Tax Legislation within the Scope of EU-State Aid Law: An Overview of Critical Issues Arising from the German ‘Reorganization Clause’

Pasquale Pistone stressed very recently in this journal `the growing importance of the prohibition of state aids in tax matters´ (Intertax 2012, p. 84). This is a fair point. The following article illustrates and expands upon this by focusing on critical issues arising from the German 'reorganization clause' by way of example. For a business, it is important to understand when it might be in a position to bring an action before the General Court. Furthermore, the question arises what makes a tax clause, such as the German reorganization clause, selective in nature. At a glance, a tax rule seems to have a general character which is not likely to constitute a form of aid.

Moreover, given that as things stand there remains considerable uncertainty surrounding the question when a tax measure constitutes unlawful State Aid, where a Commission decision breaks new ground. In that respect, the question arises whether a decision of the Commission which finds a tax rule to be State Aid may have retroactive effect or whether this retroactive effect would violate the protection of the legitimate expectations of the taxpayers.