Although the main responsibilities relating to State aid law reside with policymakers, recent decisions on Fiscal aid cases illustrate why it is so important for tax practitioners and taxpayers to be aware of and up to date on State aid law. This article looks at some of the practical implications of the State aid rules for taxpayers (and their tax advisors) and the steps available for taxpayers where policymakers fail to take the State aid rules into account during the legislative process, using the Commission's recent decision on the German financial restructuring exception (Sanierungsklausel) as an illustrative example. In the German Sanierungsklausel case, doubts have been raised if Germany has defended and will defend the provision with all arguments available, as this might have repercussions in domestic court cases where unconstitutionality of the whole change-in-ownership provision is claimed. Only if taxpayers are aware of the notification obligation for new aid and of State aid rules in general, they could take State aid risk into account when relying on tax incentives that might ultimately be considered unlawful State aid. Having a good working knowledge of the concept of Fiscal aid might also enable taxpayers to better submit observations as interested parties after the Commission has issued its opening decision. If the Commission cannot be convinced by these comments and issues a negative decision (in case of unlawful aid: with recovery) and an aid recipient decides to challenge the Commission's decision, it is important to identify the correct track for court proceedings, that is, whether the recipient has capacity to bring an action for annulment according to section 263, paragraph 4 of the Treaty on the Functioning of the European Union (TFEU), or whether the decision can be challenged in domestic court proceedings, including a request for a preliminary ruling.
Intertax