax exemption creates an incentive for landowners either to create new railway infrastructure or to maintain and actually use the infrastructure that already exists. Given that those things may entail considerable costs for landowners, the exemption from property tax effects at least some compensation. The tax exemption therefore fits understandably into the Polish system of property tax as a general tax on assets. Ultimately, an asset which is encumbered with such expense is objectively worth less than an asset without such encumbrances.
46. It is irrelevant that the objective of promoting rail transport is achieved by tax law in the present case. Although most provisions of tax law serve to finance public budgets, it is acknowledged, as I have already mentioned (in point 33 above), that tax laws can also pursue other objectives. For example, national legislatures can use targeted tax relief or tax burdens to encourage taxpayers to behave in a certain way. (28) Accordingly, an exemption from property tax, such as that provided for in Article 7(1)(1)(a) of the Law on local taxes and charges, can help encourage rail transport. Additionally, the EU legislature itself seeks to improve the efficiency and competitiveness of rail transport. (29)
47. It makes sense, moreover, that the tax exemption also exempts elements of private railway infrastructure. It is true that other tax exemption provisions in Polish property tax law – such as that for ports and roads – seem to relate only to publicly owned infrastructure. However, the maintenance and upgrading of private as well as public railway infrastructure is in the public interest in the light of the objectives of making rail transport more efficient and competitive and of reducing emissions which are harmful to the climate.
48. The referring court raises the point that private railway infrastructure in Poland is used in particular by undertakings such as mines, factories and power stations, which are the driving force behind Polish railway freight transport as a whole. However, that is not, as the Commission argued, an indication of covert discrimination. Rather, the tax exemption is a consistent implementation of that objective, unlike, for example, the tax system assessed in the Gibraltar case. (30) Poland argued convincingly that the tax exemption is intended to encourage making railway infrastructure available to transport undertakings. It is plausible that that incentive system will make rail more attractive as a mode of transport.
49. Another argument against the existence of manifestly discriminatory parameters is the fact that Article 7(1)(1)(a) of the Law on local taxes and charges concerns an objective tax exemption. The only condition for benefiting from the tax exemption is that there must be railway infrastructure located on the land and made available to a rail transport operator. Any taxpayer in possession of such infrastructure and putting it to use can therefore benefit from the tax exemption. Moreover, through its objective attachment to the use of a plot of land, the provision applies without discrimination to benefit both private and public owners.
50. As the appellant correctly underlined at the hearing, a number of other Member States also exempt the owners of railway infrastructure wholly or in part from property tax. (31) That suggests that such taxation practice is the international standard. The bar for assuming the existence of an inconsistent rule is therefore higher. That is all the more true where, as in the present case, the Commission has never objected under the rules on State aid to such long-established provisions.
51. The Commission's objection that an advantage is being conferred on particular taxpayers is therefore misconceived. The tax exemption differentiates between owners of railway infrastructure – who do not necessarily have to be undertakings – and taxpayers who do not own such land and facilities located on that land. That does not constitute unequal treatment of taxpayers in the same situation, because the provision uses ownership of the infrastructure as a distinguishing criterion. In particular, the tax exemption is independent of any particular sector or economic activity.
52. Contrary to the Commission's view, that also does not constitute covert discrimination or de facto selectivity. That would presuppose that owners of railway facilities and other landowners (such as owners of land not built on) started from comparable positions. That is not so, however, since the maintenance of railway infrastructure entails particular financial costs (and particular restrictions on the usability of the land) which are not incurred by other taxpayers.
53. In the light of the foregoing, Article 7(1)(1)(a) of the Law on local taxes and charges was not configured according to manifestly discriminatory parameters but rather fits understandably and consistently into Polish property tax law. The provision is therefore part of the reference system and not a derogation. It does not constitute a selective advantage.
(c) In the alternative: justification of a derogation from the reference system
54. Even if the Court were to consider that Article 7(1)(1)(a) of the Law on local taxes and charges constitutes a derogation from the reference system, such a derogation would in any event be justified. That is because a derogation is to be considered justified where the Member State concerned is able to demonstrate that the differentiation flows from the nature or general structure of the system of which the measure forms part. (32)
55. Poland should be able to demonstrate that that is the case. Account must be taken of the fact that Article 7(1)(1)(a) of the Law on local taxes and charges is only one of a number of provisions exempting transport infrastructure from property tax. For example, Article 2(3)(4) of the Law on local taxes and charges provides for an exception in respect of property tax for, inter alia, land used for public road transport. In addition, under Article 7(1)(2) and Article 7(1)(3) of the Law on local taxes and charges, land, buildings and structures which serve port infrastructure, facilitate access to ports or form part of airport areas in public use are also exempt.
