JUDGMENT OF THE GENERAL COURT (Second Chamber, Extended Composition)

20 September 2023 (*)

(State aid – Aid scheme put into effect by Belgium – Decision declaring the aid scheme incompatible with the internal market and unlawful and ordering recovery of the aid granted – Tax ruling – Taxable profit – Excess profit exemption – Advantage – Selectivity – Recovery)

In Case T‑420/16,

St. Jude Medical Coordination Center (SJM Coordination Center), established in Zaventem (Belgium), represented by F. Louis and É. Bruc, lawyers,

applicant,

v

European Commission, represented by P.‑J. Loewenthal, B. Stromsky and F. Tomat, acting as Agents,

defendant,

THE GENERAL COURT (Second Chamber, Extended Composition),

composed of A. Marcoulli, President, S. Frimodt Nielsen, V. Tomljenović (Rapporteur), R. Norkus and W. Valasidis, Judges,

Registrar: S. Spyropoulos, Administrator,

having regard to the written part of the procedure, in particular:

–        the decision of 16 February 2018 to stay the proceedings pending the decisions closing the proceedings in the cases that gave rise to the judgment of 14 February 2019, Belgium and Magnetrol International v Commission (T‑131/16 and T‑263/16, EU:T:2019:91), and to the judgment of 16 September 2021, Commission v Belgium and Magnetrol International (C‑337/19 P, EU:C:2021:741),

–        the decision of 26 April 2022 to resume the proceedings,

–        the written questions put by the Court to the parties and their replies to those questions,

having regard to the order of the President of the Second Chamber, Extended Composition, of 21 December 2022 joining Cases T‑278/16, T‑370/16, T‑373/16, T‑420/16, T‑467/16, T‑637/16, T‑681/16, T‑858/16 and T‑867/16 for the purposes of the oral part of the procedure,

further to the hearing on 13 February 2023,

gives the following

Judgment

1        By its action under Article 263 TFEU, the applicant, St. Jude Medical Coordination Center (SJM Coordination Center), seeks the annulment of Commission Decision (EU) 2016/1699 of 11 January 2016 on the excess profit exemption State aid scheme SA.37667 (2015/C) (ex 2015/NN) implemented by Belgium (OJ 2016 L 260, p. 61; ‘the contested decision’).

I.      Background to the dispute

2        The facts of the dispute and the legal background were set out by the General Court in paragraphs 1 to 28 of the judgment of 14 February 2019, Belgium and Magnetrol International v Commission (T‑131/16 and T‑263/16, EU:T:2019:91), and by the Court of Justice in paragraphs 1 to 24 of the judgment of 16 September 2021, Commission v Belgium and Magnetrol International (C‑337/19 P, EU:C:2021:741; ‘the judgment on appeal’). For the purposes of the present proceedings, they may be summarised as follows.

3        By an advance ruling issued by the ‘service des décisions anticipées’ (Advance Ruling Commission) of the service public fédéral des finances belge (Belgian Federal Public Service for Finance) under Article 185(2)(b) of the Code des impôts sur les revenus 1992 (Income Tax Code 1992; ‘the CIR 92’), read in conjunction with Article 20 of the loi du 24 décembre 2002 modifiant le régime des sociétés en matière d’impôts sur les revenus et instituant un système de décision anticipée en matière fiscale (Law of 24 December 2002 amending the corporate income tax system and establishing an advance tax ruling system) (Moniteur belge, 31 December 2002, p. 58817; ‘the Law of 24 December 2002’), Belgian resident companies that were part of a multinational group and Belgian permanent establishments of foreign resident companies that were part of a multinational group could reduce their tax base in Belgium by deducting what was considered to be ‘excess’ profit from the profit which they had recorded. Under that system, part of the profit made by the Belgian entities benefiting from an advance ruling was not taxed in Belgium. According to the Belgian tax authorities, that excess profit arose from the synergies, economies of scale or other benefits resulting from membership of a multinational group and, accordingly, was not attributable to the Belgian entities in question.

4        The applicant in the present case is a company established in Belgium forming part of a multinational group of undertakings. The applicant carries out transactions with other companies within the group.

5        It is apparent from the annex to the contested decision and the documents in the file that, on 26 May 2009, the Advance Ruling Commission, within the Belgian Ministry of Finance, adopted the advance ruling on the exemption of excess profit in respect of the applicant, which had requested it following a group restructuring aimed at centralising a number of functions and services in Belgium. That advance ruling was valid for five years. In 2012, the applicant obtained an amendment to the advance ruling pertaining to it to take into account an increase in product scope and functional scope that had occurred from 2010 on.

6        Following an administrative procedure that was initiated on 19 December 2013 with a letter by which the European Commission requested the Kingdom of Belgium to provide information on the system of excess profit tax rulings, which were based on Article 185(2)(b) of the CIR 92, the Commission adopted the contested decision on 11 January 2016.

7        By the contested decision, the Commission found that the excess profit exemption scheme that was based on Article 185(2)(b) of the CIR 92, pursuant to which the Kingdom of Belgium had issued advance rulings to Belgian entities of multinational groups of undertakings, granting those entities an exemption in respect of part of their profit, constituted a State aid scheme (‘the scheme at issue’) giving its beneficiaries a selective advantage, for the purposes of Article 107(1) TFEU, that was incompatible with the internal market.

8        Thus, the Commission argued, principally, that the scheme at issue granted beneficiaries of the advance rulings a selective advantage, since the excess profit exemption applied by the Belgian tax authorities was a departure from the ordinary Belgian corporate income tax system. In the alternative, the Commission found that the excess profit exemption could confer a selective advantage on beneficiaries of the advance rulings, in so far as that exemption was not in line with the arm’s length principle.

9        Having found that the scheme at issue had been put into effect in breach of Article 108(3) TFEU, the Commission ordered that the aid thus granted be recovered from its beneficiaries, a definitive list of which was to be drawn up by the Kingdom of Belgium following the decision.

II.    Forms of order sought

10      The applicant claims that the Court should:

–        annul the contested decision;

–        in the alternative, annul the contested decision in so far as it included the applicant among the beneficiaries of the scheme at issue;

–        in the alternative, annul the contested decision in so far as it ordered the recovery of any alleged aid from the applicant;

–        order the Commission to pay the costs.

11      The Commission contends that the Court should:

–        dismiss the action as unfounded;

–        order the applicant to pay the costs.

III. Law

12      In support of the action, the applicant raises 10 pleas in law, alleging, first, that the Commission lacked competence to adopt the contested decision, in that it did not respect the division of powers between the Member States and the Commission; secondly, breach of its right to be heard by the Commission during the administrative procedure; thirdly, an error in classifying the measure at issue as an aid scheme; fourthly, failure to state reasons for the contested decision; fifthly, an error of law in the finding of selectivity for the purposes of Article 107(1) TFEU; sixthly, failure to examine the existence of an advantage; seventhly, breach of the principle of equal treatment; eighthly, breach of the principles of legal certainty and legality; ninthly, that the recovery ordered in the contested decision leads to double taxation of the profits at issue; and, tenthly, that recovery cannot be subject to the Commission’s discretion.

13      The Court considers it appropriate to examine, first of all, the first plea in law and then the third plea, which relate to the Commission’s competence to adopt the contested decision and classification of the aid scheme; next, the fifth, sixth and seventh pleas together, which in essence dispute the selective advantage allegedly granted by the scheme at issue; and, lastly, the tenth, second, fourth, eighth and ninth pleas in turn.

A.      The Commission’s competence to adopt the contested decision

14      By its first plea, the applicant disputes the Commission’s competence to adopt the contested decision. Thus, in the applicant’s view, that decision infringes Article 2(6) TFEU, Article 5(1) and (2) TEU and the division of competences between the European Union and the Member States.

15      The Commission contends that the applicant’s arguments should be rejected.

16      In that regard, it must be borne in mind that the Court of Justice has already rejected such an argument against the contested decision, finding, in particular, that the Commission could not be accused of having exceeded its powers when it had examined the measures constituting the scheme at issue and when it had ascertained whether those measures constituted State aid and, if so, whether they were compatible with the internal market (the judgment on appeal, paragraph 163). In exercising their competence in the field of taxation and in adopting measures necessary to avoid situations of double taxation, the Member States must refrain from adopting measures which may constitute State aid, the monitoring of which falls within the Commission’s competence (the judgment on appeal, paragraph 166).

17      It follows that the Commission did not exceed its powers when it decided to examine the compatibility with State aid rules of the advance rulings granted by the Belgian tax authorities under the scheme at issue. Consequently, the applicant’s first plea must be rejected.

B.      The existence of an aid scheme

18      By its third plea, the applicant disputes, in essence, the method followed by the Commission to demonstrate the existence of an aid scheme and alleges infringement of Article 107(1) TFEU, Article 1(d) and Article 12 of Council Regulation (EU) 2015/1589 of 13 July 2015 laying down detailed rules for the application of Article 108 [TFEU] (OJ 2015 L 248, p. 9) and breach of the obligation to carry out a comprehensive, diligent and impartial examination of the facts at issue.

19      The Commission contends that the applicant’s arguments should be rejected.

20      In that regard, it should be borne in mind that, in the judgment on appeal, the Court of Justice stated that the contested decision had established the existence of an aid scheme, within the meaning of Article 1(d) of Regulation 2015/1589, resulting from a systematic approach by the Belgian tax authorities, and thus rejected as unfounded the plea relied on by the Kingdom of Belgium and Magnetrol International, alleging that it was incorrectly concluded that there was an aid scheme.

21      In those circumstances, the General Court must reject the third plea relied on by the applicant, alleging that the Commission erred in finding that there was an aid scheme, that plea being, in essence, similar to those of the Kingdom of Belgium and Magnetrol International, which were rejected by the Court of Justice in the judgment on appeal.

C.      Infringement of Article 107 TFEU in that the Commission found that the excess profit exemption constituted a State aid scheme

22      The arguments raised by the applicant in its fifth, sixth and seventh pleas essentially dispute the Commission’s findings as to the existence of an advantage granted by the scheme at issue and its selectivity. More specifically, as regards selectivity, in reliance on the case-law concerning assessment for the purposes of classifying a tax measure as ‘selective’, the applicant challenges the Commission’s identification of the reference system, that is to say, the ordinary or ‘normal’ tax system applicable, its finding that the scheme at issue constitutes a derogation from that reference system, and its rejection of the potential justification for the scheme afforded by the nature and general scheme of the Belgian tax system.

23      It is in the context of the analysis of the existence of a derogation that it is necessary to respond to the applicant’s arguments relating to the economic advantage granted to the beneficiaries under the scheme at issue, the examination of which, according to the applicant, should be distinct from that of selectivity, and to breach of the principle of equal treatment, as is apparent from its sixth and seventh pleas respectively.

