Judgment of the Court (First Chamber) of 26 April 2018

The first question

28 By its first question, the referring court asks, in essence, if Articles 49 and 54 TFEU should be interpreted as precluding a tax levied on large retail establishments, such as that in the main proceedings.

29 According to settled case-law, freedom of establishment aims to guarantee the benefit of national treatment in the host Member State to nationals of another Member State and to companies referred to in Article 54 TFEU by prohibiting any discrimination based on the place in which companies have their seat (see, inter alia, judgments of 12 December 2006, Test Claimants in Class IV of the ACT Group Litigation , C‑374/04, EU:C:2006:773, paragraph 43 , and of 14 December 2006, Denkavit Internationaal and Denkavit France , C‑170/05, EU:C:2006:783, paragraph 22 ).

30 The rules regarding equal treatment forbid not only overt discrimination based on the location of the seat of companies, but also all covert forms of discrimination which, by the application of other criteria of differentiation, lead in fact to the same result (judgment of 5 February 2014, Hervis Sport-és Divatkereskedelmi , C‑385/12, EU:C:2014:47, paragraph 30 and the case-law cited).

31 Moreover, a tax based on an apparently objective criterion of differentiation but that disadvantages in most cases, given its features, companies whose seat is in other Member States and that are in a comparable situation to companies whose seat is situated in the Member State where that tax is charged, constitutes indirect discrimination based on the location of the seat of the companies, which is prohibited under Articles 49 and 54 TFEU (see, to that effect, judgment of 5 February 2014, Hervis Sport-és Divatkereskedelmi , C‑385/12, EU:C:2014:47, paragraphs 37 to 41 ).

32 In the case in the main proceedings, the legislation in question lays down a criterion relating to the sales area of the establishment which does not give rise to any direct discrimination.

33 Nor does the evidence submitted to the Court show that that criterion disadvantages in most cases nationals from other Member States or companies whose seat is in another Member State.

34 More specifically, neither the information in the letter sent by the Commission to the Spanish authorities on 7 July 2004, referred to in the order for reference, from which it is apparent that undertakings from other Member States represent 61.5% of the area occupied by undertakings of over 2 500 m² subject to the IGEC, nor the information provided by the ANGED in its written observations, from which it is apparent, inter alia, that 52% of tax paid by way of IGEC is borne by large retail establishments of other Member States, are sufficient, having regard, inter alia, to the level of those percentages, to show that that is the case.

35 Consequently, the answer to the first question is that Articles 49 and 54 TFEU must be interpreted as not precluding a tax levied on large retail establishments, such as that in the main proceedings.

The second question

36 By its second question, the referring court asks, in essence, whether a tax such as that at issue in the main proceedings imposed on large retail establishments according, in essence, to their sales area, constitutes State aid within the meaning of Article 107(1) TFEU, to the extent that it exempts establishments whose sales area is less than 2 500 m² and those which pursue the business of a garden centre or of selling vehicles, construction materials, machinery or industrial supplies and reduces by 60% the tax base of establishments selling furniture, sanitary ware and doors and windows and those that are do-it-yourself stores.

37 Classification of a national measure as ‘State aid’, within the meaning of Article 107(1) TFEU, requires all the following conditions to be fulfilled. First, there must be an intervention by the State or through State resources. Second, the intervention must be liable to affect trade between Member States. Third, it must confer a selective advantage on the recipient. Fourth, it must distort or threaten to distort competition (see, inter alia, judgment of 21 December 2016, Commission v World Duty Free Group and Others , C‑20/15 P and C‑21/15 P, EU:C:2016:981, paragraph 53 ).

38 So far as concerns the condition relating to the selectivity of the advantage, also mentioned before the Court, it is clear from settled case-law that in order to assess that condition it is necessary to determine whether, under a particular legal regime, the national measure in question is such as to favour ‘certain undertakings or the production of certain goods’ over others which, in the light of the objective pursued by that regime, are in a comparable factual and legal situation and which accordingly suffer different treatment that can, in essence, be classified as ‘discriminatory’ (see, inter alia, judgment of 21 December 2016, Commission v World Duty Free Group and Others , C‑20/15 P and C‑21/15 P, EU:C:2016:981, paragraph 54 and the case-law cited).

