Case T‑219/13

Pietro Ferracci

v

European Commission

(State aid — Municipal real estate tax — Exemption granted to non-commercial entities carrying on specific activities — Codified law on income tax — Exemption from the single municipal tax — Decision in part finding no State aid and in part declaring the aid incompatible with the internal market — Action for annulment — Regulatory act not entailing implementing measures — Whether of direct concern — Admissibility — Absolute impossibility of recovering the aid — Article 14(1) of Regulation (EC) No 659/1999 — Obligation to state reasons)

Summary — Judgment of the General Court (Eighth Chamber), 15 September 2016

1.      Actions for annulment — Natural or legal persons — Measures of direct and individual concern to them — Whether directly concerned — Commission decision terminating an aid proceeding — Competitor of the undertaking receiving the aid — Right to bring an action — Conditions

(Arts 108(2) and (3) TFEU and 263, fourth para., TFEU)

2.      Actions for annulment — Natural or legal persons — Meaning of ‘regulatory act’ in Article 263, fourth paragraph, TFEU — Any act of general scope other than legislative acts — Commission decision holding a State aid, in the form of a tax exemption laid down by national legislation of general scope, incompatible with the internal market — Legal effects in relation to a general and abstract category of persons — Inclusion

(Arts 107 TFEU and 263, fourth para., TFEU)

3.      Actions for annulment — Natural or legal persons — Regulatory acts entailing implementing measures or not — Concept — Court remedies available against such measures — Conditions for using objection of illegality or reference for a preliminary ruling on validity

(Arts 263, fourth para., TFEU and 267 TFEU)

4.      Actions for annulment — Natural or legal persons — Regulatory acts — Acts not comprising implementing measures and concerning the applicant directly — Concept of implementing measures — Criteria — Commission decision holding an aid granted by States, in the form of a tax exemption laid down by national legislation of general scope, incompatible with the internal market — Decision not involving the adoption of any implementing measure on the part of the addressee — Act not entailing implementing measures

(Arts 107(1) TFEU and 263, fourth para., TFEU)

5.      State aid — Recovery of unlawful aid — Absolute impossibility of implementation — Possibility of establishing that impossibility at the stage of the administrative procedure preceding adoption of the decision — Duty of the Commission and of the Member State to collaborate in seeking a solution compatible with the Treaty

(Art. 4(3) TEU; Arts 107(1) TFEU and 108(2) TFEU; Regulation No 659/1999, thirteenth recital and Art. 14(1))

6.      State aid — Non-compliance with the obligation to recover unlawful aid — Absolute impossibility of implementation — Criteria for assessment

(Art. 4(3) TEU; Art. 108(2) TFEU)

7.      State aid — Recovery of unlawful aid — Aid granted in the form of tax exemption — Absolute impossibility of implementation — Grounds — Impossibility of the State obtaining the information necessary for identifying the aid beneficiaries

(Art. 107(1) TFEU)

8.      State aid — Commission decision finding aid incompatible with the internal market and ordering its recovery — Possibility for the Commission to base its decision on the information available — Limits — Obligation on the Commission to base its decisions on elements with a certain reliability and consistency

(Art. 107(1) TFEU)

9.      State aid — Provisions of the Treaty — Scope — Entities carrying on economic activities in a non-commercial manner — Exclusion

(Art. 107(1) TFEU)

10.    Competition — EU rules — Undertakings — Definition — Exercise of an economic activity

(Art. 107(1) TFEU)

11.    State aid — Commission decision finding an aid incompatible with the internal market without ordering its recovery and finding the non-existence of an aid — Obligation to state reasons — Scope — No infringement

(Art. 296 TFEU)

1.      See the text of the decision.

(see paras 40, 44, 46-48)

2.      Regulatory acts, within the meaning of the fourth paragraph of Article 263 TFEU, are acts of general application, with the exclusion of legislative acts. In that regard, a Commission decision on State aid which applies to situations which are determined objectively and entails legal effects for a class of persons envisaged in a general and abstract manner is of general application.

Having regard to the nature of the power conferred on the Commission under the Treaty provisions on State aid, such a decision, even if it has only a single addressee, reflects the scope of the national instruments under investigation by the Commission, whether in order to grant the necessary authorisation for an aid measure to be applied or to set out the consequences if it is found to be illegal or incompatible with the internal market. The instruments in question have a general scope, since the operators to which they apply are defined in a general and abstract manner.