1.      Identification of the reference system

24      In the first place, the applicant submits that Article 185(2)(b) of the CIR 92 and the excess profit advance rulings granted under that provision are part of the general Belgian corporate income tax system and cannot be excluded from the reference system. Article 185(2)(a) and (b) of the CIR 92 provides for the possibility of making adjustments to the accounting profits of a Belgian entity of a multinational undertaking where those profits do not reflect economic reality or the arm’s length profits. Contrary to what is stated in recital 122 of the contested decision, the taxable profit does not always correspond to the accounting profit. Thus, in Belgium, benefits granted to a related company that would not have been granted between standalone companies must be added back to the taxable income of the taxpayer, as is apparent from Articles 26, 55, 79 and 207 of the CIR 92.

25      In the second place, the applicant disputes the reasoning for the contested decision as regards the reference system, in particular with regard to the difference between Article 185(2)(a) of the CIR 92 and Article 185(2)(b) of the CIR 92. The position adopted by the Commission in recital 126 of the contested decision has the effect of treating entities of a multinational undertaking less favourably than standalone companies, since the Commission accepts, for integrated entities, only an upward adjustment to profits, but not a downward adjustment such as that provided for in Article 185(2)(b) of the CIR 92.

26      The Commission contends that the applicant’s arguments should be rejected.

(a)    Preliminary observations

27      It must be recalled that the determination of the reference system is of particular importance in the case of tax measures, since the existence of an economic advantage for the purposes of Article 107(1) TFEU may be established only when compared with ‘normal’ taxation. Moreover, determination of the set of undertakings which are in a comparable factual and legal situation depends on the prior definition of the legal regime in the light of whose objective it is necessary, where applicable, to examine whether the factual and legal situation of the undertakings favoured by the measure in question is comparable with that of those which are not (see judgment of 8 November 2022, Fiat Chrysler Finance Europe v Commission, C‑885/19 P and C‑898/19 P, EU:C:2022:859, paragraph 69 and the case-law cited).

28      In that context, it has been held that the determination of the reference system, which must be carried out following an exchange of arguments with the Member State concerned, must follow from an objective examination of the content, the structure and the specific effects of the applicable rules under the national law of that State (see judgment of 6 October 2021, World Duty Free Group and Spain v Commission, C‑51/19 P and C‑64/19 P, EU:C:2021:793, paragraph 62 and the case-law cited).

29      In addition, it is apparent from settled case-law that, while the Member States must thus refrain from adopting any tax measure liable to constitute State aid that is incompatible with the internal market, the fact remains that outside the spheres in which EU tax law has been harmonised, it is the Member State concerned which determines, by exercising its own competence in the matter of direct taxation and with due regard for its fiscal autonomy, the characteristics constituting the tax, which define, in principle, the reference system or the ‘normal’ tax regime, from which it is necessary to analyse the condition relating to selectivity. This includes, in particular, the determination of the basis of assessment and the taxable event (see judgment of 8 November 2022, Fiat Chrysler Finance Europe v Commission, C‑885/19 P and C‑898/19 P, EU:C:2022:859, paragraphs 65 and 73 and the case-law cited).

30      It follows that only the national law applicable in the Member State concerned must be taken into account in order to identify the reference system for direct taxation, that identification being itself an essential prerequisite for assessing not only the existence of an advantage, but also whether it is selective in nature.

31      Furthermore, in order to determine whether a tax measure has conferred a selective advantage on an undertaking, it is for the Commission to carry out a comparison with the tax system normally applicable in the Member State concerned, following an objective examination of the content, the structure and the specific effects of the applicable rules under the national law of that State. Parameters and rules external to the national tax system at issue cannot therefore be taken into account in the examination of the existence of a selective tax advantage within the meaning of Article 107(1) TFEU and for the purposes of establishing the tax burden that should normally be borne by an undertaking, unless that national tax system makes explicit reference to them (see, to that effect, judgment of 8 November 2022, Fiat Chrysler Finance Europe v Commission, C‑885/19 P and C‑898/19 P, EU:C:2022:859, paragraphs 92 and 96).

32      In the present case, the Commission set out in recitals 121 to 129 of the contested decision its position concerning the reference system.

33      Thus, in recitals 121 and 122 of the contested decision, the Commission stated that the reference system was the ordinary system of taxation of corporate profits under the general Belgian corporate income tax system, which had as its objective the taxation of profit of all companies subject to tax in Belgium. The Commission noted that the Belgian corporate income tax system applied to companies resident in Belgium as well as to Belgian branches of non-resident companies. Under Article 185(1) of the CIR 92, companies resident in Belgium were liable to corporate income tax on the total amount of their profit, unless a double taxation treaty applied. Moreover, under Articles 227 and 229 of the CIR 92, non-resident companies were only taxable on specific Belgium-sourced income. The Commission also stated that, in both cases, Belgian corporate income tax was payable on the total profit, which was established according to the rules on calculating profit as defined in Article 24 of the CIR 92. Under Article 185(1) of the CIR 92, read in conjunction with Articles 1, 24, 183, 227 and 229 of the CIR 92, the total profit was calculated as corporate income, minus deductible expenses which were typically recorded in the accounts, so that the profit actually recorded formed the starting point for calculating the total taxable profit, without prejudice to the subsequent application of upward and downward adjustments provided for by the Belgian corporate income tax system.

34      In recitals 123 to 128 of the contested decision, the Commission explained that the excess profit exemption scheme applied by the Belgian tax authorities was not an inherent part of the reference system.

35      More specifically, in recital 125 of the contested decision, the Commission found that that exemption was not prescribed by any provision of the CIR 92. Article 185(2)(a) of the CIR 92 allowed the Belgian tax administration to make a unilateral primary adjustment of a company’s profits where transactions or arrangements with associated companies were concluded on terms that differed from arm’s length conditions. By contrast, Article 185(2)(b) of the CIR 92 provided for the possibility of making downward adjustments of a company’s profit from an intra-group transaction or arrangement, subject to the additional condition that the profit to be adjusted had to have been included in the profit of the foreign counterparty to that transaction or arrangement.

36      In addition, in recital 126 of the contested decision, the Commission recalled that the objective of the Belgian corporate income tax system was to tax corporate taxpayers on their actual profits, irrespective of their legal form or size and of whether or not they formed part of a multinational group of undertakings.

37      Furthermore, in recital 127 of the contested decision, the Commission noted that, for the purposes of determining taxable profit, integrated multinational group companies were required to set the prices they applied to their intra-group transactions instead of those prices being dictated by the market, which is why Belgian tax law contained certain special provisions applicable to groups, which were generally aimed at putting non-integrated companies and economic entities structured in the form of groups on an equal footing.

38      In recital 129 of the contested decision, the Commission concluded that the reference system to be taken into consideration was the Belgian corporate income tax system, which had as its objective the taxation of profits of all companies resident or operating through a permanent establishment in Belgium in the same manner. That system included the applicable adjustments under the Belgian corporate income tax system, which determined the company’s taxable profit for the purpose of levying Belgian corporate income tax.

39      It should be noted at the outset that the parties are agreed on the starting point: that the ordinary Belgian corporate income tax system constitutes the reference system. However, the applicant submits that the Commission misinterpreted that system.

(b)    The possibility of adjusting the accounting profit for the purposes of calculating the taxable profit

40      As a preliminary point, it must be noted that, for the purpose of establishing what the ordinary or ‘normal’ tax system applicable in Belgium is, the Commission relied on the legal provisions applicable, in particular the CIR 92, as is apparent from paragraphs 32 to 38 above. Indeed, on the basis of the information provided by the Kingdom of Belgium in the context of the administrative procedure, the Commission described the legislative framework applicable and set out, in particular in recitals 23 to 28 of the contested decision, the Belgian corporate income tax system, as laid down by the CIR 92. Specifically, as stated in paragraph 33 above, the Commission expressly referred to Articles 1, 24, 183 and 185 of the CIR 92.

41      In that regard, it should be noted that, under Article 183 of the CIR 92, income subject to corporate tax is the same as that envisaged by personal income tax, the calculation of which is based on the principle that the taxable income is made up of all net income, including profit, less deductible expenses. Furthermore, under Article 185(1) of the CIR 92, companies are taxable on the total amount of profit.

42      It follows that, according to the provisions of the CIR 92, for corporate income tax purposes, taxable revenue is calculated on the basis of all profits made or recorded by undertakings subject to taxation in Belgium, profits to which the deductions provided for by law are to be applied.

43      Thus, contrary to what the applicant claims, the Commission did not disregard the fact that, in the case of profits on transactions between associated companies, adjustments had to be made in order to determine the taxable profit of the company subject to taxation in Belgium.

44      Admittedly, it is indicated in recital 133 of the contested decision that in the context of the ordinary system of taxation of corporate profits under the Belgian corporate income tax system, entities subject to taxation in Belgium are taxed on their total profit, that is, on their profit actually recorded, not on a hypothetical level of profit.

45      However, that finding does not mean that the Commission failed to take into account the adjustments provided for by the Belgian corporate income tax system. Indeed, in recital 123 of the contested decision, in particular, the Commission recognised that, specifically under Article 185(2)(b) of the CIR 92, in order to determine the taxable profit of a Belgian undertaking, there was a possibility of making downward adjustments where part of the profit of that undertaking was already included in the taxable profit of an associated foreign undertaking.

46      Thus, contrary to the applicant’s contention, the position taken by the Commission in the contested decision does not mean that all profit recorded by companies that are subject to taxation in Belgium must be taxed by the Belgian tax authorities without any adjustments being made to the profits recorded in the accounts of those companies. In fact, the Commission itself takes account of the fact that the total recorded profit provides the basis for calculation which is subject to the adjustments provided for by the ordinary Belgian corporate income tax system, such as those provided for in Articles 26, 55, 79 and 207 of the CIR 92 relied on by the applicant. Accordingly, the applicant’s argument based on the existence of the adjustments provided for in Articles 26, 55, 79 and 207 of the CIR 92 must be rejected.

47      Moreover, it is apparent from recital 68 of the contested decision that the Commission does not criticise the Kingdom of Belgium for applying adjustments generally, but that it is only the downward adjustment in the context of the excess profit scheme which it regarded as contra legem.

48      Therefore, contrary to what is claimed by the applicant, the Commission did take into account the fact that, in the tax system applicable in Belgium, specifically as regards the taxable base for the taxation of corporate profit, it was possible to make upward and downward adjustments to the profits recorded. For the same reasons, the applicant’s claims that the Commission disregarded the fact that there was a difference in the Belgian tax system between the accounting profit and the taxable profit cannot be upheld.

(c)    The distinction between the adjustments provided for in Article 185(2)(a) and (b) of the CIR 92

49      The Commission noted in recital 125 of the contested decision that the upward and downward adjustments laid down in Article 185(2)(a) and (b) of the CIR 92 were special tax provisions applicable to situations in which the conditions agreed for a transaction or an arrangement differed from those that would have been agreed between independent companies.

50      The applicant complains that the Commission endorsed the adjustment under Article 185(2)(a) of the CIR 92 solely because it provided for the possibility of an upward adjustment of the taxable profit.

