Action brought on 7 April 2011 - Germany v Commission

(Case T-205/11)

Language of the case: German

Parties

Applicant: Federal Republic of Germany (represented by: T. Henze and J. Möller, Agents)

Defendant: European Commission

Form of order sought

The applicant claims that the Court should:

annul Decision K(2011)275 final, issued on 26 January 2011 by the Commission in the procedure 'State aid C 7/2010 relating to the fiscal carry-forward of losses ("Sanierungsklausel")';

in the alternative: annul in part Decision K(2011)275 final, issued on 26 January 2011 by the Commission in the procedure 'State aid C 7/2010 relating to the fiscal carry-forward of losses ("Sanierungsklausel")' in so far as, by Article 2 thereof, the Commission decided that the individual aid granted is wholly incompatible with the internal market and must be recovered in its entirety in each case where the amount of the individual aid exceeds EUR 500 000;

order the Commission to pay the costs.

Pleas in law and main arguments

In support of the action, the applicant relies on the following pleas in law.

Pleas in support of the principal form of order sought:

First plea in law, alleging infringement of Article 107(1) TFEU: no selectivity owing to the fact that the provision enabling the carry forward of fiscal losses ('the Sanierungsklausel') does not constitute an exception within the relevant reference system.

The German Government submits that the Sanierungsklausel laid down in Paragraph 8c(1a) of the German Law on corporation tax (Körperschaftssteuergesetz, 'the KStG'), under which it is possible to carry fiscal losses forward in the case of undertakings which have been taken over with a view to their 'turn-around', is not selective. According to the German Government, this arrangement does not constitute a State aid scheme for the purposes of Article 107(1) TFEU, since the above provision does not introduce any exception to the relevant reference system.

Second plea in law, alleging infringement of Article 107(1) TFEU: manifest error of assessment relating to the general character of the measure.

The German Government submits that the Commission made a manifest error of assessment with regard to the question whether the Sanierungsklausel laid down in Paragraph 8c(1a) of the KStG is a general measure, in so far as the Commission adopted an inappropriate approach to the analysis of that question and did not consider, in the context of an overall economic assessment, whether the Sanierungsklausel was based on 'horizontal' data which were equally valid for all undertakings; according to the German Government, the Sanierungsklausel is thus of benefit across the board to every undertaking on German territory and, in consequence, can be categorised as a general measure.

Third plea in law, alleging infringement of Article 107(1) TFEU: no selectivity owing to the fact that the Commission did not take into consideration the fact that the legislation at issue is justified by the nature and the internal structure of the German fiscal system.

According to the German Government, the Sanierungsklausel laid down in Paragraph 8c(1a) of the KStG is not selective and, in consequence, does not amount to a State aid scheme for the purposes of Article 107(1) TFEU, since it is justified by the nature and the internal structure of the German fiscal system.

Plea in support of the alternative form of order sought:

Infringement of Article 107(3) TFEU, read in conjunction with the temporary Union framework for State aid measures to support access to finance in the current financial and economic crisis.

The Commission misapplied Article 107(3) TFEU, read in conjunction with the Commission Communication on the 'Temporary Union framework for State aid measures to support access to finance in the current financial and economic crisis', in so far as it treated the amount of EUR 500 000 referred to in Article 2 of the decision as an exemption ceiling, so that aid paid in excess of that amount triggers an obligation to repay all the aid in full, rather than as a threshold marking the limits of an approved aid amount, so that only the aid paid in excess of that amount falls to be repaid.

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