56. It follows from a combined reading of those tax exemptions that, in Poland, transport infrastructure is systematically exempt from property tax. That is a parameter based on the nature and internal structure of the tax system, which would justify a (supposed) derogation from the reference system. In that context, Poland rightly pointed out before the Court that the exemptions from property tax for infrastructure which serves the public interest form a consistent bundle within the reference system.
57. The Commission also appears to consider the tax exemptions for road, port and airport infrastructure to be unproblematic. It is not clear why that should not apply to railway infrastructure, of all things. In conclusion, any derogation from the reference system would in any event be justified, which means that there is also no infringement of Article 107(1) TFEU on those grounds.
(d) Intermediate conclusion
58. When examining whether a tax exemption under the law of the Member State forms the basis of a selective advantage, a limited standard of review applies because of the fiscal autonomy of the Member States. The Member State defines the tax system (that is to say, the reference system), which includes tax exemptions. The Court can therefore only examine whether the tax system at issue was configured according to manifestly discriminatory parameters intended to circumvent the rules on State aid.
59. There are no indications of such inconsistent configuration in the present case, because the exemption from property tax in question pursues understandable aims within the Polish law on property tax and was therefore not configured in a manifestly inconsistent manner. Article 7(1)(1)(a) of the Law on local taxes and charges therefore does not constitute a derogation from the reference system. In any event, even if the existence of a derogation were assumed, it would be justified. The tax exemption in question therefore does not constitute a selective advantage for the purposes of the rules on State aid.
2. In the alternative: existence of a distortion of competition
60. If the Court were to assume the existence of a derogation, and assume that that derogation is also not justified, it would still need to be examined whether such an objective, property-dependent tax exemption may cause a distortion of competition relevant under the rules on State aid.
61. Such a distortion of competition presupposes that the State aid granted by the Member State strengthens the position of an undertaking compared with other undertakings in the internal market. (33) It is therefore necessary to compare the situation of the beneficiary before and after the aid was granted.
62. In the light of that yardstick, no distortion of competition resulting from the tax exemption is discernible. Owners of land without railway infrastructure and landowners who do possess such infrastructure are already not in competition with one another. Furthermore, the tax exemption may even serve to enhance competition by compensating for the disadvantages resulting from the particular costs of maintaining railway infrastructure, which undertakings lacking such facilities do not incur.
63. In a normal State aid procedure, moreover, the Commission bears the burden of proof in respect of the characteristics of State aid. (34) In a request for a preliminary ruling, the Commission does not bear that burden of proof. The preliminary ruling proceedings must therefore at least provide some indication that competition has been distorted. That is lacking in the present case. Consequently, the Court cannot on its own initiative establish, not to mention presume, the existence of a possible distortion of competition. On this score too, a finding of prohibited State aid is precluded.
B. Second question referred for a preliminary ruling
64. By its second question, the referring court asks whether an operator is required to pay the outstanding tax plus interest if it has availed itself of a tax exemption introduced in breach of the notification obligation laid down in the first sentence of Article 108(3) TFEU. There is no need to answer that question, if only because it was referred by the national court only in case the first question referred was answered in the affirmative.
65. Even if the Court were to reach a different conclusion with regard to the first question, there would be no need to answer the second question, since it is in any event irrelevant to the resolution of the dispute. That is because the question concerns the situation where an operator has availed itself of a tax exemption. As the appellant itself submits, however, it has not to date been granted the tax exemption under Article 7(1)(1)(a) of the Law on local taxes and charges. As argued by the Republic of Poland and the Commission, that question must therefore be considered inadmissible.
VI. Conclusion
66. I therefore propose that the questions referred by the Naczelny Sąd Administracyjny (Supreme Administrative Court, Poland) be answered as follows:
Article 107(1) TFEU must be interpreted as meaning that a derogation from the reference system by means of a statutory tax exemption exists only where the national provision concerned is manifestly inconsistent. If it is not, it is part of the relevant (national) reference system and cannot constitute a selective advantage. A provision is inconsistent in that sense where it was configured according to manifestly discriminatory parameters in order to circumvent the prohibition of State aid laid down in Article 107(1) TFEU. It is for the national court to determine whether that is so. However, there is nothing to indicate that Article 7(1)(1)(a) of the Law on local taxes and charges, under which owners of land with railway infrastructure are exempt from property tax, does not fit consistently into the Polish law on property tax.