51      In that regard, however, it must be noted that what the Commission states in recital 125 of the contested decision is that only Article 185(2)(a) of the CIR 92, which concerns upward transfer pricing adjustments, allows the Belgian tax authorities to make a unilateral primary transfer pricing adjustment if the conditions agreed differ from those that would have been agreed between independent companies. By contrast, the Commission notes that Article 185(2)(b) of the CIR 92 provides for a corresponding downward adjustment and, therefore, does not allow the unilateral non-taxation of a fixed part or percentage of the profit actually recorded by a Belgian entity forming part of a multinational group.

52      It follows that the distinction relied on by the applicant between the two adjustments provided for in Article 185(2) of the CIR 92 is not capable of calling into question the Commission’s interpretation of the Belgian tax system, as set out in the contested decision.

(d)    The non-inclusion of the excess profit scheme in the reference system

53      In the first place, it should be pointed out that the Commission did not exclude Article 185(2)(b) of the CIR 92 from the reference system. However, it did find that the excess profit scheme applied by the Belgian tax authorities was not laid down by that provision and, therefore, did not form part of the reference system.

54      In the second place, in order to determine whether the Commission correctly concluded that the excess profit scheme was not provided for by Article 185(2)(b) of the CIR 92, it is necessary to examine, on the one hand, the scope of that provision and, on the other, the excess profit scheme as applied by the Belgian tax authorities.

(1)    The scope of Article 185(2) of the CIR 92

55      It must be noted that the Commission based its analysis of Article 185(2) of the CIR 92 on the wording of that provision and the texts that accompanied its entry into force. In recitals 29 to 38 of the contested decision, the Commission described in detail, first, the text of Article 185(2) of the CIR 92, introduced by the loi du 21 juin 2004, modifiant le [CIR 92] et la loi du 24 décembre 2002 (Law of 21 June 2004 modifying the CIR 92 and the Law of 24 December 2002) (Moniteur belge, 9 July 2004, p. 54623; ‘the Law of 21 June 2004’); secondly, the explanatory memorandum to the draft of that law, presented to Belgium’s Chamber of Representatives by the Belgian Government on 30 April 2004 (‘the Memorandum to the Law of 21 June 2004’); and, thirdly, the circular of 4 July 2006 concerning Article 185(2) of the CIR 92 (‘the Circular of 4 July 2006’).

56      First of all, in the version applicable to the present case, Article 185(2) of the CIR 92, to which reference is made in recital 29 of the contested decision, is worded as follows:

‘Without prejudice to the second paragraph, for two companies that are part of a multinational group of associated companies and in respect of their reciprocal cross-border relationships:

…

(b)      when profit is included in the profit of one company which is already included in the profit of another company and the profit so included is profit which should have been made by that other company if the conditions agreed between the two companies had been those which would have been agreed between independent companies, the profit of the first company is adjusted in an appropriate manner.

The first paragraph applies by way of advance ruling without prejudice to the application of the Convention on the elimination of double taxation in connection with the adjustment of profits of associated enterprises (90/436) of 23 July 1990 or of a Convention for the avoidance of double taxation.’

57      Next, the Memorandum to the Law of 21 June 2004, referred to in recital 34 of the contested decision, states that Article 185(2)(b) of the CIR 92 provides for an appropriate correlative adjustment in order to avoid or undo a (potential) double taxation and that a correlative adjustment should be made only if the tax administration or the Advance Ruling Commission considers both the principle and the amount of the primary adjustment to be justified.

58      Moreover, the Memorandum to the Law of 21 June 2004 makes clear that that provision does not apply if the profit made in the partner State is increased in such a way that it is greater than the profit that would have been obtained had the arm’s length principle been applied, since the Belgian tax authorities are not obliged to accept the consequences of an arbitrary or unilateral adjustment in the partner State.

59      Lastly, the Circular of 4 July 2006, referred to in recital 38 of the contested decision, reiterates that such a downward adjustment does not apply in cases where the primary upward adjustment in another tax jurisdiction is exaggerated. That circular, moreover, largely reproduces the text of the Memorandum to the Law of 21 June 2004, in that it recalls that the corresponding downward adjustment is informed by the arm’s length principle, that its objective is to avoid or undo a (potential) double taxation and that it must be made in an appropriate manner, that is, that the Belgian tax authorities can make that adjustment only if both the principle and the amount of that adjustment are justified.

60      Accordingly, it is apparent from the wording of Article 185(2)(b) of the CIR 92 that the downward adjustment is envisaged in the context of cross-border relationships between two associated companies and that it must be a correlative adjustment, in the sense that it is applicable only if the profit that is to be adjusted is already included in the profit of the other company and the profit so included is profit which should have been made by that other company if the conditions agreed between the two companies had been those which would have been agreed between independent companies.

61      That finding is confirmed both by the Memorandum to the Law of 21 June 2004 and by the Circular of 4 July 2006, which make clear that both the principle and the amount of the correlative adjustment must be appropriate and that that adjustment should not be made if the profit made in another State is increased in such a way that it is greater than the profit that would have been obtained had the arm’s length principle been applied. Those texts indicate that the downward adjustment provided for by Article 185(2)(b) of the CIR 92 requires a correlation between the profit adjusted downwards in Belgium and profit included in another group company established in another State.

(2)    The excess profit scheme

62      The Commission describes the excess profit scheme, as applied by the Belgian tax authorities, in recitals 13 to 22 of the contested decision. In addition, in recitals 39 to 42 of the contested decision, the Commission took into account the replies given by the Belgian Minister for Finance on 13 April 2005, 11 April 2007 and 6 January 2015 to parliamentary questions on the application of Article 185(2)(b) of the CIR 92. Those replies explain the administrative practice of the Belgian tax authorities relating to excess profit.

63      It is apparent from those replies that, in the context of the excess profit scheme applied by the Belgian tax authorities, the downward adjustment of profit enabling that excess profit to be deducted from the tax base was not conditional upon the exempted profit having been included in the profit of another company and that profit being profit which should have been made by that other company if the conditions agreed between them had been those which would have been agreed between independent companies.

64      It is, moreover, apparent from the explanations given by the Kingdom of Belgium, as set out in particular in recitals 15 to 20 of the contested decision, that the exemption applied by the Belgian tax authorities under the scheme at issue was based on an exemption percentage, calculated on the basis of a hypothetical average profit for the Belgian entity, obtained using a profit level indicator derived from a comparison with the profit of comparable standalone companies and fixed as a point in the interquartile range of the chosen profit level indicator of a set of comparable standalone companies. That exemption percentage would have been applicable for a number of years, that is to say, during the period of validity of the advance ruling. Thus, the resulting starting point for the taxation of Belgian entities was not the full profit actually recorded, within the meaning of Articles 1, 24, 183 and Article 185(1) of the CIR 92, to which the adjustments provided for by law in the case of groups of undertakings would have been applied under Article 185(2) of the CIR 92; rather, it was a hypothetical profit that disregarded the total profit made by the Belgian entity in question and the adjustments provided for by law.

65      Furthermore, the fact that the objective of that provision is to avoid potential double taxation cannot eliminate the condition expressly laid down, relating to the fact that the profit to be adjusted must already have been included in the profit of another company and that that profit is profit which should have been made by that other company if the conditions agreed between them had been those which would have been agreed between independent companies. Indeed, it is precisely where the profit of a Belgian entity is already included in the profit of another company, established in another State, that the possibility of double taxation can arise.

(3)    Conclusion on the non-inclusion of the excess profit scheme in the reference system

66      It follows from the above that, while Article 185(2)(b) of the CIR 92 requires, for the purposes of a downward adjustment, that the profit to be adjusted should already have been included in the profit of another company and be profit which should have been made by that other company if the conditions agreed between the two companies had been those which would have been agreed between independent companies, the excess profit scheme was applied by the Belgian tax authorities without those conditions being taken into consideration.

67      Accordingly, contrary to the applicant’s contention, the Commission was right to find that the excess profit exemption applied by the Belgian tax authorities under the scheme at issue did not form part of the reference system.

68      In those circumstances, the Court must reject all of the applicant’s arguments challenging the Commission’s identification of the reference system in the contested decision.

2.      The existence of a selective advantage as a result of the existence of a derogation from the reference system

69      It is appropriate to examine the second part of the fifth plea, disputing the existence of a derogation from the reference system, in conjunction with the sixth and seventh pleas. In essence, the applicant disputes the findings in the contested decision on the existence of an advantage conferred by the scheme at issue. First, the applicant claims that the Commission failed to analyse that advantage. Secondly, the applicant disputes the factors identified as characteristics of the scheme at issue. Thirdly, it states that those characteristics are not applicable to it. Fourthly, the applicant disputes the Commission’s conclusions as to the advantage that is said to result from the application of the arm’s length principle by the Kingdom of Belgium under the scheme at issue.

(a)    Identification of the advantage granted by the scheme at issue

70      The applicant submits that the Commission failed to examine in the contested decision the existence of an advantage and that it confused advantage with the concept of selectivity.

71      The Commission contends that the applicant’s arguments should be rejected.

72      As a preliminary point, as noted in paragraphs 35 to 37 above, it should be recalled that, in recital 125 of the contested decision, the Commission indicated that the excess profit exemption applied by the Belgian tax authorities was not provided for by the Belgian corporate income tax system. Furthermore, in recital 126 of the contested decision, the Commission highlighted the fact that that exemption was calculated in disregard of the total profit actually recorded by the Belgian entity and the adjustments provided for by law. In recital 127 of the contested decision, it stated that although the Belgian system contained certain special provisions applicable to groups, these were aimed at putting integrated multinational group entities and standalone entities on an equal footing.

73      In that context, in recital 133 of the contested decision, the Commission indicated that, under the Belgian corporate income tax system, corporate entities resident or operating through a permanent establishment in Belgium were taxed on their profit actually recorded, not on a hypothetical level of profit, which was why the excess profit exemption conferred an advantage on Belgian group entities benefiting from the scheme at issue.

74      In recital 135 of the contested decision, the Commission recalled the case-law according to which an economic advantage may be granted through a reduction in an undertaking’s tax burden and, in particular, through a reduction in the tax base or in the amount of tax due. Thus it found that, in the present case, the scheme at issue allowed corporate beneficiaries of advance rulings to reduce their tax liability by deducting a so-called ‘excess’ profit from their profit that was actually recorded. That excess profit was determined by estimating the hypothetical average profit of comparable standalone undertakings, so that the difference between the profit actually recorded and the hypothetical average profit was then translated into an exemption percentage underpinning the calculation of the tax base agreed for the five years of the advance ruling’s application. In so far as that tax base, thus determined on the basis of the advance rulings granted under the scheme at issue, was lower than it would have been had those advance rulings not been issued, an advantage would have arisen.

75      In those circumstances, it should be noted that the contested decision discloses the factors which the Commission took into account in considering the existence of an advantage. The recitals highlighted, notably in paragraphs 72 to 74 above, make it possible to understand that the advantage identified by the Commission consisted in the non-taxation of the excess profit of corporate beneficiaries, and in the taxation of their profit which was calculated on the basis of a hypothetical average profit that disregarded the total profit made by those companies and the adjustments provided for by law, in accordance with advance rulings under the scheme at issue. According to the Commission, such taxation represented a lowering of the tax burden of the beneficiaries of the scheme, in comparison with the burden that would have arisen from normal taxation, under the Belgian corporate income tax system, which would have covered all profits actually recorded, after applying the adjustments provided for by law.

