Micheau, Claire --- "State Aid and Taxation in EU Law" [2011] ELECD 705; in Szyszczak, Erika (ed), "Research Handbook on European State Aid Law" (Edward Elgar Publishing, 2011)

Book Title: Research Handbook on European State Aid Law

Editor(s): Szyszczak, Erika

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781849802741

Section: Chapter 9

Section Title: State Aid and Taxation in EU Law

Author(s): Micheau, Claire

Number of pages: 26

Extract:

9 State aid and taxation in EU law
Claire Micheau


I. INTRODUCTION
The application of State aid law to taxation is a decisive regulatory instru-
ment 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 stakehold-
ers involved. According to the Commission Scoreboard, tax exemptions
accounted for 42% of the share of aid instruments in total aid for indus-
try 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 2003­2005 and 2006­2008
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 ...