In case T-112/22, the GC had the opportunity to rule on tax measure (Swedish draft law) affecting credit institutions, that exceed a balance sheet debt threshold for a given fiscal year. The dispute appears to be confined to the field of state aid and direct taxation, but cannot be read without the regime of the CRR/CRD/BRRD package. The judge dismisses any argument that can be drawn from this package in favor of the classic rules drawn up for state aid. For taxation purposes, and according to the judge, the financial health of a credit institution depends solely on its indebtedness. The reasoning followed is based on the premise repeated throughout the judgment: large credit institutions that exceed the debt threshold provided by the draft law incur a systemic risk for the financial system, since in the event of default, financial stability would be affected and the occurrence of a financial crisis with harmful consequences for society would be inevitable. In this context, society would have to bear the so-called indirect costs that the failure of these institutions would generate. The purpose of taxation is to offset these costs. For institutions that are not sufficiently leveraged (in connection to the threshold provided for), this risk does not exist, and so they are not taxed. This is the basis for the difference in taxation treatment between credit institutions provided by the draft law and confirmed by the Commission and the judge. It is fair to say that this premise remains hypothetical, without financial logic, and is in turn based on the so-called indirect costs that taxation is intended to offset. However, neither risk, nor financial stability, nor these costs are defined in the judgment. The judge follows a line of reasoning borrowed from competition law, but ignores the references and logic that animate this same law when it comes to contesting the notion of relevant market knowing that – and without this being contested – all taxed and not taxed credit institutions operate, in the same market. The positions on risk, financial stability, relevant market and the “notorious” indirect costs to society, while disregarding any rules deriving from the applicable financial regulations, produce a rather perplexing amalgam that the Court is called upon to clarify, as the GC’s judgment has been appealed.
European Business Law Review