39 As regards, in particular, national measures that confer a tax advantage, it must be recalled that a measure of that nature which, although not involving the transfer of State resources, places the recipients in a more favourable position than other taxpayers is capable of procuring a selective advantage for the recipients and, consequently, constitutes State aid, within the meaning of Article 107(1) TFEU. By contrast, a tax advantage resulting from a general measure applicable without distinction to all economic operators does not constitute such aid within the meaning of that provision (judgment of 21 December 2016, Commission v World Duty Free Group and Others , C‑20/15 P and C‑21/15 P, EU:C:2016:981, paragraph 56 ).

40 In that regard, in order to classify a tax as ‘selective’, the ordinary or ‘normal’ tax system applicable in the Member State concerned must first be identified and it must then be demonstrated that the tax being examined is a derogation from that system, in so far as it differentiates between operators who, in the light of the objective pursued by that ordinary tax system, are in a comparable factual and legal situation (see, inter alia, judgment of 21 December 2016, Commission v World Duty Free Group and Others , C‑20/15 P and C‑21/15 P, EU:C:2016:981, paragraph 57 and the case-law cited).

41 It should also be recalled that the legal reference framework for the purpose of assessing the selectivity of a measure must not necessarily be determined within the territory of the Member State concerned, but may be that of the territory within which a regional or local authority exercises the powers conferred on it by the constitution or by law. Such is the case when that entity enjoys a legal and factual status which makes it sufficiently autonomous in relation to the central government of a Member State, with the result that, by the measures it adopts, it is that body and not the central government which plays a fundamental role in the definition of the political and economic environment in which undertakings operate (see, to that effect, judgment of 11 September 2008, UGT-Rioja and Others , C‑428/06 to C‑434/06, EU:C:2008:488, paragraphs 47 to 50 and the case-law cited).

42 A measure that differentiates between undertakings which, in the light of the objective pursued by the legal regime concerned, are in a comparable factual and legal situation and is, therefore, a priori selective, does not, however, constitute State aid within the meaning of Article 107(1) TFEU where the Member State concerned is able to demonstrate that the differentiation is justified since it flows from the nature or overall structure of the system of which it forms part (judgment of 21 December 2016, Commission v World Duty Free Group and Others , C‑20/15 P and C‑21/15 P, EU:C:2016:981, paragraph 58 and the case-law cited).

43 A measure which creates an exception to the application of the general tax system may be justified by the nature and overall structure of the tax system if the Member State concerned can show that the measure results directly from the basic or guiding principles of its tax system. In that connection, a distinction must be made between, on the one hand, the objectives attributed to a particular tax scheme and which are extrinsic to it and, on the other, the mechanisms inherent in the tax system itself, which are necessary for the achievement of those objectives (judgment of 6 September 2006, Portugal v Commission , C‑88/03, EU:C:2006:511, paragraph 81 ).

44 It should also be borne in mind that although, in order for a tax to be established as being selective, it is not always necessary that it should derogate from a tax system considered to be an ordinary tax system, the fact that it can be so characterised is highly relevant in that regard where its effect is that two categories of operators are distinguished and are subject, a priori, to different treatment, namely those who fall within the scope of the derogating measure and those who continue to fall within the scope of the ordinary tax system, although those two categories are in a comparable situation in the light of the objective pursued by that system (judgment of 21 December 2016, Commission v World Duty Free Group and Others , C‑20/15 P and C‑21/15 P, EU:C:2016:981, paragraph 77 ).

45 With regard to the legislation at issue in the main proceedings, it must first be noted that the question of whether the territorial reference framework should be the Autonomous Community of Catalonia has not been disputed before the Court.

46 Next, although the tax criterion relating to the sales area does not appear to formally derogate from a given legal reference framework, its effect is nonetheless to exclude retail establishments whose sales area is less than 2 500 m² from the scope of that tax. Thus, the IGEC cannot be distinguished from a regional tax on retail establishments whose sales areas exceed a certain threshold.

47 Article 107(1) TFEU defines State interventions on the basis of their effects, independently of the techniques used (judgment of 22 December 2008, British Aggregates Association , C‑487/06 P, EU:C:2008:757, paragraph 89 ).

48 It cannot, therefore, be excluded a priori that such a criterion enables an advantage to be given, in practice, to ‘certain undertakings or the production of certain goods’ within the meaning of Article 107(1) TFEU by mitigating their tax burden in relation to those subject to the tax at issue in the main proceedings.

49 In that connection, it must therefore be determined whether the retail establishments thus excluded from the scope of that tax are in a comparable situation to the establishments that come within that scope.