(b)    The joint analysis by the Commission of the criteria of advantage and selectivity

76      At the outset, it should be borne in mind that selectivity and advantage are two separate criteria. So far as advantage is concerned, the Commission must show that the measure improves the financial situation of the recipient (see, to that effect, judgment of 2 July 1974, Italy v Commission, 173/73, EU:C:1974:71, paragraph 15). However, so far as selectivity is concerned, the Commission must show that the advantage does not benefit other undertakings that are in a factual and legal situation comparable to that of the recipient in the light of the objective of the reference system (see, to that effect, judgment of 8 September 2011, Paint Graphos and Others, C‑78/08 to C‑80/08, EU:C:2011:550, paragraph 49).

77      In that regard, according to the case-law, the requirement as to selectivity under Article 107(1) TFEU must be clearly distinguished from the concomitant detection of an economic advantage, in that, where the Commission has identified an advantage, understood in a broad sense, as arising directly or indirectly from a particular measure, it is also required to establish that that advantage specifically benefits one or more undertakings (judgment of 4 June 2015, Commission v MOL, C‑15/14 P, EU:C:2015:362, paragraph 59).

78      It must however be stated that, according to the case-law of the Court of Justice, those two criteria may be examined together as a ‘third condition’ laid down by Article 107(1) TFEU, requiring there to be a ‘selective advantage’ (see, to that effect, judgment of 30 June 2016, Belgium v Commission, C‑270/15 P, EU:C:2016:489, paragraph 32).

79      In the contested decision, the Commission’s reasoning with regard to the advantage is set out in its analysis of the existence of a selective advantage, that is, in Section 6.3, entitled ‘Existence of a selective advantage’. In that context, as has just been noted in paragraphs 72 to 74 above, the Commission did in fact examine the criterion of advantage. Next, the actual analysis of the selectivity of that advantage is set out in recitals 136 to 141 of the contested decision, under Section 6.3.2.1, so far as concerns the reasoning as to selectivity put forward by the Commission as part of its principal case, based on the existence of a derogation from the general Belgian corporate income tax system. Moreover, selectivity is also analysed in recitals 152 to 170 of the contested decision, under Section 6.3.2.2, so far as concerns the Commission’s subsidiary line of reasoning as to selectivity, based on the existence of a derogation from the arm’s length principle.

80      Accordingly, the fact that, in terms of form, the analysis of advantage was included in a section that also covers the examination of selectivity does not reveal a failure to carry out a substantive examination of both concepts, in so far as the existence of an advantage, on the one hand, and the existence of its selective nature, on the other, are in fact assessed (see, to that effect, judgment of 24 September 2019, Netherlands and Others v Commission, T‑760/15 and T‑636/16, EU:T:2019:669, paragraph 129).

(c)    The existence of an advantage favouring the beneficiaries of the scheme at issue

81      It should be noted that, according to settled case-law, measures which, whatever their form, are likely directly or indirectly to favour certain undertakings or which fall to be regarded as an economic advantage that the recipient undertaking would not have obtained under normal market conditions are regarded as State aid (see judgment of 2 September 2010, Commission v Deutsche Post, C‑399/08 P, EU:C:2010:481, paragraph 40 and the case-law cited; judgment of 9 October 2014, Ministerio de Defensa and Navantia, C‑522/13, EU:C:2014:2262, paragraph 21).

82      In the case of tax measures, the very existence of an advantage may be established only when compared with ‘normal’ taxation (judgment of 6 September 2006, Portugal v Commission, C‑88/03, EU:C:2006:511, paragraph 56). Therefore, such measures confer an economic advantage on their recipients if the measures mitigate the burdens normally included in the budget of an undertaking and, accordingly, without being subsidies in the strict meaning of the word, are similar in character and have the same effect (judgment of 9 October 2014, Ministerio de Defensa and Navantia, C‑522/13, EU:C:2014:2262, paragraph 22).

83      Consequently, in order to determine whether there is a tax advantage, the position of the recipient as a result of the application of the measure at issue must be compared with the recipient’s position in the absence of that measure, and under the normal rules of taxation (see judgment of 24 September 2019, Netherlands and Others v Commission, T‑760/15 and T‑636/16, EU:T:2019:669, paragraph 147 and the case-law cited).

84      Furthermore, in the context of an aid scheme, the Commission need only demonstrate that the tax scheme at issue is such as to favour its beneficiaries, by ascertaining that the scheme, taken as a whole, is, given its particular characteristics, capable of resulting, at the time of its adoption, in the tax liability being lower than it would have been if the general tax regime had been applied (see judgment of 2 February 2023, Spain and Others v Commission, C‑649/20 P, C‑658/20 P and C‑662/20 P, EU:C:2023:60, paragraph 63 and the case-law cited).

85      In the present case, as indicated in paragraphs 72 to 75 above, the Commission noted in recitals 125 to 127 and 133 to 135 of the contested decision that, following the advance rulings issued under the scheme at issue, the Belgian entities that were part of a multinational group and that had requested it had been able to reduce their corporate tax liability in Belgium, by deducting from their tax base a percentage of their profit, as ‘excess’ profit, for the five years of the advance rulings’ validity.

86      First of all, it is not disputed that the scheme at issue was designed as a system which consisted in the non-taxation of part of the profit recorded by Belgian entities that were part of a multinational group. Also undisputed is the fact that, under Article 2 of the Law of 21 June 2004, it is only through an advance ruling issued by the Advance Ruling Commission in response to a request made by the Belgian entities concerned that part of the profit of those entities could be classified as excess profit under Article 185(2)(b) of the CIR 92 and that the exemption percentage in question could be applied to the tax base of those entities, so that only part of that tax base was taxed.

87      Next, it should be recalled that it is apparent from Article 185(1) of the CIR 92 that resident companies in Belgium are to be taxed on the total amount of profit. Furthermore, it is apparent from Article 24 of the CIR 92, set out in recital 122 of the contested decision, that the starting point for the taxable profit of undertakings is all the profit realised or registered in the accounts.

88      Lastly, as indicated in paragraphs 55 to 61 above, it is apparent from Article 185(2)(b) of the CIR 92 that the tax base can be adjusted downwards where the profit of the company in question is already included in the profit of another company of the same group and it is profit which should have been made by that other company if the conditions agreed between them had been those which would have been agreed between independent companies.

89      Consequently, under the normal rules of taxation in Belgium, Belgian entities were taxed on all of their profit, as registered in their accounts, subject to any adjustments, such as that provided for in Article 185(2)(b) of the CIR 92. However, in so far as the scheme at issue consisted in an exemption of ‘excess’ profit for which, as noted in paragraph 66 above, no provision was made in Article 185(2)(b) of the CIR 92, that scheme was capable of resulting in a reduction of the tax which the entities that requested those rulings would otherwise have had to pay, pursuant to the rules on corporate income tax in Belgium.

90      In the circumstances, the Commission cannot be criticised for having found that the tax scheme at issue was such as to favour its beneficiaries, in so far as that scheme, taken as a whole and given its particular characteristics, was capable of resulting in the tax liability being lower than it would have been if the normal rules of corporate taxation in Belgium had been applied.

91      It follows that the applicant’s arguments, alleging failure to examine the advantage granted by the scheme at issue or confusion between the criteria of selectivity and advantage, must be rejected.

(d)    The finding of a derogation from the reference system

92      Challenging the Commission’s finding that there is a derogation from the reference system, in its primary line of reasoning, the applicant submits, in the first place, that Article 185(2)(b) of the CIR 92 does not constitute a derogation from the general Belgian corporate income tax system in favour of resident entities of a multinational group as compared to other entities situated in Belgium which are factually and legally comparable.

93      It argues, in the second place, that the Commission has not shown that that derogation resulted in its beneficiaries being treated differently from other undertakings in a comparable situation.

94      Thus, first, the applicant submits that undertakings belonging to multinational groups are in a different legal and factual situation from that of national entities. Similarly, the risk of upward adjustment incurred by undertakings belonging to multinational groups under Article 185(2)(a) of the CIR 92 is not a risk to purely national undertakings. Moreover, the difference in treatment is justified by group synergies and economies of scale that occur more often in larger structures, such as undertakings belonging to multinational groups.

95      Secondly, it submits that the existence of new substantial investments, the creation of employment or the relocation of activities to Belgium were not necessary key elements for the deduction of excess profits. Although it may have been necessary to invoke a ‘new situation’ to obtain an advance ruling under the scheme at issue, that new situation did not necessarily require additional investments, additional workforce or a relocation of activities to Belgium. The requirement of an advance ruling was intended to ensure that the Advance Ruling Commission would check carefully, on a case-by-case basis, that taxpayers had actually made excess profits. That is, moreover, a normal feature of advance ruling systems, which also exist outside Belgium, guaranteeing legal certainty for an applicant considering introducing operations or changing its structure. In any event, the fact that a tax rule applies only to situations arising after its entry into force is not sufficient for that rule to be classified as selective.

96      Thirdly, it complains that the Commission erred in concluding, in its allegedly flawed examination of a sample of individual advance rulings, that the possibility of deducting excess profit was reserved to undertakings of a certain size. That condition is not apparent from the applicable provisions. Moreover, the alleged absence of a small or medium-sized undertaking among the undertakings belonging to a multinational group that benefited from an advance ruling is not sufficient to establish that the undertakings had to satisfy a size condition in order to obtain an advance ruling.

97      The Commission contends that the applicant’s arguments should be rejected.

98      In that regard, it must be noted that, according to the case-law, in examining the selectivity of a tax measure, after first identifying and examining the common or ‘normal’ tax regime applicable in the Member State concerned, that is to say, the reference system, it is necessary, secondly, to assess and determine whether any advantage granted by the tax measure at issue may be selective by demonstrating that the measure derogates from that common regime inasmuch as it differentiates between economic operators who, in the light of the objective assigned to the tax system of the Member State concerned, are in a comparable factual and legal situation (see judgment of 8 September 2011, Paint Graphos and Others, C‑78/08 to C‑80/08, EU:C:2011:550, paragraph 49 and the case-law cited).

99      In the contested decision (Section 6.3.2.1), the Commission found, principally, that the Belgian excess profit exemption scheme conferred a selective advantage on its beneficiaries by derogating from the general Belgian corporate income tax system, in so far as that system provided for companies to be taxed on their total profit, that is, their profit actually recorded, not on a hypothetical average profit that disregarded the total profit made by those companies and the adjustments provided for by law.

100    Thus, the Commission concluded, in recital 136 of the contested decision, that Article 185(2)(b) of the CIR 92, on which the Kingdom of Belgium relied as the basis for the scheme at issue, did not have the meaning or effect suggested by that scheme and accordingly that that scheme constituted, rather, a derogation from the general rule under Belgian tax law according to which profit actually recorded is taxed. The Commission also pointed out that that scheme was not available to all entities in a similar legal and factual situation in the light of the objective of the Belgian corporate income tax system, which was to tax the profits of all companies subject to tax in Belgium.

