Arrendamiento Fiscal

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Last September 23, the General Court of the European Union (“GC”), following the referral back of the case by the Court of Justice of the European Union (“CJEU” or “Court of Justice”) in July 2018, dismissed the appeals filed against the European Commission Decision of 2013, which found that the Spanish tax system applicable to finance lease agreements constituted unlawful state aid and confirmed the order to recover it.


The system in question consisted of a series of tax benefits applicable to certain finance lease agreements, which allowed shipping companies to obtain a 20% to 30% discount on the price of ships built by Spanish shipyards. In particular, the mechanism was based on the early depreciation of assets leased to investors forming part of a tax-transparent Economic Interest Grouping (EIG) that in turn transferred part of those tax advantages to shipping companies.

The proceedings against that tax regime began in 2006, when the European Commission received several reports from national shipyard federations and operators located in other EU Member States, allegedly harmed by this mechanism. After an investigation spanning almost 7 years, the Commission adopted a Decision in 2013 (available here) finding that the Spanish tax lease regime constituted unlawful state aid and ordered its recovery. 

In 2015, the GC annulled the Commission decision, holding, firstly, that only the investors and not the EIGs were beneficiaries of state aid, and, secondly, that the tax regime was not selective, as any investor could participate in the EIGs and benefit from the tax benefits, concluding all together that the tax system could not be classified as state aid. However, in 2018 the CJEU ruled that the GC had erred in its analysis by excluding the EIGs’ as beneficiaries solely based on their legal form and applied the latest case law incorrectly regarding the selectivity criterion. The CJEU therefore referred the case back to the GC for a new ruling (our previous post can be consulted here).

The new judgment of the General Court

In its judgment of September 23, 2020, the GC confirms the European Commission Decision classifying the Spanish tax lease regime as state aid within the meaning of Article 107 of the TFEU, accepting its full recovery from investors.

Specifically, with regard to the selectivity criterion, , the GC declared on the basis of the judgment of the Court of Justice that the vagueness of the requirements for granting the tax benefits together with the tax administration’s broad discretionary power to determine the start date of the depreciation and the beneficiaries, without having to follow any guidelines, made it possible to treat the beneficiaries more favorably than other companies in a comparable situation. Furthermore, the GC stated that the existence of a broad de jure discretionary power meant the tax advantages could only benefit certain companies, regardless of whether they were de facto granted on a discretionary basis or not.

With regard to recovering unlawful aid, the GC ruled out a possible infringement of the principle of legitimate expectations, understanding that the parties failed to sufficiently demonstrate that the Commission had offered precise, unconditional and consistent assurances that the regime did not constitute state aid, and that despite the fact that the Commission already in 2011, in response to a request for information, received information concerning the Spanish tax lease mechanism and, nevertheless, did not open an investigation until several years later.

The GC also concluded that the Commission did not breach the legal certainty requirement as the recovery of state aid was only ordered after the publication of the Commission decision declaring a similar tax regime in France unlawful.

Finally, regarding the recovery of aid from investors, and unlike its previous judgment, the GC maintained that the beneficiaries of the aid were the EIGs and their members, excluding the shipping companies, regardless of the fact that part of the tax benefits had been transferred to them, as the transfer of tax advantages to third parties was not obligatory under the applicable regulations.


The judicial review proceedings and the debate on the legality of the tax lease system might not be over yet, as the appellants, including the Kingdom of Spain, can file an appeal against the GC’s judgment before the Court of Justice.

It should be noted that, several years ago, the tax inspectorate of the Spanish Tax Administration Agency (AEAT) initiated proceedings to recover the aid, issuing tax settlements to different taxpayers that had allegedly benefited from the tax lease mechanism. Many of them have challenged those settlements before the courts and are therefore facing dual proceedings before the European and Spanish courts. If the Court of Justice annuls the GC’s judgment, the settlements that the AEAT has concluded to date will be void.

This again shows the difficulties raised by the ex ante analysis of state aid mechanisms, particularly in tax matters, as discussed in this blog. It shall be highlighted, however, that the judgment in question does not affect the current Spanish tax lease regime, in force since 2013, whose legality has been confirmed by the European Commission.

The case can found under the references T-515/13 RENV and T‑719/13 RENV. Both the GC’s press release and the full text of the judgment are available here and here.

Authors: Emilija Berzanskaite and Alexandre Picón

This post is also available in: Español



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