1 Original language: German.
2 On individual interpretations of provisions of tax law, see judgments of 14 December 2023, Commission v Amazon.com and Others (C‑457/21 P, EU:C:2023:985); of 5 December 2023, Luxembourg and Others v Commission (C‑451/21 P and C‑454/21 P, EU:C:2023:948); and of 8 November 2022, Fiat Chrysler Finance Europe v Commission (C‑885/19 P and C‑898/19 P, EU:C:2022:859).
3 Directive of the European Parliament and of the Council of 21 November 2012 (OJ 2012 L 343, p. 32).
4 Judgments of 16 March 2021, Commission v Poland (C‑562/19 P, EU:C:2021:201, paragraph 27); of 28 June 2018, Andres (Insolvency of Heitkamp BauHolding) v Commission (C‑203/16 P, EU:C:2018:505, paragraph 82); 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 53); and Commission v Hansestadt Lübeck (C‑524/14 P, EU:C:2016:971, paragraph 40).
5 Judgments 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 57), and Commission v Hansestadt Lübeck (C‑524/14 P, EU:C:2016:971, paragraphs 53 and 55).
6 Judgments of 19 December 2018, A-Brauerei (C‑374/17, EU:C:2018:1024, paragraph 36); 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 57); and of 8 September 2011, Paint Graphos (C‑78/08 to C‑80/08, EU:C:2011:550, paragraph 49).
7 See my Opinions in Commission v Luxembourg and Others (C‑457/21 P, EU:C:2023:466, point 91 et seq.); in Luxembourg v Commission and Engie Global LNG Holding and Others v Commission (C‑451/21 P and C‑454/21 P, EU:C:2023:383, point 86 et seq.); and in Tesco-Global Áruházak (C‑323/18, EU:C:2019:567, point 147 et seq.).
8 Judgments of 14 December 2023, Commission v Amazon.com and Others. (C‑457/21 P, EU:C:2023:985, paragraph 56); of 5 December 2023, Luxembourg and Others v Commission (C‑451/21 P and C‑454/21 P, EU:C:2023:948, paragraph 115 et seq.); and of 8 November 2022, Fiat Chrysler Finance Europe v Commission (C‑885/19 P and C‑898/19 P, EU:C:2022:859, paragraph 95 et seq.).
9 Judgment of 16 March 2021, Commission v Poland (C‑562/19 P, EU:C:2021:201, paragraph 37); see, to that effect, regarding the fundamental freedoms, judgments of 3 March 2020, Vodafone Magyarország (C‑75/18, EU:C:2020:139, paragraph 49), and Tesco-Global Áruházak (C‑323/18, EU:C:2020:140, paragraph 69 and the case-law cited).
10 Judgments of 15 September 2022, Fossil (Gibraltar) (C‑705/20, EU:C:2022:680, paragraph 59), and of 16 March 2021, Commission v Poland (C‑562/19 P, EU:C:2021:201, paragraph 37); see, to that effect, inter alia, judgment of 26 April 2018, ANGED (C‑233/16, EU:C:2018:280, paragraph 50 and the case-law cited).
11 See also, to that effect, judgment of 8 November 2022, Fiat Chrysler Finance Europe v Commission (C‑885/19 P and C‑898/19 P, EU:C:2022:859, paragraph 95 et seq.).
12 Judgments of 10 September 2024, Commission v Ireland and Apple Sales International (C‑465/20 P, EU:C:2024:724, paragraph 81), and of 5 December 2023, Luxembourg and Others v Commission (C‑451/21 P and C‑454/21 P, EU:C:2023:948, paragraph 112).
13 Judgments 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 of 28 June 2018, Andres (Insolvency of Heitkamp BauHolding) v Commission (C‑203/16 P, EU:C:2018:505, paragraph 103).
14 Judgments of 10 September 2024, Commission v Ireland and Apple Sales International (C‑465/20 P, EU:C:2024:724, paragraph 81), and of 5 December 2023, Luxembourg and Others v Commission (C‑451/21 P and C‑454/21 P, EU:C:2023:948, paragraph 112).
15 Judgment of 5 December 2023, Luxembourg and Others v Commission (C‑451/21 P and C‑454/21 P, EU:C:2023:948, paragraph 112).