50 In the context of that analysis, account must be taken of the fact that, in the absence of EU rules governing the matter, it falls within the competence of the Member States, or of infra-State bodies having fiscal autonomy, to designate bases of assessment and to spread the tax burden across the various factors of production and economic sectors (judgment of 15 November 2011, Commission and Spain v Government of Gibraltar and United Kingdom , C‑106/09 P and C‑107/09 P, EU:C:2011:732, paragraph 97 ).

51 As recalled by the Commission in paragraph 156 of its Notice on the notion of State aid as referred to in Article 107(1) of the Treaty on the Functioning of the European Union (OJ 2016 C 262, p. 1), ‘Member States are free to decide on the economic policy which they consider most appropriate and, in particular, to spread the tax burden as they see fit across the various factors of production … in accordance with Union law’.

52 As regards the tax at issue in the main proceedings, the information provided by the referring court shows that the purpose of that tax is to contribute towards environmental protection and town and country planning. Its purpose is to correct and counteract the environmental and territorial consequences of the activities of these large retail establishments, deriving, inter alia, from the ensuing rise in traffic flows, by having those establishments contribute to the financing of environmental action plans and making improvements to infrastructure networks.

53 In that regard, it is not disputed that the environmental impact of retail establishments is largely dependent on their size. The larger the sales area, the higher the attendance of the public, which results in greater adverse effects on the environment. Consequently, a condition relating to sales area thresholds, such as that adopted by the national legislation at issue in the main proceedings, in order to distinguish between undertakings with a greater or lesser environmental impact, is consistent with the objectives pursued.

54 It is also clear that the setting up of such establishments is of particular significance for town and country planning policies, wherever those establishments may be situated (see, by analogy, judgment of 24 March 2011, Commission v Spain , C‑400/08, EU:C:2011:172, paragraph 80 ).

55 In those circumstances, a condition under which the imposition of a tax is based on the sales area of an undertaking, such as that in the case in the main proceedings, differentiates between categories of establishments that are not in a comparable situation in the light of the objectives pursued by the legislation that imposed that condition.

56 Therefore, the tax exemption received by the retail establishments whose sales area is less than 2 500 m² cannot be regarded as conferring a selective advantage on those establishments and, therefore, is not capable of constituting State aid within the meaning of Article 107(1) TFEU.

57 The referring court is also uncertain as to the other features of the tax at issue in the main proceedings. It questions whether the total tax exemption granted to collective retail establishments and individual retail establishments pursuing the business of a garden centre or of selling vehicles, construction materials, machinery or industrial supplies, as well as the 60% reduction of the tax base for establishments selling furniture, sanitary ware and doors and windows and those that are do-it-yourself stores, constitute advantages for those establishments.

58 It must first of all be noted that those measures derogate from the framework established by that specific tax.

59 Next, the Regional Government of Catalonia argues in its written observations that the activities of the retail establishments concerned require, by their very nature, large sales areas that are not intended to attract the greatest number of consumers or increase flows of customers who travel there by private vehicle. Thus, those activities will have fewer adverse effects on the environment and on town and country planning than the activities of establishments liable for the tax in question.

60 That factor may be such as to justify the distinction adopted in the contested legislation in the main proceedings, which, accordingly, would not result in selective advantages being given to the retail establishments concerned. It is, however, for the referring court to determine whether in fact that is the case.

61 Lastly, as far as concerns the criterion drawing a distinction for fiscal purposes on the basis of the individual nature of retail establishments, the effect of which is to exempt collective large retail establishments from the IGEC, it creates, by contrast, a distinction between two categories of establishment that are objectively in a comparable situation in the light of the objectives of environmental protection and town and country planning pursued by the legislation at issue in the main proceedings. As a result, the exemption of those collective large retail establishments from that tax is selective and is therefore likely to constitute State aid if the other conditions set out in Article 107(1) TFEU are met.

62 In that regard, it may be noted that such a measure is financed through State resources and is attributable to the State for the purpose of that provision.

63 In addition, contrary to the Regional Government of Catalonia’s claims in its written observations, such a measure is also liable to affect trade and to distort or to threaten to distort competition within the meaning of Article 107(1) TFEU.

64 It is settled case-law that, for the purpose of categorising a national measure as State aid, it is necessary, not to establish that the aid has a real effect on trade between Member States and that competition is actually being distorted, but only to examine whether that aid is liable to affect such trade and distort competition (see, inter alia, judgment of 27 June 2017, Congregación de Escuelas Pías Provincia Betania , C‑74/16, EU:C:2017:496, paragraph 78 ).