101    The Commission then went on, in recitals 137 to 141 of the contested decision, to develop its reasons for considering that the scheme at issue differentiated between operators who, in the light of the objective assigned to the Belgian tax system, were in a comparable legal and factual situation.

(1)    Whether there is a derogation from the reference system

102    It should be recalled at the outset that what the Commission regarded as not forming part of the reference system and thus as derogating from it was the excess profit scheme, that is to say, the downward adjustment, as applied by the Belgian tax authorities to a certain part of the taxable profit, referred to as the ‘excess’.

103    However, as indicated in paragraphs 56 and 57 above, in the light of the wording of Article 185(2)(b) of the CIR 92, the downward adjustment of the taxable profit is conditional on the profit of a given company that is to be deducted having already been included in the profit of another company, and that profit being profit which should have been made by that other company if the conditions agreed between them had been those which would have been agreed between independent companies. By contrast, the Belgian tax authorities’ practice of making a unilateral downward adjustment without the need to establish that the profit that is to be adjusted has already been included in the profit of another company and that it is profit which would have been made by that other company if the relevant transactions had been between independent companies is not provided for in Article 185(2)(b) of the CIR 92.

104    In fact, as the Court of Justice confirmed in the judgment on appeal, even though the tax rulings formally invoked Article 185(2)(b) of the CIR 92, the excess profit exemption scheme, which the Commission classified as a State aid scheme, was based on the Belgian tax authorities’ consistent administrative practice. As has just been established in paragraph 103 above, that practice differed from what was provided for in Article 185(2)(b) of the CIR 92.

105    Accordingly, the Commission was right to find that the excess profit exemption, as applied by the Belgian tax authorities, constituted a derogation from the reference system accepted by the Commission, that is to say, the ordinary Belgian corporate income tax system, which included, in particular, Article 185(2)(b) of the CIR 92, as has been noted in paragraph 53 above.

(2)    Whether there is differentiation, as a result of the derogation from the reference system, between economic operators who are in a comparable situation

106    As regards the Commission’s finding that the scheme at issue differentiates between the beneficiaries of the exemptions and other operators who are in a comparable situation, it should be noted that, in recitals 138 to 140 of the contested decision, the Commission put forward three alternative grounds for its conclusion. It is appropriate to examine each of these in turn, for the sake of completeness.

(i)    Different treatment of beneficiaries forming part of a multinational group of undertakings

107    In recital 138 of the contested decision, the Commission asserted that the scheme was selective because it was only open to entities that were part of a multinational group of undertakings.

108    It is true that Article 185(2)(b) of the CIR 92 is intended to apply to integrated multinational group companies. However, as the applicant argues, the purpose of Article 185(2) of the CIR 92 is precisely to put associated and unrelated undertakings on an equal footing.

109    In that regard, as stated in paragraph 64 above, it must be recalled that the objective of the ordinary Belgian corporate income tax system, as is apparent from recital 129 of the contested decision, is the taxation of all the taxable profits of entities subject to Belgian corporate income tax, whether they are standalone entities or form part of a multinational group of undertakings. In addition, as stated in paragraph 87 above, according to the normal rules of taxation in Belgium, the starting point for the taxable profit of undertakings is all the profit realised or registered in their accounts.

110    By contrast, the excess profit exemption applied by the Belgian tax authorities, in so far as it derogates from Article 185(2) of the CIR 92, granted a tax reduction to the beneficiaries concerned, on the ground that they were part of a multinational group of undertakings, by allowing them to deduct part of their recorded profit from their tax base, without that exempted profit having been included in the profit of another group company.

111    Therefore, entities forming part of a multinational group which benefited under the scheme at issue from an excess profit exemption, in the form of an exemption percentage calculated on the basis of a hypothetical average profit that disregarded the total profit made by those companies and the adjustments provided for by law, would be treated differently from other entities, whether standalone or forming part of a group of undertakings, which would have been taxed in accordance with the normal Belgian rules of corporate income tax on their total profit actually recorded, where appropriate, in the case of integrated entities, after adjustment pursuant to Article 185(2)(b) of the CIR 92, under the conditions laid down in that provision.

112    Accordingly, the Commission cannot be criticised for having stated that the entities forming part of a multinational group which benefited from the excess profit exemption pursuant to the scheme at issue, as an adjustment which is not as such provided for by law, were treated differently from other entities in Belgium that did not benefit from it, although those entities were in a comparable factual and legal situation, in the light of the objective of the ordinary Belgian corporate income tax system, which is the taxation of all taxable profits of all companies resident or operating through a permanent establishment in Belgium.

113    Furthermore, the applicant’s argument that the national taxation of an undertaking differs from its cross-border taxation is ineffective, since, in the present case, the Commission based its examination solely on the national taxation of the Belgian undertakings in question. In that regard, it must be borne in mind that the Commission based its analysis on the objective of the Belgian tax system, which was to determine the tax base of entities established in its territory on the basis of the profits shown in their accounts. However, the possibility of reducing the tax base which follows from the scheme at issue was not available to standalone entities, irrespective of any cross-border taxation to which those entities may have been subject.

114    In addition, it should be borne in mind that, as stated in paragraph 64 above, the excess profit exemption as applied by the Belgian tax authorities does not relate to the taxation of profits from intra-group transactions recorded in Belgium by a Belgian company that is part of a multinational group of undertakings; rather, it consists in the taxation of that Belgian company on the basis of a hypothetical profit, disconnected from intra-group transactions actually carried out. In so far as such an exemption improves the net financial position of the beneficiary compared with other competing undertakings established in Belgium, such as standalone undertakings or companies forming part of a national group, which are taxed not on hypothetical profit, but on their actual profit, the Commission was right to consider that it gave rise to differentiation between operators in a comparable situation.

115    For the same reasons, the applicant’s argument based on paragraph 148 of the judgment of 24 September 2019, Netherlands and Others v Commission (T‑760/15 and T‑636/16, EU:T:2019:669), must also be rejected, since it relates to measures and an analysis by the Commission that are entirely different from those at issue in the present case.

(ii) Different treatment in comparison with undertakings that have not made investments, created employment or centralised activities in Belgium

116    In recital 139 of the contested decision, the Commission stated that the scheme at issue was selective in so far as it was not open to companies that may have decided not to make investments, create employment or centralise activities in Belgium. The Commission noted that Article 20 of the Law of 24 December 2002 made the adoption of advance rulings conditional on the existence of a situation or of a transaction that had not had tax consequences and that an advance ruling was necessary in order to benefit from the excess profit exemption.

117    The Commission also noted that, in the sample of advance rulings granting an excess profit exemption that it had analysed, each ruling contained references to substantial investments, centralisation of activities or the creation of employment in Belgium. Accordingly, it found that the ‘new situation’ requirement that was a prerequisite for requests for advance rulings by which requesting parties sought to benefit from the excess profit exemption resulted in multinational groups that amended their business model by establishing new operations in Belgium being treated differently from any other economic operators, including multinational groups, that continued to operate under their existing business models in Belgium.

118    In that regard, it should be recalled that, in paragraphs 142 to 144 of the judgment on appeal, the Court of Justice confirmed that the choice of a sample consisting of 22 advance rulings, issued in 2005, 2007, 2010 and 2013, was appropriate and sufficiently representative.

119    It should also be noted that Article 20 of the Law of 24 December 2002 defines an ‘advance ruling’ as the legal act by which the Federal Public Service for Finance determines, in accordance with the applicable provisions, how the law will apply to a particular situation or transaction that has not yet had tax consequences. Moreover, Article 22 of that law makes clear that an advance ruling cannot be issued, in particular, when the request concerns situations or transactions identical to those having already had tax consequences as regards the requesting party.

120    Admittedly, it cannot be inferred from the provisions referred to in paragraph 119 above that the making of investments, creation of employment or centralisation of activities in Belgium is explicitly required as a condition for obtaining an advance ruling.

121    However, it is apparent from the sample of advance rulings analysed by the Commission in the contested decision that those rulings were in fact granted following requesting parties’ proposals to invest, to relocate certain operations or to create a certain number of jobs in Belgium. Indeed, the three examples described in footnote 80 to the contested decision, in which the parties requesting the advance rulings in question described their plans for investment and for recentralisation of activities in Belgium, show that, in practice, the condition for the issue of an advance ruling, that there should be a situation that had not had tax consequences, was satisfied by investments, by the centralisation of activities or by the creation of employment in Belgium.

122    In that regard, it should be borne in mind that, in the present case, it is precisely the administrative practice of the Belgian tax authorities – consisting in exempting profits by advance rulings – that has been considered to derogate from what is provided for in Article 185(2)(b) of the CIR 92. As a result of those advance rulings, their beneficiaries obtained an advantage consisting in a reduction in their tax base, because of the exemption of ‘excess’ profit. By contrast, entities that did not amend their business model in order to create new tax situations – which, in the light of that practice, consisted systematically in investments, centralisation of activities or creation of employment in Belgium – and therefore did not request an advance ruling were taxed on all of their taxable profits. Consequently, the scheme at issue resulted in companies that were in a comparable factual and legal situation being treated differently, in the light of the objective of the ordinary Belgian corporate income tax system.

123    In those circumstances, the Commission cannot be criticised for having stated, in recital 139 of the contested decision, that the system at issue was selective because it was not open to companies that had decided not to make investments, centralise activities or create employment in Belgium.

(iii) Different treatment in comparison with undertakings that are part of a small group

124    In the present case, the Commission stated, in recital 140 of the contested decision, that the scheme at issue was selective since only Belgian entities forming part of a large or medium-sized multinational group could effectively benefit from the excess profit exemption.

125    Indeed, in recital 140 of the contested decision, the Commission indicated that only entities belonging to a sufficiently large multinational group had an incentive to obtain an advance ruling, given that it was only within large corporate groups that synergies, economies of scale and other benefits were likely to generate a significant profit that would justify the request for an advance ruling. The Commission also noted that the process for obtaining such a ruling required a detailed request presenting the new situation that justified the exemption together with excess profit studies, which was more cumbersome for small corporate groups than for large corporate groups.

126    In that regard, it is not disputed that, within the sample of 22 advance rulings under the scheme at issue that was reviewed by the Commission, as described in recital 65 of the contested decision, and which was considered appropriate and representative in paragraphs 142 to 144 of the judgment on appeal, none of those rulings concerned entities belonging to small groups of undertakings.

127    Furthermore, as indicated in recital 66 of the contested decision, it is undisputed that, during the administrative procedure, following that finding by the Commission on the basis of the sample of 22 advance rulings and in response to a request by the Commission to that effect, the Kingdom of Belgium was unable to substantiate its claim that the exemption had also been granted to undertakings belonging to small corporate groups.

128    Consequently, in the light of the administrative practice referred to by the Commission, it is undertakings forming part of large and medium-sized groups that relied on the excess profit exemption scheme, to the exclusion of undertakings forming part of a small corporate group.

129    In those circumstances, the Commission cannot be criticised for having stated, in recital 140 of the contested decision, that the system at issue was selective because it was not open to undertakings that were part of a small corporate group.

