April 23
Trajan Shipley
4th March 2021
Competition & State Aid

Court of Justice sets aside General Court ruling and confirms Commission’s decision that the tax scheme of four Spanish football clubs constitutes State aid

The Court of Justice has delivered its judgment in Commission v Fútbol Club Barcelona (C-362/19 P), setting aside a General Court judgment (T‑865/16) that had annulled a Decision of the European Commission (2016/2391) in State aid case SA.29769. It thus confirms the nature of illegal State aid of the Spanish law in question, which favoured professional football clubs F.C. Barcelona, Real Madrid, Athletic Club de Bilbao, and C.A. Osasuna. 

The Commission had taken the view that a Spanish law obliging all Spanish professional sports clubs to convert into public limited sports companies, with the exception of those that had achieved a positive financial balance during the financial years preceding adoption, constituted unlawful State aid, as it amounted to a preferential corporate tax rate for the only four clubs that did not fall within the law’s scope. Hearing an action for annulment by F.C. Barcelona, the General Court held the Commission did not properly analyse the extent of the tax deductions for the reinvestment of extraordinary profits permitted under the aid regime, in order to determine whether an advantage exists for the purposes of Article 107(1) TFEU.

In its judgment, the Court of Justice followed Advocate General Pitruzzella’s Opinion, and found that the General Court erred in finding that the decision related both to an aid scheme and individual aid. The Court reasons that the measure at issue concerns such an aid scheme, insofar as the specific tax provisions are capable of benefiting each of the football clubs ‘for an indefinite period of time and an indefinite amount, without further implementing measures being required and without those provisions being linked to the realisation of a specific project’. Thus, the fact that the Commission erroneously found that aid was granted individually is not a relevant fact to be taken into account by EU courts to determine the existence of an advantage.

In finding that, the Court of Justice considers that such error in law committed by the General Court vitiates its conclusions concerning the extent of the obligations incumbent on the Commission as regards proof of the existence of an advantage. According to the Court, while the Commission is required to carry out a global assessment of the aid scheme, ‘the examination of the existence of an advantage cannot depend on the financial situation of the beneficiaries at the time of the subsequent grant of individual aid’, and the impossibility to determine the exact amount of the advantage ‘cannot prevent the Commission from finding that that scheme was capable, from that moment, of conferring an advantage on those beneficiaries’. The Commission is only required to look into the individual situation of each beneficiary in the recovery stage.

The Court further held that the aid scheme at issue was, from the time of its adoption, liable to favour the clubs concerned, by operating as non-profit entities over clubs operating in the form of public limited sports companies, thereby conferring on them an advantage capable of falling within the scope of Article 107(1) TFEU. Contrary to what the General Court found, in examining this, the Commission was not required to examine, the effect of the deductions or the fact that the possibilities of deferral would neutralise the advantage resulting from the reduced tax rate.

The judgment is available here (not available in English at the time of publication).

An analysis of the judgment by Juan Jorge Piernas López will follow shortly.


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