In the light of those considerations, a Commission decision which, in relation to a tax exemption scheme, finds, first, in respect of one aspect of the scheme, incompatibility of an aid with the internal market, and, second, in respect of another aspect of the same scheme, the absence of aid, is of general application as regards, first, the fact that the Commission did not order recovery of the State aid which it considered illegal and incompatible concerning the tax exemption in question and, second, the fact that it considered that part of that scheme did not constitute State aid within the meaning of Article 107 TFEU. Consequently, such a decision, which is an act of general application and is not a legislative act, constitutes a regulatory act within the meaning of the fourth paragraph of Article 263 TFEU.

(see paras 50, 52-55)

3.      See the text of the decision.

(see paras 56-59)

4.      In order to determine whether the measure being challenged entails implementing measures within the meaning of the fourth paragraph of Article 263 TFEU, reference should be made exclusively to the subject-matter of the action.

Where, in a decision on State aid matters, the Commission considers that, in the light of the particular features of the case, it would be absolutely impossible, for the Member State concerned, to recover the illegal aid granted under a tax exemption scheme and thus decides not to require that Member State to recover the sums paid under that scheme from each recipient, the national authorities will not be required to adopt any measure, particularly vis-à-vis the applicant, in order to implement the contested decision.

The contested decision does not entail implementing measures vis-à-vis the applicant and, accordingly, the action must be declared admissible under the final limb of the fourth paragraph of Article 263 TFEU.

(see paras 60, 61, 64, 70)

5.      Although the absolute impossibility of recovering illegal State aid generally refers to cases in which the Member State concerned claims that it is impossible to do so after a recovery decision has been adopted and in the context of the implementation of that decision, at the stage of implementing the decision, mainly as a defence in an action for failure to fulfil obligations under Article 258 TFEU, neither the applicable rules nor the case-law have established that absolute impossibility could not be found during the administrative procedure leading to a Commission decision on State aid.

In addition, the only obligation which is imposed on the Member State in question and the Commission, where recovery is found to be absolutely impossible, is the obligation to establish sincere cooperation under which the Member State must submit for the Commission’s assessment the reasons why recovery of the aid would be impossible and the Commission must carefully examine those reasons. Accordingly, the cooperation between the Member State and the Commission may take place before the adoption of the final Commission decision if absolute impossibility has already been found during the formal investigation procedure. In addition, if, during that investigation, the Commission finds that there are no alternative methods of recovering the illegal aid or that partial recovery cannot be achieved either, there is no reason why absolute impossibility should not be recognised by the Commission even before it orders recovery of the aid. The Commission may not impose, in the field of State aid, obligations whose implementation would, from the outset, be impossible in objective and absolute terms.

(see paras 80, 84-86, 90)

6.      See the text of the decision.

(see paras 94-96)

7.      The Commission does not err in law by taking the view, in a decision on State aid matters, that recovery of an illegal aid by the national authorities is impossible, in absolute and objective terms, on the ground that the determination of the economic or non-economic nature of the activities carried on by the beneficiary undertakings in real estate subject to a tax exemption scheme cannot be identified by reason of the fact that the cadastral and tax databases do not make it possible to identify the type of type of activity carried on in the real estate owned by those entities or to calculate objectively the amount of the tax to be recovered.

Given that the cadastral databases identify the real estate on the basis of their objective characteristics, in particular their physical features and their structure, it is not possible to work out the type of activities, either economic or non-economic, carried on by the non-commercial entities in their real estate, in order to be able to determine whether those entities have illegally benefited from the said tax exemption and, if so, to quantify the amount to be repaid to the authorities concerned.

The same applies where the tax databases likewise do not allow the type of activities carried on by the entitled benefiting from the said tax exemption in their buildings to be traced retroactively or the amount of the exemptions received illegally to be calculated.

(see paras 98, 101, 106)

8.      See the text of the decision.

(see para. 109)

9.      In the context of the examination of the existence of a State aid and a possible infringement of Article 107(1) TFEU, a national regulation granting exemption from a municipal tax on real estate, which expressly excludes from the scope of that exemption activities which by their nature are in competition with those of other market operators that seek to make a profit, thus limits the benefit of that exemption to entities carrying on economic activities on a non-commercial basis which cannot be regarded as undertakings for the purposes of EU law.

Moreover, it is for the national authorities to determine on a case-by-case basis whether that regime is to be implemented and, more specifically, whether or not there is a competitive relationship between a specific beneficiary of that exemption and other operators in the sector concerned, and the persons concerned can use national remedies where the scheme, as authorised by the Commission, is not applied correctly.

In those circumstances, the said legislation does not fall within the scope of Article 107(1) TFEU.

(see paras 132, 140, 145, 149)

10.    See the text of the decision.

(see paras 134-136)

11.    See the text of the decision.

(see paras 153-157)