65 In particular, when aid granted by a Member State strengthens the position of certain undertakings as compared with that of other undertakings competing in trade between Member States, such trade must be regarded as affected by the aid and it is not necessary that the beneficiary undertakings themselves be involved in trade between Member States. Where a Member State grants aid to undertakings, internal activity may be maintained or increased as a result, so that the opportunities for undertakings established in other Member States to penetrate the market in that Member State are thereby reduced (see, inter alia, judgment of 27 June 2017, Congregación de Escuelas Pías Provincia Betania , C‑74/16, EU:C:2017:496, paragraph 79 ).

66 With regard to the condition concerning distortion of competition, in principle, aid intended to release an undertaking from costs which it would normally have to bear in its day-to-day management or normal activities distorts the conditions of competition (see, inter alia, judgment of 27 June 2017, Congregación de Escuelas Pías Provincia Betania , C‑74/16, EU:C:2017:496, paragraph 80 ).

67 In the light of the foregoing, the answer to the second question is that a tax such as that at issue in the main proceedings imposed on large retail establishments according, in essence, to their sales area does not constitute State aid within the meaning of Article 107(1) TFEU to the extent that it exempts establishments whose sales area is less than 2 500 m². Nor, in so far as that tax exempts establishments which pursue the business of a garden centre or of selling vehicles, construction materials, machinery or industrial supplies or reduces by 60% the tax base of establishments selling furniture, sanitary ware and doors and windows and those that are do-it-yourself stores, does it constitute State aid within the meaning of Article 107(1) TFEU, provided that those establishments do not have as significant an adverse effect on the environment and on town and country planning as the others, which it is for the referring court to ascertain.

68 Such a tax does, however, constitute State aid within the meaning of that provision to the extent that it exempts collective large retail establishments with a surface area equal to or greater than 2 500 m².

The third question

69 By its third question, the referring court asks, in essence, if, in the event that the answer to the second question is in the affirmative, State aid resulting from the exemptions to and reductions of a tax levied on large retail establishments, such as the tax at issue in the main proceedings, could be regarded as existing aid within the meaning of Article 1(b) of Regulation No 659/1999, which is reproduced, in essence, in Article 1(b) of Regulation 2015/1589.

70 In view of the answer given to the second question, that third question must be answered.

71 In that regard, it must be borne in mind at the outset that the validity of measures giving effect to aid is affected if national authorities act in breach of the last sentence of Article 108(3) TFEU and that national courts must offer to individuals in a position to rely on such breach the certain prospect that all the necessary inferences will be drawn, in accordance with their national law, as regards the validity of measures giving effect to the aid, the recovery of financial support granted in disregard of that provision and possible interim measures (judgment of 21 November 1991, Fédération nationale du commerce extérieur des produits alimentaires and Syndicat national des négociants et transformateurs de saumon , C‑354/90, EU:C:1991:440, paragraph 12 ).

72 Nevertheless, existing aid may, in accordance with Article 108(1) TFEU, be lawfully implemented so long as the Commission has made no finding of incompatibility, so that Article 108(3) TFEU does not give national courts the power to prohibit that aid being put into effect (see judgment of 18 July 2013,  P , C‑6/12, EU:C:2013:525, paragraphs 36 and 41 ).

73 However, Article 1(b)(v) of Regulation No 659/1999, referred to by the referring court, concerns the case where it can be established that a measure, at the time it was put into effect, did not constitute aid, but, without it having been altered by the Member State, subsequently became aid as a result of the development of the internal market. Those conditions do not appear to have been met in the circumstances of the case in the main proceedings.

74 As for the question whether the aid received by the establishments concerned in connection with the tax at issue in the main proceedings could be regarded as having been authorised by the Commission within the meaning of Article 1(b)(ii) of Regulation No 659/1999, reproduced in Article 1(b)(ii) of Regulation 2015/1589, it must be borne in mind that, in matters of State aid, an act, whatever its kind, constitutes such a decision when, taking account of its substance and the Commission’s intention, that institution has, at the end of the preliminary examination stage, definitively established its position — by way of that act — on the measure in question and, therefore, once it has decided whether or not that measure constituted aid and that it has no doubts as regards its compatibility with the internal market (see, to that effect, judgments of 17 July 2008, Athinaïki Techniki v Commission , C‑521/06 P, EU:C:2008:422, paragraph 46 , and of 9 June 2011, Diputación Foral de Vizcaya and Others v Commission , C‑465/09 P to C‑470/09 P, not published, EU:C:2011:372, paragraph 94 ).

