2023-12-11-KPMG_s_EU_Tax_Centre-Euro_Tax_Flash_from_EU_Tax_Centre_6页_349kb

CJEU Ruling on Luxembourg Tax Rulings

Background

The Court of Justice of the European Union (CJEU) annulled the European Commission's decision finding certain Luxembourg tax rulings incompatible with EU State aid rules in cases C-451/21 P and C-454/21 P. The rulings involved Luxembourg tax authorities approving intra-group financing structures that resulted in double non-taxation of subsidiary profits.

Key Findings

1. Incorrect Reference Framework:

   • The CJEU determined that the European Commission (EC) and the General Court erred in establishing the reference framework for the selectivity analysis.
   • The EC improperly interpreted Luxembourg's tax exemption rules for participation income, overlooking the principle that national Member States have exclusive competence to determine the characteristics of their domestic tax systems, provided they comply with the principle of tax legality.

2. Non-Application of Anti-Abuse Rules:

   • The CJEU upheld the Advocate General's opinion that the EC must consider whether non-application of a general anti-abuse rule (GAAR) constitutes a selective advantage.
   • The EC must demonstrate that the tax authorities departed from national case-law or administrative practice in applying the GAAR, not merely that the ruling differs from hypothetical applications.

Consequences

• The CJEU annulled the EC's Decision and set aside the General Court's ruling.
• This reinforces Member States' fiscal autonomy and requires review authorities to respect national authorities' interpretations of domestic tax rules.

Significance

• This ruling clarifies that EU State aid law applies only if national tax measures depart from national practice, not general principles.
• It highlights the EC's obligation to adhere to legally sound interpretations of national tax systems, potentially influencing future State aid assessments.