Opinion of Advocate General Pikamäe delivered on 29 September 2022.

JurisdictionEuropean Union
ECLIECLI:EU:C:2022:744
Date29 September 2022
Celex Number62020CC0649
CourtCourt of Justice (European Union)

Provisional text

OPINION OF ADVOCATE GENERAL

PIKAMÄE

delivered on 29 September 2022 (1)

Joined Cases C649/20 P, C658/20 P and C662/20 P

Kingdom of Spain (C649/20 P),

Lico Leasing SA and

Pequeños y Medianos Astilleros Sociedad de Reconversión SA (C658/20 P)

v

European Commission (C649/20 P and C658/20 P)

and

Caixabank SA

and Others

v

European Commission

(C662/20 P)

(Appeals – State aid – Article 107(1) TFEU – Aid granted by the Spanish authorities to certain economic interest groupings (EIGs) and their investors – Tax regime applicable to certain finance lease agreements for the purchase of ships (Spanish tax lease system) – Selectivity – Recovery of the aid – Indirect advantage)






1. These joined cases concern the appeals brought by the Kingdom of Spain (Case C‑649/20 P), by Lico Leasing SA and Pequeños y Medianos Astilleros Sociedad de Reconversión SA (‘PYMAR’) (Case C‑658/20 P) and by Caixabank SA and Others (Case C‑662/20 P) respectively against the judgment of the General Court of 23 September 2020, Spain and Others v Commission (T‑515/13 RENV and T‑719/13 RENV, EU:T:2020:434) (‘the judgment under appeal’), by which the General Court dismissed the action brought by the Kingdom of Spain seeking annulment of Commission Decision 2014/200/EU of 17 July 2013 on the aid scheme SA.21233 C/11 (ex NN/11, ex CP 137/06) implemented by Spain – Tax scheme applicable to certain finance lease agreements also known as the Spanish Tax Lease System (‘the decision at issue’), (2) and the action brought by Lico Leasing and PYMAR seeking annulment of that decision, in the alternative, annulment of the order to recover the State aid and, in the further alternative, annulment of the order to recover the aid in respect of the calculation of the amount of incompatible aid to be recovered.

2. This is the second time that the Court of Justice has been called upon to examine the Spanish tax lease system, which has been the subject matter of a veritable legal saga before the EU Courts since 2013 and is singular in that its implementation depends on the exercise of a broad discretionary power by the tax authority.

3. At the Court’s request, this Opinion will focus on the grounds of the appeals which raise highly complex legal questions and are important in terms of applying State aid rules, that is to say, questions relating to the method of analysing selectivity and to how the case-law on indirect advantages should be interpreted in order to determine the amount of the aid to be recovered from its direct beneficiaries.

I. Background to the dispute

4. Following complaints that the Spanish tax lease system as applied to certain finance lease agreements for the purchase of vessels (‘the STL system’) enabled shipping companies to purchase ships built by Spanish shipyards at a 20% to 30% rebate, the European Commission, by Decision C(2011) 4494 final of 29 June 2011, (3) initiated the formal examination procedure under Article 108(2) TFEU.

5. During that procedure, the Commission found that the STL system had been used, until the date of that decision, in transactions that involved shipyards building ships, the acquisition of those ships by shipping companies and the financing of those transactions by means of an ad hoc legal and financial structure put in place by a bank. The STL system involved, for each ship order, a shipping company, a shipyard, a bank, a leasing company, an Economic Interest Grouping (EIG) set up by the bank and investors who purchased shares in the EIG. The EIG leased the ship from a leasing company as soon as construction of the ship began and would then charter it to the shipping company under a bareboat charter. The EIG would undertake to acquire the vessel at the end of the leasing contract while the shipping company would undertake to acquire it at the end of the bareboat charter contract. According to the decision at issue, that tax planning scheme was intended to generate tax benefits for the investors in a tax transparent EIG and transfer part of those benefits to the shipping company in the form of a rebate on the price of the ship.

6. The Commission found that the STL operations combined five measures provided for in a number of provisions of Real Decreto Legislativo 4/2004, por el que se aprueba el texto refundido de la Ley del Impuesto sobre Sociedades (Royal Legislative Decree 4/2004 approving the consolidated version of the Law on Corporation Tax) of 5 March 2004 (‘the TRLIS’) (4) and of Real Decreto 1777/2004, por el que se aprueba el Reglamento del Impuesto sobre Sociedades (Royal Decree 1777/2004 approving the Regulation on Corporation Tax) of 30 July 2004 (‘the RIS’). (5) Those five measures were (i) the accelerated depreciation of leased assets under Article 115(6) of the TRLIS; (ii) the discretionary application of the early depreciation of leased assets under Article 48(4) and Article 115(11) of the TRLIS and Article 49 of the RIS; (iii) the provisions relating to EIGs; (iv) the tonnage tax system under Articles 124 to 128 of the TRLIS; and (v) the provisions of Article 50(3) of the RIS.