75 The Court has also ruled that it must be possible to establish the existence of such a Commission decision on the basis of objective factors and that decision must correspond to a clear and definitive expression of the Commission’s position on the measure in question (see judgment of 9 June 2011, Diputación Foral de Vizcaya and Others v Commission , C‑465/09 P to C‑470/09 P, not published, EU:C:2011:372, paragraph 95 ).

76 The effect of the Commission’s prior control in matters of State aid, and, in particular, of the prohibition on putting new aid measures into effect before a final decision has been adopted by the Commission laid down in the last sentence of Article 108(3) TFEU, is that the existence of a decision on the compatibility of an aid measure leaves no room for doubt, all the more so when the allegedly authorised aid measures have not been notified to the Commission pursuant to Article 108(3) TFEU, thereby jeopardising the legal certainty that that provision is intended to safeguard (see, to that effect, judgment of 9 June 2011, Diputación Foral de Vizcaya and Others v Commission , C‑465/09 P to C‑470/09 P, not published, EU:C:2011:372, paragraphs 96 and 97 ).

77 Consequently, in the case in the main proceedings, such authorisation cannot be inferred from the wording of the Commission’s letter of 2 October 2003, referred to by the referring court and in paragraph 16 of the present judgment, if only because the information before the Court shows that the Commission adopted a position in that letter only on whether the detailed rules for applying IGEC revenue are compatible with the law on State aid.

78 Lastly, it must be observed that, according to Article 1(b)(iv) of Regulation No 659/1999, reproduced in essence in Article 1(b)(iv) of Regulation 2015/1589, ‘existing aid’ is to be understood as also meaning ‘aid which is deemed to be existing aid pursuant to Article 15’ of Regulation No 659/1999.

79 Under Article 15(1) of Regulation No 659/1999, reproduced in Article 17 of Regulation 2015/1589, the powers of the Commission to recover unlawful aid are to be subject to a limitation period of 10 years. By virtue of paragraph 2 of that article, the limitation period begins on the day on which the unlawful aid is awarded to the beneficiary, either as individual aid or as aid under an aid scheme, and any action taken by the Commission or by a Member State, acting at the request of the Commission, with regard to the unlawful aid interrupts the limitation period. Moreover, according to paragraph 3 of that article, any aid with regard to which the limitation period has expired is to be deemed to be existing aid.

80 Irrespective of the scope that should be given to that provision when it is relied on before national courts, it must be observed that the conditions it lays down are not, in any event, met in the main proceedings.

81 To the extent that beneficiaries of aid received in connection with a tax such as that in the main proceedings are defined in a general and abstract manner and the amount of the aid thereby granted to them remains indeterminate, such aid falls under the definition of ‘aid schemes’ within the meaning of Article 1(d) of Regulation No 659/1999, reproduced in identical terms in Article 1(d) of Regulation 2015/1589.

82 Consequently, in accordance with Article 15(2) of Regulation No 659/1999, the day on which the unlawful aid is actually granted to the beneficiary is the starting point for the limitation period (see, to that effect, judgment of 8 December 2011, France Télécom v Commission , C‑81/10 P, EU:C:2011:811, paragraphs 80 to 82 , and order of 7 December 2017, Ireland v Commission , C‑369/16 P, not published, EU:C:2017:955, paragraph 41 ).

83 However, it is apparent from the order for reference that, by letter of 28 November 2014 mentioned in the order for reference and referred to in paragraph 17 of the present judgment, the Commission informed the Spanish authorities that the IGEC was likely to constitute State aid and that tax had to be amended or withdrawn. Such a document therefore constitutes action taken by the Commission within the meaning of Article 15(2) of Regulation No 659/1999, which interrupts the limitation period, so that the aid awarded during the 10-year period preceding that letter cannot be regarded as existing aid.

84 As far as concerns the aid awarded before that period, it is apparent from both the 2014 letter and from the Commission’s letter of 2 October 2003 mentioned by the referring court that those letters were sent following exchanges of and requests for information to the Spanish authorities on the IGEC regime.

85 In those circumstances, such requests also interrupted the limitation period laid down in Article 15 of Regulation No 659/1999 (see, to that effect, judgment of 6 October 2005, Scott v Commission , C‑276/03 P, EU:C:2005:590, paragraph 36 ).

86 In the light of the foregoing, the answer to the third question is that, in circumstances such as those in the main proceedings as described by the referring court, State aid resulting from a tax regime such as that at issue in the main proceedings cannot constitute existing aid within the meaning of Article 1(b) of Regulation No 659/1999, the wording of which is reproduced in Article 1(b) of Regulation 2015/1589.