The Role of State Aid in the European Fiscal Integration

"This book analyzes the issue of European fiscal State aid in order to provide insights into the related evolution prospects and legal problems. State aid has assumed a central position in the field of taxation, becoming the most important instrument of European legal integration, especially in the area of direct taxes. This is the result of major regulatory and interpretative development, which has altered the initial European and national balances in the face of globalization and the problems of the new economy. In this context, the scope and objectives of State aid have progressively broadened, encompassing a significant level of both positive and negative integration of European national tax systems" Introduction and Work Plan Contents Chapter 1: The State Aid Framework Within the European System. Evolution of Legislation and Objectives 1.1 The Combination of the State and the Market in the Legal and Economic Development of the European Legal System 1.1.1 The Social Market Economy in the European Project 1.1.2 The Market and Competition. Mutual Instrumentality and Flexibility of the Notions 1.2 Competition Rules. State Aid 1.2.1 The Rules on State Aid in the Treaty. Framework 1.2.2 The Construction of the State Aid Framework. The Role of the European Commission 1.3 The Development of the State Aid Framework in European Policy. The Historical Phases 1.3.1 The Modernisation of the State Aid Framework 1.3.2 The State Aid Framework During the Covid-19 Emergency. The Current Phase 1.4 State Aid Prohibited Under Article 107(1) TFEU. Negative Integration 1.4.1 The Definition of Prohibited Aid 1.4.1.1 Notion of Undertaking and Economic Activity 1.4.1.2 State Origin 1.4.1.3 Advantage 1.4.1.4 Selectivity 1.4.1.5 The Effect on Trade Between Member States and the Distortion of Competition 1.5 Permitted Aid. Positive Integration 1.5.1 Aid Permitted de jure 1.5.2 Aid Allowed on a Discretionary Basis 1.5.3 Assessment of the Compatibility of the Aid. The Economic Method 1.5.4 Aid Permitted Without Prior Notification 1.5.4.1 Regional Aid 1.5.4.2 Sectoral and Horizontal Aid 1.5.4.3 De minimis Aid 1.6 The Implementation of the State Aid Framework and the Protection of Rights 1.6.1 The Development of the Procedural Framework. Public and Private Enforcement 1.6.2 The Stages and the General Principles 1.6.2.1 Monitoring of New and Existing State Aid 1.6.2.2 Recovery of Aid 1.6.2.3 The Protection of Rights 1.7 Concluding Remarks Bibliography Chapter 2: The State Aid Framework in European Fiscal Integration 2.1 European Integration in Tax Matters. The Development of European Tax Law 2.1.1 The Content 2.1.2 The Interplay Between Sources of Law 2.1.3 The Tax Function 2.2 Fiscal Policy in Indirect Taxation 2.2.1 The Customs Union and the Principle of Equal Treatment of Goods 2.2.2 The Principle of Tax Harmonisation 2.3 European Integration in the Field of Direct Taxation. The Role of State Aid. Coordination Policy 2.3.1 The Principle of Tax Non-discrimination and the Prohibition of Tax Restrictions 2.3.2 Restrictions on Economic Freedoms and Justifications for Taxation 2.3.3 Approximation of Direct Tax Matters. Article 115 TFEU Directives 2.3.4 Harmful Tax Competition and Aggressive Tax Planning. Definition 2.3.5 The International Approach 2.3.6 The European Approach. Developments 2.3.7 Convergence Between Harmful Tax Competition and the Prohibition of State Aid 2.4 Fiscal State Aid. General Characteristics 2.4.1 The Contention of Fiscal Function Crisis 2.4.2 The Definition of Guidelines for National Tax Policy on Selective Framework 2.4.3 The Function of General Support for the National Economy. Support in Economic and Social Emergencies 2.4.4 Regulation in a Common Area of the Principle of Non-discrimination in Taxation 2.4.5 Tackling Harmful Tax Competition 2.4.6 The Definition of the Promotional Function of Taxation 2.4.7 Empowering Territorial Autonomies and Fiscal Federalism Projects 2.5 Concluding Remarks Bibliography Chapter 3: The Prohibition of Fiscal State Aid. Negative Integration of National Laws 3.1 The Prohibition of State Aid Under Article 107(1) TFEU 3.1.1 Negative Integration of National Tax Systems 3.2 The Notion of Fiscal Aid 3.2.1 Advantage and Selectivity of Fiscal Aid. The Complexity of the Analysis and the Variety of Interpretations 3.3 Selectivity of Fiscal Aid. The Formal Legal Approach and the Substantive Economic Approach 3.3.1 Material Selectivity de jure. Justification in Light of the Nature or General Scheme of the Tax System 3.3.2 Material Selectivity de facto 3.3.3 Territorial Selectivity 3.3.4 Reflections on the National Framework of Fiscal Federalism 3.4 The Cases of Fiscal Aid. The Purpose of the Prohibition. The Problems of Adaptation 3.5 Tax Benefits: Analysis 3.5.1 The Most Significant Cases of State Aid Prohibited in Italy 3.5.1.1 Aid to Banking Foundations 3.5.1.2 Aid to the Banks 3.5.1.3 Tax Advantages for Public Companies 3.5.1.4 Tax Benefits for Cooperative Societies 3.5.1.5 Tax Benefits for Ecclesiastical Bodies 3.5.2 Developments in the National Notion of a Tax Benefit 3.6 Procedures for Determining Tax Credits 3.6.1 The Case of Tax Settlements 3.7 Cases Amounting to Harmful Tax Competition 3.7.1 Analysis of General Schemes Amounting to Harmful Tax Competition. The Gibraltar Case 3.7.2 The Control of Tax Rulings. Evolution 3.7.3 European Review of Tax Rulings. Summary of the Most Important Cases 3.7.3.1 The Apple Case 3.7.3.2 The Amazon Case 3.7.3.3 The Starbucks Case 3.7.3.4 The Fiat Case 3.7.4 The Principles Laid Down by the European Commission in Respect of Tax Rulings 3.7.5 The Position of European Jurisprudence 3.7.6 Reflections on the Application of the State Aid Framework to Tax Rulings 3.8 Concluding Remarks Bibliography Chapter 4: The Positive Integration of the State Aid Framework into Taxation Matters. Permitted Aid 4.1 Permitted Aid Under the State Aid Framework 4.1.1 The General Principles. Integration and Positive Harmonisation 4.2 Aid Permitted on an Individual Basis. De jure Aid and Aid Granted on a Discretionary Basis 4.3 Aid Permitted on a General Basis. The Legal Framework. Council Regulations 4.3.1 Commission Regulations (Cont ́d). The Compatibility Criteria 4.3.2 The Categories of Permitted Aid and the Areas Concerned 4.4 The Function of Permitted Aid 4.4.1 The Relationship Between Fiscal Federalism and Permitted Aid. The Role of Territorial Entities in European Policy 4.5 Permitted Fiscal State Aid. Tax Law as a Vehicle for Development Policies at European Level 4.5.1 Implementation of Permitted Fiscal Aid 4.6 The Italian Experience. The Promotional Function of Tax Law 4.6.1 Environmental Aid 4.6.2 Aid for Culture 4.6.3 The Development of Degraded and Deprived Areas 4.6.4 Aid for Innovation. The Industry 4.0 Plan 4.6.5 Tax Relief Schemes in Favour of Innovation 4.7 Aid Allowed in Times of Economic and Social Emergency 4.7.1 The Measures Adopted in the Italian State in the Covid 19 Emergency 4.8 The Implementation of Permitted Aid by the State and Territorial Entities. Consequences and Liability 4.9 Concluding Remarks Bibliography Chapter 5: The Implementation of the State Aid Framework and the Protection of Rights in Tax Matters. The Italian Experience 5.1 The Implementation of the European State Aid Framework. General Principles and the Special Nature of Fiscal Aid 5.1.1 The European Principle of Effectiveness as a General Principle of Legal Integration 5.1.2 The Principle of Procedural Autonomy (Cont ́d) 5.1.3 The Development of the Framework 5.2 State Aid Control and the Role of the European Commission 5.2.1 The Control of Compatibility by the European Commission 5.2.2 Review of Legality by the Courts. Cooperation Between the Courts and the European Bodies 5.2.3 National Obligations Prior to Notification of the Aid. The Italian Experience 5.2.4 Monitoring Fiscal Aid. Problematic Issues 5.3 Recovery of State Aid. General Principles 5.3.1 The European Commission Recovery Order 5.3.2 Recovery Decisions in the Field of Taxation. Problematic Issues 5.3.3 Exceptions to the Recovery Order 5.3.4 National Procedures for the Recovery of State Aid. General Background 5.3.5 National Procedures for the Recovery of Fiscal Aid. The Italian Experience 5.3.6 The National Procedure for Recovery of Incompatible aid (Cont ́d). The Specific Nature of Tax Matter 5.3.7 The Exclusive Jurisdiction of the Administrative Court (Cont ́d). Problems in Taxation 5.4 The Protection of Third Parties. The Principle of Compensation for Damage 5.4.1 State Liability for Breach of Community Obligations in the State Aid Framework 5.4.2 State Liability in Fiscal Aid. Problematic Issues 5.4.3 Non-contractual Liability Within the Aid Framework 5.5 Concluding Remarks Bibliography Chapter 6: Final Conclusions