In summary, it appears from article 107 of the TEUF that it is considered state aid if:
1) aid is granted
2) through state resources
3) which distorts or threatens to distort competition
4) by favouring certain undertakings and
5) that the aid affects trade between member states.
An aid scheme will favour specific companies instead of others if the aid is selective. This assessment is decisive when investigating the member states' tax schemes. If a tax scheme treats companies that are in the same situation differently, the scheme will generally be selective and distort competition by giving some companies tax advantages.
THE MOST RECENT CASES CONCERNING STATE AID THROUGH TAXES AND DUTIES
On 21 January 2016, the Commission ordered the Netherlands, Belgium and France to abolish corporate tax exemptions for national harbours to bring the taxation in accordance with the state aid rules.
On 11 January 2016, the Commission ordered 35 multi-national companies to repay state aid of approx. Euro 700 million as the Belgian "profit increase" tax scheme was found to be invalid. Under the scheme, multi-national groups could avoid paying corporate tax of the profit which was not considered earned in Belgium based on a hypothetical comparison. The Belgian scheme could not be justified based on the consideration to avoid double taxation because the adjustments of the taxable profit were unilateral, and because there was not requirement for documentation of double taxation.
The Commission's investigation of the tax treatment of McDonald's in Luxembourg in December 2015 was based on the same consideration. Here, the national authorities actively departed from the tax rules and the double taxation treaty concluded with the USA granting a tax exemption even though there was proof that the income was not taxed in the USA either. The matter has not yet been concluded.
In October 2015, the Commission further found that Fiat and Starbucks were to repay tax advantages granted contrary to the EU's state aid rules. In both cases, the national tax authorities in Luxembourg and the Netherlands had, by way of tax rulings, approved methods for calculation of the taxable profit, which were not in accordance with the companies' actual capital and general market values and interest. Fiat and Starbucks were given the opportunity to transfer large parts of the taxable profit to foreign subsidiaries thereby reducing the basis of taxation.
WHAT WILL THE FUTURE BRING?
The next interesting step will presumably be the regulatory initiatives, where the Commission introduced its plan in June 2015, which will ensure a fair and effective taxation within the EU. In December 2015, the Directive on tax ruling transparency in the EU was adopted. In the long term, the plan is, inter alia, to introduce a basic principle that all companies, irrespective of size, must pay corporate tax in the country where the profit is earned.