16 Judgment of 5 December 2023, Luxembourg and Others v Commission (C‑451/21 P and C‑454/21 P, EU:C:2023:948, paragraph 114, with reference to its judgment of 16 March 2021, Commission v Hungary, C‑596/19 P, EU:C:2021:202, paragraph 49).
17 See, also to that effect, judgment of 10 September 2024, Commission v Ireland and Apple Sales International (C-465/20 P, EU:C:2024:724, paragraph 83).
18 See judgments of 26 April 2018, ANGED (C‑233/16, EU:C:2018:280, paragraphs 59 to 61); ANGED (C‑236/16 and C‑237/16, EU:C:2018:291, paragraph 40 et seq.); and ANGED (C‑234/16 and C‑235/16, EU:C:2018:281, paragraphs 45 and 46).
19 See my Opinion in Tesco-Global Áruházak (C‑323/18, EU:C:2019:567, point 151).
20 Judgment of 15 November 2011, Commission and Spain v Government of Gibraltar and United Kingdom (C‑106/09 P and C‑107/09 P, EU:C:2011:732, paragraph 72); see also judgments of 15 September 2022, Fossil (Gibraltar) (C‑705/20, EU:C:2022:680, paragraph 61); of 16 March 2021, Commission v Poland (C‑562/19 P, EU:C:2021:201, paragraph 42 et seq., in particular paragraph 44); and Commission v Hungary (C‑596/19 P, EU:C:2021:202, paragraph 48 et seq., in particular paragraph 50). In its judgment of 15 November 2011, Commission and Spain v Government of Gibraltar and United Kingdom (C‑106/09 P and C‑107/09 P, EU:C:2011:732, paragraph 101), the Court already spoke of a legal regime in respect of which 'it is apparent that … in practice [it] discriminates between companies' (emphasis added).
21 As happened in the case of Gibraltar, for example: judgment of 15 November 2011, Commission and Kingdom of Spain v Government of Gibraltar and United Kingdom (C‑106/09 P and C‑107/09 P, EU:C:2011:732, paragraph 101 et seq.). In that case, the United Kingdom was also unable to explain the purpose of the underlying tax law parameters (paragraph 149).
22 See my Opinion in Luxembourg v Commission and Engie Global LNG Holding and Others v Commission (C‑451/21 P and C‑454/21 P, EU:C:2023:383, point 92).
23 Difficulties of that nature arose in the Amazon and Engie cases, as I set out in my Opinions in those cases (Commission v Luxembourg and Others (C‑457/21 P, EU:C:2023:466, point 98 et seq.), and Luxembourg v Commission and Engie Global LNG Holding and Others v Commission (C‑451/21 P and C‑454/21 P, EU:C:2023:383, points 94 to 95)).
24 Regulation 2015/1589.
25 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 97).
26 Judgment of 29 April 2004, Germany v Commission (C‑277/00, EU:C:2004:238, paragraph 76).
27 See also my Opinion in Luxembourg v Commission and Engie Global LNG Holding and Others v Commission (C‑454/21 P and C‑451/21 P, EU:C:2023:383, point 101).
28 See my Opinion in Dyrektor Krajowej Informacji Skarbowej (Nature of the management of a CIU) (C‑18/23, EU:C:2024:609, point 81).
29 See recital 5 of Directive 2012/34.
30 Judgment of 15 November 2011, Commission and Kingdom of Spain v Government of Gibraltar and United Kingdom (C‑106/09 P and C‑107/09 P, EU:C:2011:732).
31 See, for example, Paragraph 4(3)(a) of the German Grundsteuergesetz (Law on property tax), Paragraph 4(9)(a) of the Luxembourg Grundsteuergesetz (Law on property tax) and Paragraph 2(1)(b) of the Austrian Grundsteuergesetz (Law on property tax).
32 Judgments of 16 March 2021, Commission v Poland (C‑562/19 P, EU:C:2021:201, paragraph 32 and the case-law cited); of 26 April 2018, ANGED (C‑233/16, EU:C:2018:280, paragraph 43); and of 6 September 2006, Portugal v Commission (C‑88/03, EU:C:2006:511, paragraph 81).
33 Judgments of 17 September 1980, Philip Morris Holland v Commission (730/79, EU:C:1980:209, paragraph 11), and of 19 September 2000, Germany v Commission (C‑156/98, EU:C:2000:467, paragraph 33).
34 See, to that effect, judgment of 3 April 2014, France v Commission (C‑559/12 P, EU:C:2014:217, paragraph 104).
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