7. Under Article 115(6) of the TRLIS, the accelerated depreciation of the leased asset started on the date on which that asset became operational, that is to say, not before it was delivered to and started being used by the lessee. However, pursuant to Article 115(11) of the TRLIS, the Ministry of Economic Affairs could, on a formal request by the lessee, set an earlier start date for depreciation. Article 115(11) of the TRLIS imposed two general conditions for that early depreciation. The specific conditions applicable to EIGs were set out in Article 48(4) of the TRLIS. The authorisation procedure under Article 115(11) of the TRLIS was set out in Article 49 of the RIS.

8. The tonnage tax system was authorised in 2002 as State aid compatible with the internal market by virtue of the Community guidelines on State aid to maritime transport of 5 July 1997 (OJ 1997 C 205, p. 5), as amended on 17 January 2004 (OJ 2004 C 13, p. 3), by means of Commission Decision C(2002) 582 final of 27 February 2002 concerning State aid N 736/2001 implemented by Spain – Scheme for the tonnage based taxation of shipping companies (OJ 2004 C 38, p. 4). Under that system, undertakings entered in one of the registers of shipping companies which have obtained authorisation from the tax authority to that end are taxed, not on the basis of their profits and losses, but on the basis of tonnage. The Spanish legislation enables EIGs to be entered in one of those registers, even though they are not shipping companies.

9. Article 125(2) of the TRLIS established a special procedure for vessels already acquired at the time of entry into the tonnage tax system and for used vessels acquired when the undertaking was already benefiting from that system. When that system was applied normally, any capital gains were taxed under the tonnage tax system and the taxation of capital gains, even though it was delayed, was assumed to take place when the vessel was sold or dismantled. However, by way of derogation from that provision, Article 50(3) of the RIS provided that, when vessels were acquired through a call option as part of a leasing contract previously approved by the tax authorities, those vessels were deemed to be new rather than used vessels within the meaning of Article 125(2) of the TRLIS, without taking into consideration whether they had already depreciated. This meant that any capital gains were not taxed. That exception, which was not notified to the Commission, was only applied to specific leasing contracts approved by the tax authorities in the context of applications for early depreciation pursuant to Article 115(11) of the TRLIS, that is to say, in relation to newly built vessels that were leased and acquired through STL operations from – with one exception – Spanish shipyards.

10. By applying all those measures, the EIG collected the tax benefits in two stages. In the first stage, early and accelerated depreciation of the leased vessel was applied under the ordinary corporate income tax system, which generated heavy tax losses for the EIG which, because the EIGs are tax transparent, were deductible from the investors’ own revenues in proportion to their shares in the EIG. Whereas that early and accelerated depreciation of the cost of the vessel is usually offset subsequently by increased tax payments when the vessel is completely depreciated or when the vessel is sold resulting in a capital gain, the tax savings resulting from the initial losses transferred to the investors were then safeguarded, at the second stage, as a result of the EIG switching to the tonnage tax system, which allowed exemption of the entire capital gain resulting from the sale of the vessel to the shipping company.

11. While it took the view that the STL scheme had to be characterised as a system, the Commission also examined each of the measures in question individually. By the decision at issue, it found that, among those measures, those resulting from Article 115(11) of the TRLIS, relating to the early depreciation of leased assets, those resulting from the application of the tonnage tax scheme to non-eligible undertakings, vessels and activities and those resulting from Article 50(3) of the RIS (‘the tax measures at issue’) constituted State aid to the EIGs and their investors, unlawfully put into effect by the Kingdom of Spain since 1 January 2002 in breach of Article 108(3) TFEU. The Commission declared that the tax measures at issue were incompatible with the internal market, except to the extent that the aid corresponded to remuneration in conformity with the market for the intermediation of financial investors and to the extent that it was channelled to maritime transport companies eligible under the Maritime Guidelines. It decided that the Kingdom of Spain was obliged to put an end to that aid scheme...

To continue reading

Request your trial
1 practice notes
  • Opinion of Advocate General Pikamäe delivered on 9 March 2023.
    • European Union
    • Court of Justice (European Union)
    • 9 March 2023
    ...(JO 2016, C 262, p. 1). 46 Voir mes conclusions dans les affaires jointes Espagne e.a./Commission (C‑649/20 P, C‑658/20 P et C‑662/20 P, EU:C:2022:744, points 114 et 47 Arrêt du 13 juin 2002, Pays-Bas/Commission (C‑382/99, EU:C:2002:363). Provisional text OPINION OF ADVOCATE GENERAL PIKAMÄE......
1 cases
  • Opinion of Advocate General Pikamäe delivered on 9 March 2023.
    • European Union
    • Court of Justice (European Union)
    • 9 March 2023
    ...(JO 2016, C 262, p. 1). 46 Voir mes conclusions dans les affaires jointes Espagne e.a./Commission (C‑649/20 P, C‑658/20 P et C‑662/20 P, EU:C:2022:744, points 114 et 47 Arrêt du 13 juin 2002, Pays-Bas/Commission (C‑382/99, EU:C:2002:363). Provisional text OPINION OF ADVOCATE GENERAL PIKAMÄE......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT