Commission's decision on tax lease partially annulled
Tax Alert
On February 2, 2023 the Court of Justice of the European Union (CJEU) partially annulled Commission Decision of 17 July 2013 which declared that the Spanish tax lease system was a state aid scheme and ordered it to be recovered from the investors only.
The judgment brings to an end a lawsuit that has lingered in EU courts for a decade and in which Garrigues represented various investors.
Following a first annulment of the decision in 2015, the CJEU upheld in 2018 a cassation appeal lodged by the European Commission and ordered the General Court to conduct another review. The General Court’s second judgment, which endorsed the legality of the decision, has now been annulled by the CJEU, which chose to make a pronouncement on the facts of the case in line with the solution suggested by Advocate General Pikamäe in his conclusions dated September 2022.
The judgment concludes that the tax lease scheme was not intended to favor investors (which the decision identified as beneficiaries), and was instead designed to transfer tax advantages to other entities. According to the court, the Commission erred in its decision by restricting the recovery order to the investors and preventing the aid from being recovered from its actual recipients. For that reason, the judgment annuls the recovery order contained in the 2013 decision.
This pronouncement has a direct effect on all recovery proceedings conducted by the tax authorities against the investors, as well as tens of stayed court proceedings before the General Court.