130    In any event, even if the Commission had erred in relying on that ground relating to different treatment in comparison with undertakings forming part of a small group, that would not affect the validity of the other two grounds put forward by the Commission, which have been examined, respectively, in paragraphs 107 to 115 and 116 to 123 above.

(3)    Conclusion on the existence of a prima facie selective advantage, identified by the Commission in its primary line of reasoning

131    In the light of the above, the Commission did not err in stating, after setting out its primary line of reasoning, that the excess profit exemption scheme derogated from the ordinary Belgian corporate income tax system. Moreover, the Commission did not err when it pointed out that that scheme was not available to all entities in a similar legal and factual situation in the light of the objective of the Belgian corporate income tax system, which was to tax the profits of all companies subject to tax in Belgium.

132    In those circumstances, it is not necessary to examine the merits of the applicant’s arguments put forward in the context of the second part of the fifth plea in law against the subsidiary line of reasoning with regard to selectivity which the Commission set out in Section 6.3.2.2 of the contested decision.

133    Accordingly, the second part of the fifth plea in law must be rejected in its entirety, in so far as the Commission has sufficiently demonstrated the reasons why the scheme at issue was selective in its primary line of reasoning.

(e)    The characteristic elements of the scheme at issue that are purportedly not applicable in the applicant’s case

134    The applicant claims that several elements regarded by the Commission as forming part of the scheme at issue are not applicable to it. Thus, first of all, the Commission’s criticisms of the method used to calculate the excess profit by the Belgian authorities under the scheme at issue only partly concern the applicant.

135    Next, the applicant submits that it did not benefit from an advantage, in so far as the part of the group’s profit that was not taxed by the Kingdom of Belgium under Article 185(2)(b) of the CIR 92 was taxed by the United States of America.

136    Lastly, the applicant claims that there is a contradiction between the Commission’s refusal to take account of the effects produced at group level by synergies and economies of scale and the conclusion as to the beneficiaries of the aid in question, which are the corporate groups as a whole. According to recital 203 of the contested decision, the existence of aid depends on a potential corresponding adjustment in another country. However, the group to which the applicant belongs did not receive any advantage for the purposes of Article 107(1) TFEU.

137    In any event, the Commission failed to analyse, in the contested decision, the concrete underpinning of each individual excess profit advance ruling and to demonstrate the existence of an advantage in each case where Article 185(2)(b) of the CIR 92 was applied by the Advance Ruling Commission.

138    The Commission contends that the applicant’s arguments should be rejected.

139    At the outset, it must be noted that, in the context of a decision concerning an aid scheme, the Commission is not required to carry out an analysis of the aid granted in individual cases under the scheme. It is only at the stage of recovery of the aid that it is necessary to look at the individual situation of each undertaking concerned (see judgment of 9 June 2011, Comitato ‘Venezia vuole vivere’ and Others v Commission, C‑71/09 P, C‑73/09 P and C‑76/09 P, EU:C:2011:368, paragraph 63 and the case-law cited). Accordingly, the applicant’s argument that the Commission did not sufficiently prove the advantage for each beneficiary concerned and for itself in particular cannot succeed.

140    It follows that, first, the method chosen by the applicant in the present case in order to determine its taxable profit is irrelevant to the conclusions as to the economic advantage granted by the scheme at issue to its beneficiaries. In that regard, it should be recalled that the Court of Justice held in the judgment on appeal that recital 102 of the contested decision explained that the amount exempt under the excess profit exemption systematically corresponded to the difference between the profit actually recorded by the beneficiary and a hypothetical profit generated if the beneficiary had operated independently of the group, irrespective of the method used to lead to that finding (the judgment on appeal, paragraph 151). Furthermore, as the Commission submits, relying on paragraph 125 of the judgment of 6 April 2022, Mead Johnson Nutrition (Asia Pacific) and Others v Commission (T‑508/19, EU:T:2022:217), it was entitled to rely on the description given by the Kingdom of Belgium of the manner in which the exempted excess profit had been determined for beneficiaries of the scheme at issue.

141    Secondly, the concept of advantage granted to the beneficiaries of aid for the purposes of Article 107(1) TFEU is to be determined by comparison with other undertakings of the same State and not with undertakings of other Member States (judgments of 11 November 2004, Spain v Commission, C‑73/03, not published, EU:C:2004:711, paragraph 28, and of 25 March 2015, Belgium v Commission, T‑538/11, EU:T:2015:188, paragraph 124), or indeed third countries. It is therefore appropriate to reject the applicant’s argument in the present case based on the Commission’s alleged error in having analysed only the taxation of companies in Belgium and not in the other States in which the multinational groups benefiting from the aid at issue were located.

142    Furthermore, the applicant’s claim that its Belgian profits exempted under the scheme at issue were taxed in a third country is irrelevant as regards the existence of a selective advantage deriving from that scheme. As is apparent from paragraph 63 above, the practice of the Belgian tax authorities consisted in granting the exemption at issue unilaterally, without verifying the correlative nature of the downward adjustment sought. Therefore, in the light of the case-law referred to in paragraph 139 above, the circumstances inherent in the applicant’s individual situation as regards its taxation in third countries cannot call into question the Commission’s conclusions regarding the economic advantage granted by the scheme at issue to its beneficiaries.

143    Thirdly, as regards the applicant’s argument that the contested decision is vitiated by an error in the identification of the beneficiaries, which were, in the present case, the multinational group as a whole and not the applicant itself, whereas the advantage had been examined only for the Belgian group entity, it must be noted that, in the present case, the Commission stated, in recital 183 of the contested decision, that the Belgian entities that had obtained an advance ruling enabling them to deduct profit considered to be excess profit, for the purpose of determining their taxable profit, were the beneficiaries of the State aid at issue.

144    In addition, in recital 184 of the contested decision, the Commission recalled that, in matters of State aid, separate legal entities could be considered to form one economic unit, which was capable of being considered to be the beneficiary of the aid. It thus found that, in the present case, the Belgian entities benefiting from the aid at issue had operated as central entrepreneurs for the benefit of other entities within their corporate groups which they often controlled. It also noted that the Belgian entities were, in turn, controlled by the entity managing the corporate group as a whole. The Commission thus inferred from this that the multinational group as a whole could be seen as the beneficiary of the aid measure.

145    Moreover, in recital 185 of the contested decision, the Commission stated that it would be the group as a whole, irrespective of the fact that it was organised in different legal entities, that would have taken the decision to centralise certain activities in Belgium and to make the necessary investments there in order to benefit from advance rulings.

146    Thus, in recital 186 of the contested decision, it concluded that, in addition to the Belgian entities that had been allowed to benefit from the scheme at issue, the multinational groups to which those entities belonged had to be considered beneficiaries of the aid scheme within the meaning of Article 107(1) TFEU.

147    First of all, it must be recalled that in a decision which concerns an aid scheme, the Commission is not required to carry out an analysis of the aid granted in individual cases under the scheme. It is only at the stage of recovery of the aid that it is necessary to look at the individual situation of each undertaking concerned (see, to that effect, judgments of 7 March 2002, Italy v Commission, C‑310/99, EU:C:2002:143, paragraphs 89 and 91; of 9 June 2011, Comitato ‘Venezia vuole vivere’ and Others v Commission, C‑71/09 P, C‑73/09 P and C‑76/09 P, EU:C:2011:368, paragraph 63; and of 13 June 2019, Copebi, C‑505/18, EU:C:2019:500, paragraphs 28 to 33).

148    In addition, according to established case-law, the Commission has a broad discretion when it is called upon to determine, in the context of the application of State aid provisions, whether, for the purposes of the application of those provisions in particular, separate legal entities form an economic unit (see, to that effect, judgments of 16 December 2010, AceaElectrabel Produzione v Commission, C‑480/09 P, EU:C:2010:787, paragraph 63, and of 25 June 1998, British Airways and Others v Commission, T‑371/94 and T‑394/94, EU:T:1998:140, paragraph 314).

149    Thus, it has been held that the Commission was entitled to consider, for the purpose of assessing the beneficiaries of State aid and the appropriate conclusions to be drawn from a decision ordering recovery of that aid, that there was an economic unit among a number of separate legal entities, in particular where they were linked by a relationship of control (see, to that effect, judgments of 14 November 1984, Intermills v Commission, 323/82, EU:C:1984:345, paragraph 11, and of 16 December 2010, AceaElectrabel Produzione v Commission, C‑480/09 P, EU:C:2010:787, paragraph 64).

150    In recitals 184 to 186 of the contested decision, the Commission highlighted the fact that, in the context of the scheme at issue, there were links of control between the Belgian entity and the other entities of the group to which they belonged. Thus, the Commission noted the fact that the Belgian entity performed core functions for other entities of the group, which were often controlled by that entity. Moreover, the Commission pointed out that the decisions within the multinational corporate groups regarding the structures that gave rise to the exemptions in question, namely the centralisation of activities in Belgium or investments made in Belgium, had been taken by entities within the group and were necessarily taken by those which controlled the group. Furthermore, it is apparent from the Kingdom of Belgium’s description of the excess profit scheme, as set out in particular in recital 14 of the contested decision, that the excess profit exempted was supposedly generated by synergies and economies of scale as a result of the Belgian entities’ membership of a multinational corporate group.

151    It follows that, in the contested decision, the Commission highlighted elements that supported its conclusion that there were, in principle, links of control within the multinational corporate groups to which the Belgian entities that had obtained advance rulings belonged. In view of those elements of the scheme at issue, it cannot be concluded that the Commission exceeded the limits of its discretion when it found that those groups constituted an economic unit with those entities, benefiting from State aid under that scheme, within the meaning of Article 107(1) TFEU.

152    In the light of the above considerations, the complaint alleging that the Commission made an error of assessment in identifying the advantage granted to beneficiaries of the scheme at issue must be rejected.

153    In those circumstances, it is necessary to reject all of the applicant’s arguments challenging the Commission’s finding, in its primary line of reasoning, relating to the existence of a selective advantage granted by the scheme at issue, in particular the arguments claiming that the applicant’s situation differs from the characteristic elements of the scheme at issue.

(f)    The application of the arm’s length principle under the scheme at issue

154    The applicant submits that any advantage resulting from the correct application of the arm’s length principle is not attributable to the Kingdom of Belgium; rather, it is simply the result of tax disparities between that State and the other countries in which the multinational groups concerned operate.

155    In addition, in the context of the seventh plea, the applicant alleges breach of the principle of equal treatment, in so far as the Commission recognises, in the context of its subsidiary line of reasoning, in recital 177 of the contested decision, the right of tax administrations to increase the tax base of undertakings engaging in intra-group transactions, while requiring, in recital 178, that undertakings show a concrete risk of double taxation in order to benefit from downward adjustments. Limiting the analysis of the advantage to the Belgian entity alone breaches the principle of equal treatment.

156    In that regard, it should be noted that it is only in the context of the analysis of the selectivity of the scheme at issue that the Commission examined, in the alternative, the extent to which that scheme derogated from the arm’s length principle. Those arguments are therefore irrelevant as regards the Commission’s examination of the existence of an advantage and its examination, as part of its principal case, of the selectivity of that advantage.

157    In those circumstances, it is necessary to reject the applicant’s arguments relating to the Commission’s subsidiary line of reasoning, including those alleging breach of the principle of equal treatment between integrated and standalone undertakings, raised in the context of the second part of the fifth plea, the second part of the sixth plea and the seventh plea.

3.      Whether there is any justification based on the nature and general scheme of the Belgian tax system

158    The applicant submits, in the alternative, that, if the deduction of excess profit provided for in Article 185(2)(b) of the CIR 92 constituted a derogation from the reference system, that derogation would have been justified by the aim of avoiding double taxation, which would have represented a burden for the undertakings and would have restricted their fundamental freedoms. In the contested decision, the Commission attempted to deprive the Member States of their tax jurisdiction and to carry out compulsory harmonisation in that area. In any event, the Kingdom of Belgium is not entitled to monitor whether taxpayers established in other countries have been taxed under the laws applicable in those countries.

159    The Commission contends that the applicant’s arguments should be rejected.

160    It should be noted that, in recitals 173 to 181 of the contested decision, the Commission concluded, in essence, that the Kingdom of Belgium had not been able to establish that the measures at issue were actually aimed at avoiding double taxation. According to the Commission, in so far as Article 185(2)(b) of the CIR 92 provided for a downward adjustment of a company’s profit if it had been included in the profit of another company, the exemption applied by the Belgian tax authorities, without it being necessary to prove that the excess profit to be exempted had been included in the tax base of another company, could not be justified by the general scheme of the system. Thus, the Commission concluded that the unilateral exemption at issue did not address situations of double taxation in a necessary and proportionate manner.

161    In that regard, it must be noted that, according to the case-law, a measure which constitutes an exception to the application of the general tax system may be justified if the Member State concerned can show that that measure results directly from the basic or guiding principles of its tax system. In that context, it is necessary to distinguish between, on the one hand, the objectives attributed to a particular tax regime and which are extrinsic to it and, on the other, the mechanisms inherent in the tax system itself which are necessary for the achievement of such objectives. Thus, tax exemptions which are the result of an objective that is unrelated to the tax system of which they form part cannot circumvent the requirements under Article 107(1) TFEU (see, to that effect, judgment of 8 September 2011, Paint Graphos and Others, C‑78/08 to C‑80/08, EU:C:2011:550, paragraphs 64, 65, 69 and 70).

162    In the present case, it has been determined, notably in paragraph 103 above, that the excess profit exemption applied by the Belgian tax authorities was not conditional on it being demonstrated that that profit had been included in the profit of another company. Nor was that excess profit required actually to have been taxed in another State. Accordingly, it must be held that the measures at issue were not conditional on there being a situation of actual or possible double taxation.

163    In those circumstances, it cannot be maintained that the excess profit exemption, as applied by the Belgian tax authorities, was intended to avoid either actual or possible double taxation. Therefore, the Commission was right to conclude that such an exemption did not address situations of double taxation in a necessary and proportionate manner.

164    That conclusion cannot be called into question by the applicant’s arguments to the effect that the general scheme of the Belgian tax system allows only profits falling within the jurisdiction of the Kingdom of Belgium to be taxed. As has been established in paragraphs 102 to 105 above, the Belgian tax authorities’ exemption of excess profit was not provided for by the ordinary Belgian corporate income tax system. Consequently, notwithstanding its exemption under the scheme at issue, that profit was, fundamentally, taxable in Belgium under that system, and it cannot therefore be considered not to fall within the tax jurisdiction of the Kingdom of Belgium.

165    As regards the applicant’s argument that the contested decision interferes with Belgium’s tax jurisdiction and establishes a compulsory harmonisation of tax rules, it must be held that, in essence, that argument refers to the first plea in law and must therefore be rejected.

166    In the light of the above, it is necessary to reject the fifth, sixth and seventh pleas, alleging, respectively, that the scheme at issue is not selective, that the contested decision failed to examine the existence of an advantage and that the contested decision breached the principle of equal treatment, in that that decision did not allow the particular features of the taxation of integrated undertakings to be taken into account.

D.      The Commission’s interference in the method of recovery of the aid

167    By its tenth plea, the applicant alleges infringement of Article 107 TFEU and of Article 16 of Regulation 2015/1589 by recitals 208 to 211 of the contested decision, which set out the method of recovery of the aid. If those recitals were to be interpreted as not allowing the beneficiaries concerned to request, unless expressly authorised by the Commission, a reduction in the taxable basis which they would have been able to claim during the period covered by an advance ruling, the contested decision would prevent any adaptation to the actual factual and legal situation of the beneficiary in question.

168    The Commission contends that the applicant’s arguments should be rejected.

169    Under Article 16 of Regulation 2015/1589, where the Commission finds that there is State aid that is incompatible with the internal market and unlawful, it is to decide that the Member State concerned is to take all necessary measures to recover the aid from the beneficiary, unless this would be contrary to a general principle of EU law.

170    As is apparent from paragraph 139 above, in a decision concerning aid schemes, the Commission is not required to carry out an analysis of the aid granted in individual cases under the scheme. It is only at the stage of recovery of the aid that it is necessary for the Member States to look at the individual situation of each undertaking concerned. However, the Commission’s decision must be supported by sufficient grounds to permit its implementation by the national authorities. The verification to be carried out by the national authorities of the individual situation of each beneficiary concerned must be carried out sufficiently within the framework of the Commission decision concerning an aid scheme which is accompanied by a recovery order (judgment of 9 June 2011, Comitato ‘Venezia vuole vivere’ and Others v Commission, C‑71/09 P, C‑73/09 P and C‑76/09 P, EU:C:2011:368, paragraphs 28 to 33 and 120).

171    In the present case, as stated in paragraph 143 above, it should be noted that, in recital 183 of the contested decision, the Commission identified the beneficiaries of the aid at issue as being the Belgian entities that had deducted excess profit from their taxable profit pursuant to an advance ruling. In addition, as stated in paragraphs 144 to 146 above, in recitals 184 to 186 of the contested decision, the Commission indicated the reasons for its conclusion that there was an economic unit that was formed by those Belgian entities and the associated companies within the groups to which they belonged, in the light of the case-law.

172    Moreover, as regards the amounts to be recovered, it must be noted that, in recitals 207 to 211 of the contested decision, the Commission provided explanations as to the method of calculating the aid to be recovered. Thus, the Commission indicated that it was necessary to calculate the amount of the tax which should have been paid if the excess profit exemption had not been granted, taking into account the amount of tax saved as a consequence of all advance rulings delivered to the beneficiary concerned and the cumulated interest on that amount calculated as from the moment the aid was granted, that is to say, the date on which the tax saved would have been due in each tax year in the absence of the advance ruling. In addition, information was included on making the adjustments corresponding to the various deductions applicable. Lastly, it was noted that the amount to be recovered could be further refined subsequently in correspondence between the Kingdom of Belgium and the Commission.

173    It follows that the Commission provided explanations enabling the Kingdom of Belgium to look at the individual situation of each undertaking concerned as regards the beneficiaries from which the aid was to be recovered and the amount to be recovered. In addition, in the light of the complaints put forward in the context of the present action and the above considerations, it must be held that the Commission has provided sufficient explanations to enable the Kingdom of Belgium to ascertain the reasons for the Commission’s decision and the General Court to exercise its power of review.

174    Accordingly, the applicant’s claims in the context of the tenth plea in law must be rejected, in so far as the contested decision does not reject the possibility of adjusting the determination of the amount to be recovered to the individual situation of the beneficiary concerned.

175    Therefore, the tenth plea in law must be rejected.

E.      Infringement of the applicant’s right to be heard

176    In its second plea, the applicant alleges infringement of its right to be heard in the administrative procedure which led to the adoption of the contested decision. In essence, the applicant claims that it was unable to submit its observations on the findings of the contested decision relating to the origin, scope and content of the arm’s length principle, as interpreted by the Commission.

177    The Commission contends that the applicant’s arguments should be rejected.

178    As a preliminary point, it should be noted that, in the procedure for reviewing State aid, the applicant, as beneficiary of the aid, cannot rely on actual rights of defence and, in particular, the right to be heard. According to settled case-law, the administrative procedure relating to aid is initiated only against the Member State concerned, since the recipient of the aid is considered only to be an interested party in that procedure, for the purposes of Article 108(2) TFEU and Article 6(1) and Article 24(1) of Regulation 2015/1589 (see judgment of 13 March 2018, Alouminion tis Ellados v Commission, T‑542/11 RENV, not published, EU:T:2018:132, paragraph 189 and the case-law cited; judgment of 19 October 2022, Sogia Ellas v Commission, T‑347/20, not published, EU:T:2022:639, paragraph 100). Thus, the parties concerned have only the right to be involved in the administrative procedure to the extent appropriate in the light of the circumstances of the case (judgment of 16 March 2016, Frucona Košice v Commission, T‑103/14, EU:T:2016:152, paragraph 53 and the case-law cited).

179    In that regard, it must be borne in mind that, in the context of an examination under Article 108(2) TFEU, the Commission is required to give notice to the parties concerned to submit their comments (see judgment of 8 May 2008, Ferriere Nord v Commission, C‑49/05 P, not published, EU:C:2008:259, paragraph 68 and the case-law cited). With regard to that obligation, the Court of Justice has ruled that the publication of a notice in the Official Journal of the European Union is an appropriate means of informing all the parties concerned that a formal investigation procedure has been initiated (judgment of 14 November 1984, Intermills v Commission, 323/82, EU:C:1984:345, paragraph 17), while also pointing out that the sole aim of that communication is to obtain from persons concerned all information required for the guidance of the Commission with regard to its future action (see judgment of 16 March 2016, Frucona Košice v Commission, T‑103/14, EU:T:2016:152, paragraph 56 and the case-law cited).

180    Furthermore, it is also apparent from the case-law that, when the Commission decides to initiate the formal investigation procedure, it is permissible for that decision merely to summarise the relevant issues of fact and law, include a preliminary assessment as to the aid character of the State measure in question and set out its doubts as to the measure’s compatibility with the internal market (see, to that effect, judgment of 23 October 2002, Diputación Foral de Guipúzcoa and Others v Commission, T‑269/99, T‑271/99 and T‑272/99, EU:T:2002:258, paragraph 104).

181    Therefore, in the procedure for reviewing State aid, interested parties other than the Member State and the recipients of the aid concerned cannot themselves seek to engage in an exchange of arguments with the Commission, such as that initiated in favour of that State, or, in general, in communication of documents exchanged between the Commission and the Member State concerned during the investigation procedure, since no provision of the procedure for reviewing State aid reserves a special role, among the interested parties, to the recipient of the aid (see judgment of 19 October 2022, Sogia Ellas v Commission, T‑347/20, not published, EU:T:2022:639, paragraph 104 and the case-law cited).

