The General Court of the European Union (GCEU) rendered its judgement T-131/16 and T-263/16 regarding the compatibility of the Belgian excess profit ruling system ('Belgian EPR') with the EU State aid rules.
The GCEU judgment, issued on February 14, 2019, annulled the European Commission’s (EC’s) final decision, and found that the EC had erred in qualifying the measure as an ‘aid scheme.’
One or more parties to the case (including the EC) will likely file an appeal of the GCEU’s decision. If the appeals are considered admissible and well-founded, the Court of Justice of the EU can, in turn, annul the GCEU’s decision and decide on the case itself. Otherwise, it must refer the case back to the GCEU. If that happens, a final decision in this case can be expected in a few years.
This judgment is the GCEU’s first review of a series of recent EC State aid decisions that assess whether tax rulings and transfer pricing rules can be selective and unlawful State aid. Each case has its own facts, so taxpayers will need to await each of the individual judgments.
The EU State aid rules have caused significant uncertainty for taxpayers as to the correct application of tax rulings and transfer pricing rules within the EU. This judgment is only a first step in providing further clarity and guidance on the application of the State aid rules.
