Recent Developments June 2018
Commission proposes new State aid rules for research
On 6 June 2018, the Commission proposed a new InvestEU Fund and a new Single Market Programme for the EU from 2021 onwards. The InvestEU Programme brings EU budget financing in the form of loans and guarantees under one roof, in order to boost job creation, investment, and innovation. The new Single Market Programme aims to (i) empower and protect consumers, (ii) enable small and medium-sized enterprises to take full advantage of a well-functioning single market, and (iii) promote human, animal and plant health as well as animal welfare. The EU budget for InvestEU Fund is €2 billion while the budget for the Single Market Programme is €4 billion. An important component for achieving the objectives is the modification of the State aid rules. The Commission is proposing an amendment which aims to improve the interplay of those EU funding programmes with national funding programmes. The amendment empowers the Commission to adopt two new categories for the General Block Exemption Regulation ("GBER"). Categories of State aid under the GBER are exempted from the notification obligation and can be implemented without prior Commission authorisation, if they comply with the specific GBER requirements.
GC rejects appeal in Dutch corporate income tax exemption for ports
On 31 May 2018, the General Court ("GC") upheld the Commission decision that declared the exemption in the Dutch Corporate Income Tax Act ("CITA") for six public ports as incompatible State aid. In 2015, the Dutch Parliament adopted a new version of the CITA that required publically owned companies to be subjected to the CITA in the same way as privately owned companies. However, under the new CITA, six public ports in the Netherlands remained exempted from paying corporate income tax. A similar tax exemption was applicable in Belgium, France, and Germany for their publicly owned ports. The GC concluded that the Commission did not violate the principle of equal treatment by deciding that the Dutch tax exemption had to be abolished while the investigations into the Belgium, French, and German tax exemptions were still pending. The Dutch investigation was in a more advanced stage and the other tax exemptions were not similar to the Dutch exemption, which justified the Commission adopting the contested decision first.
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Freedom of Establishment and Tax Sovereignty
On 31 May 2018, the CJEU answered the preliminary question of a German court about the compatibility of a German tax measure with the freedom of establishment. The case emanates from guarantees provided by Hornbach-Baumarkt AG, free of charge, to the benefit of two of its foreign EU subsidiaries. The German tax authority took the view that the guarantees would normally be provided for remuneration, and that therefore the taxable income of Hornbach-Baumarkt AG had to be increased. Hornbach appealed, arguing that the provision at issue only applied in relation to foreign subsidiaries and not in relation to national subsidiaries. The CJEU ruled that a difference in the tax treatment of taxpayers, based on the place where the companies have their registered office, is liable to constitute a restriction of freedom of establishment. Such a hindrance can however be justified if there is an overriding public interest recognised by EU law. In this context, the CJEU ruled that the national legislation at issue is appropriate to pursue the objective of maintaining the balanced allocation of the power to tax between the Member States (a justification derived from the principle of territoriality, also known as tax sovereignty). Further, the CJEU ruled that the national legislation at issue does not go beyond what is necessary to achieve the objective which it pursues, provided that the authorities responsible for the enforcement of that legislation afford the resident taxpayer the opportunity to prove that the guarantee terms were agreed on for commercial reasons which could result from its status as a shareholder in the non-resident company.
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CJEU clarifies concept of postal service provider
On 31 May 2018, the CJEU answered preliminary questions on the conformity of Italian law with European law on providing postal services (Directive 97/67 and Directive 2008/6). In particular, the CJEU dealt with the question of whether providers of haulage, freight-forwarding, and express delivery services should be qualified as 'postal service' providers if such service includes limited ancillary clearance, sorting and distribution of mail. The CJEU confirmed that EU law does not preclude national law from characterising such haulage and freight-forwarding services as postal services. Additionally, according to the CJEU, the added value of express mail services in relation to universal postal services cannot alter the qualification of express mail as a postal service. Furthermore, the CJEU ruled that EU law does not preclude national law from (i) requiring a general authorisation for the provision of postal services from companies providing haulage, freight-forwarding, and express delivery services, and (ii) obliging providers of such services to contribute to a universal service compensation fund, as long as the service provided is seen as interchangeable with the universal postal service by the user of such services.
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Unfair terms in consumer contracts and effective judicial protection
On 31 May 2018, the Court of Justice of the EU ("CJEU") ruled that EU law does not preclude national procedural rules laying down specific procedural requirements for actions brought by consumers who have entered into loan agreements based on foreign currency. According to the Hungarian procedural law in question, an applicant claiming the unfair character of the clauses in the contract is only admissible if three conditions are fulfilled: (i) the applicant must invoke the invalidity of the contract; (ii) the applicant does not demand the reinstatement of the situation before the conclusion of the contract because of the invalidity and (iii) the applicant must claim the repayment of the unduly paid amount. The purpose of this procedural rule was to allow judges to effectively deal with a large number of cases on loan contracts denominated in foreign currency with unfair clauses. The CJEU pointed out that in the absence of harmonisation, the national procedural rules must provide for equivalence and effective judicial protection. The CJEU concluded that the procedural requirement in question is not so complicated or severe that it disproportionally affects the consumer's right to effective judicial protection in the case of unfair contract clauses.
Click here to read more (French only).
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