Research Handbook on European State Aid Law
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Research Handbook on European State Aid Law

Edited by Erika Szyszczak

This timely new Handbook reflects on current issues that confront State aid law and policy in the EU.
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Chapter 9: State Aid and Taxation in EU Law

Claire Micheau


Claire Micheau I. INTRODUCTION The application of State aid law to taxation is a decisive regulatory instrument which can have a significant effect on the internal market. Given the critical importance of taxation systems in national economies, tax measures are a significant tool for Member States to introduce market distortions in order to strengthen some sectors or activities and thereby to support economic, political, strategic or social policies. Empirical surveys show the importance of State aid in tax matters. It involves considerable amounts of money for the economic stakeholders involved. According to the Commission Scoreboard, tax exemptions accounted for 42% of the share of aid instruments in total aid for industry and services in the Member States in 2008. Consequently, State aids awarded through tax exemption represented the second most important conferral of aid instruments.1 This amounted to around €19.8 billion.2 Moreover, the comparison between the periods 2003–2005 and 2006–2008 shows that Member States increasingly introduced State aids in the form of tax exemptions while on average the use of grants remained stable.3 The adaptation of the rules governing State aid to direct taxation raises intricate issues, and is at the crossroads of different legal areas (those of tax law, competition law and EU law). It also involves sensitive questions subject to economic concerns. Above all, it deals with taxation which is a sovereign area of Member States. Therefore, applying State aid law to tax measures remains a subtle process where the right balance between political, economic and...

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