182    In that context, it should be noted in particular that, in the context of the formal investigation procedure, it is for the Member State and the potential beneficiary of the measure which is the subject of that procedure to inform the Commission of all the facts of the case (see, to that effect, judgments of 18 November 2004, Ferriere Nord v Commission, T‑176/01, EU:T:2004:336, paragraph 93, and of 6 April 2022, Mead Johnson Nutrition (Asia Pacific) and Others v Commission, T‑508/19, EU:T:2022:217, paragraph 125).

183    In the present case, it follows from the case-law cited in paragraphs 179 to 183 above that the applicant cannot claim that the Commission was required to hear it in the context of the administrative procedure relating to State aid that was initiated against the Kingdom of Belgium. The Commission was under no obligation to do so.

184    Moreover, it must be noted that the Commission published in the Official Journal of the European Union of 5 June 2015 the decision to initiate a formal investigation procedure on account of the measures at issue, in which it set out the essential elements on which its decision to initiate such a procedure had been based, and that the applicant did not react following that publication. The applicant itself admits that it had decided not to submit observations during the procedure before the Commission, since it was convinced that the advance ruling that it had obtained in accordance with Article 185(2) of the CIR 92 would be deemed to comply with the Organisation for Economic Co-operation and Development (OECD) principles.

185    Therefore, the Commission cannot be criticised for not having heard the applicant in the administrative procedure preceding the adoption of the contested decision. Moreover, undertakings to which aid has been granted may not, in principle, entertain a legitimate expectation that the aid is lawful unless it has been granted in compliance with the procedure laid down in Article 108 TFEU and a diligent economic operator should normally be able to determine whether that procedure has been followed. In particular, where aid is implemented without prior notification to the Commission, with the result that it is unlawful under Article 108(3) TFEU, the recipient of the aid cannot have at that time a legitimate expectation that its grant is lawful (see, to that effect, judgment of 27 September 2012, Producteurs de légumes de France v Commission, T‑328/09, not published, EU:T:2012:498, paragraph 21 and the case-law cited), save in exceptional circumstances (judgment of 30 November 2009, France and France Télécom v Commission, T‑427/04 and T‑17/05, EU:T:2009:474, paragraph 263).

186    In those circumstances, the applicant’s second plea must be rejected.

F.      Breach of the obligation to state reasons for the contested decision

187    In the fourth plea in law, the applicant submits that the statement of reasons for the contested decision does not make it possible, first, to establish the existence of a selective advantage attributable to the Kingdom of Belgium, secondly, to explain why the principles of equal treatment and legal certainty should not be affected and, thirdly, to understand the reasons why recovery of the aid in question must be ordered.

188    The Commission contends that the applicant’s arguments should be rejected.

189    First, as regards the applicant’s claim that there was a failure to state reasons in the contested decision regarding the existence of a selective advantage attributable to the Kingdom of Belgium, it follows from the answers given to the fifth and sixth pleas in law that the Commission gave sufficient reasons for its conclusions in that regard.

190    Secondly, as regards the adequate statement of reasons relating to the protection of the principles of equal treatment and legal certainty, it must be understood from the applicant’s reference to the other pleas in law in its action that it is challenging, in essence, the statement of reasons given in the contested decision as regards the arm’s length principle. As is apparent from paragraph 132 above, that complaint must also be rejected, since it relates to the subsidiary line of reasoning as to selectivity.

191    Thirdly, so far as concerns infringement of the obligation to state reasons as regards recovery of the aid, it follows from paragraphs 173 and 174 above that the contested decision sufficiently sets out the reasons why recovery must be ordered.

192    Consequently, the fourth plea in law, alleging failure to state reasons for the contested decision, must be rejected.

G.      Breach of the principles of the protection of legitimate expectations, legal certainty and legality as a result of the recovery of the aid ordered by the contested decision

193    The eighth plea alleges breach of the principles of legal certainty and legality in so far as, in recitals 200 to 204 of the contested decision, the Commission stated that it was not bound by its previous decision-making practice in its assessment of the arm’s length principle and that recovery of the alleged unlawful aid was possible. According to the applicant, a conscientious operator could legitimately have believed that it could legitimately benefit from the excess profit exemption at issue. The Commission changed its position as regards, first, the OECD methods and principles; secondly, the application of rules intended to delineate a State’s taxation rights pursuant to the applicable treaties; thirdly, the taking into account of the risk of double taxation; fourthly, the requirement to prove the existence of an advantage; fifthly, the condition that the advantage be assessed at the level of the group of undertakings benefiting from the measure and not of one of the components of that group; and, sixthly, the fact that benefits deriving from disparities between tax jurisdictions are State aid neutral.

194    The Commission contends that the applicant’s arguments should be rejected.

195    It should be noted that the applicant repeats to a large extent the arguments that it raised in the context of the other pleas, by which it disputed the Commission’s findings in the contested decision as regards the advantage, the application of the arm’s length principle in the context of the scheme at issue, the risk of double taxation or the Kingdom of Belgium’s tax jurisdiction.

196    As regards, more specifically, breach of the principle of the protection of legitimate expectations, it is apparent from the case-law cited in paragraph 186 above that undertakings to which aid has been granted may not, in principle, entertain a legitimate expectation that the aid is lawful unless it has been granted in compliance with the procedure laid down in Article 108 TFEU and that a diligent economic operator exercising due care should normally be able to determine whether that procedure has been followed. Accordingly, the applicant cannot rely on a legitimate expectation as to the compliance of the scheme at issue with Articles 107 and 108 TFEU.

197    It follows that the complaint alleging breach of the principle of the protection of legitimate expectations must be rejected.

198    As regards, next, breach of the principles of legal certainty and legality owing to the recovery ordered from the multinational groups to which the Belgian entities that adjusted their taxable profits pursuant to an advance ruling belong, due to the fact that only the entities benefiting from an advance ruling could have benefited from the exemptions in question, in accordance with the conclusion set out in paragraph 155 above, that complaint must be rejected.

199    In those circumstances and in the light of the above considerations, the eighth plea in law must be rejected.

H.      The risk of double taxation as a result of the recovery ordered

200    In the ninth plea, the applicant submits that the recovery ordered by the contested decision leads to double taxation. Thus, it takes issue with recital 203 of the contested decision, according to which the Arbitration Convention or treaties for the avoidance of double taxation are capable of resolving possible conflicts, since experience has shown that those instruments did not protect taxpayers correctly. Recovery infringes Article 107 TFEU and Article 16 of Regulation 2015/1589, read in conjunction with the fundamental freedoms.

201    The Commission contends that the applicant’s arguments should be rejected.

202    First of all, it should be recalled that, in the context of a tax measure, the existence of an advantage is determined by reference to the normal tax rules of the Member State concerned, so that the tax rules of another Member State are not relevant (see, to that effect, judgment of 11 November 2004, Spain v Commission, C‑73/03, not published, EU:C:2004:711, paragraph 28). Consequently, the Commission could limit its analysis to the tax rules applicable in the Member State where the beneficiary undertaking concerned was established. Thus, if the Commission established that the scheme at issue granted unlawful aid to its beneficiaries, it would have to order its recovery, the tax burden of the other undertakings in the group to which the applicant belonged being irrelevant in that regard.

203    Next, it should be noted that, first, the profit exempted under the scheme at issue was profit generated by the Belgian group entity.

204    Secondly, in recital 203 of the contested decision, the Commission rejected the Kingdom of Belgium’s argument that recovery could lead to double taxation, finding, in essence, that the excess profit exemption was the result of a unilateral adjustment that was not correlative and that, therefore, in the absence of a corresponding primary adjustment, there could be no double taxation. The applicant’s arguments in no way call those findings into question.

205    In any event, even if, as it claims, the applicant’s profit exempted in Belgium were subject to double taxation as a result of the recovery ordered by the contested decision and its taxation in another country, which, moreover, the applicant has not demonstrated, that would result from its individual situation and would not be a general characteristic of the scheme at issue. Such a circumstance would not therefore be capable of calling into question the finding of the existence of an unlawful aid scheme and the related recovery order.

206    It follows that the applicant’s claims to the effect that the multinational group to which it belongs is already subject to double taxation and that recovery would only increase it considerably are ineffective.

207    Accordingly, the applicant’s ninth plea, according to which recovery of the aid would automatically lead to double taxation of its profits, must be rejected.

208    Since all of the pleas put forward by the applicant have been rejected, the action must be dismissed in its entirety.

IV.    Costs

209    Under Article 134(1) of the Rules of Procedure of the General Court, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the applicant has been unsuccessful, it must be ordered to bear its own costs and to pay those incurred by the Commission, in accordance with the form of order sought by the Commission.

On those grounds,

THE GENERAL COURT (Second Chamber, Extended Composition)

hereby:

1.      Dismisses the action;

2.      Orders St. Jude Medical Coordination Center (SJM Coordination Center) to bear its own costs and to pay those incurred by the European Commission.

Marcoulli Frimodt Nielsen Tomljenović

Norkus Valasidis

Delivered in open court in Luxembourg on 20 September 2023.

V. Di Bucci M. van der Woude

Registrar President

Table of contents

I. Background to the dispute

II. Forms of order sought

III. Law

A. The Commission’s competence to adopt the contested decision

B. The existence of an aid scheme

C. Infringement of Article 107 TFEU in that the Commission found that the excess profit exemption constituted a State aid scheme

1. Identification of the reference system

(a) Preliminary observations

(b) The possibility of adjusting the accounting profit for the purposes of calculating the taxable profit

(c) The distinction between the adjustments provided for in Article 185(2)(a) and (b) of the CIR 92

(d) The non-inclusion of the excess profit scheme in the reference system

(1) The scope of Article 185(2) of the CIR 92

(2) The excess profit scheme

(3) Conclusion on the non-inclusion of the excess profit scheme in the reference system

2. The existence of a selective advantage as a result of the existence of a derogation from the reference system

(a) Identification of the advantage granted by the scheme at issue

(b) The joint analysis by the Commission of the criteria of advantage and selectivity

(c) The existence of an advantage favouring the beneficiaries of the scheme at issue

(d) The finding of a derogation from the reference system

(1) Whether there is a derogation from the reference system

(2) Whether there is differentiation, as a result of the derogation from the reference system, between economic operators who are in a comparable situation

(i) Different treatment of beneficiaries forming part of a multinational group of undertakings

(ii) Different treatment in comparison with undertakings that have not made investments, created employment or centralised activities in Belgium

(iii) Different treatment in comparison with undertakings that are part of a small group

(3) Conclusion on the existence of a prima facie selective advantage, identified by the Commission in its primary line of reasoning

(e) The characteristic elements of the scheme at issue that are purportedly not applicable in the applicant’s case

(f) The application of the arm’s length principle under the scheme at issue

3. Whether there is any justification based on the nature and general scheme of the Belgian tax system

D. The Commission’s interference in the method of recovery of the aid

E. Infringement of the applicant’s right to be heard

F. Breach of the obligation to state reasons for the contested decision

G. Breach of the principles of the protection of legitimate expectations, legal certainty and legality as a result of the recovery of the aid ordered by the contested decision

H. The risk of double taxation as a result of the recovery ordered

IV. Costs

*      Language of the case: English.