JUDGMENT OF THE COURT (Second Chamber)

21 September 2023 ( *1 )

(Appeal – State aid – Article 107(1) TFEU – Concept of ‘aid’ – Condition relating to selective advantage – Tax treatment of operators of public casinos in Germany – Levy on the profits – Partial deductibility of the amounts paid in respect of that levy from the tax base for income or corporation tax and trade tax – Decision of the European Commission – Rejection of a complaint at the end of the preliminary examination stage on the ground that that deductibility does not constitute State aid – Separate finding of no economic advantage and no selectivity – Action before the General Court of the European Union limited to the finding of no selectivity – Action deemed ineffective – Identification by the Commission of the reference system or ‘normal’ tax system – Interpretation for that purpose of the applicable national tax law – Classification of the levy on the profits as a ‘special tax’ deductible in respect of ‘costs associated with commercial transactions’ – Principle ne ultra petita)

In Case C‑831/21 P,

APPEAL under Article 56 of the Statute of the Court of Justice of the European Union, brought on 28 December 2021,

Fachverband Spielhallen eV, established in Berlin (Germany),

LM,

represented by A. Bartosch and R. Schmidt, Rechtsanwälte,

appellants,

the other parties to the proceedings being:

European Commission, represented initially by K. Blanck and B. Stromsky, and subsequently by B. Stromsky, acting as Agents,

defendant at first instance,

Federal Republic of Germany, represented by J. Möller and R. Kanitz, acting as Agents,

intervener at first instance,

THE COURT (Second Chamber),

composed of A. Prechal (Rapporteur), President of the Chamber, M.L. Arastey Sahún, F. Biltgen, N. Wahl and J. Passer, Judges,

Advocate General: P. Pikamäe,

Registrar: A. Calot Escobar,

having regard to the written procedure,

after hearing the Opinion of the Advocate General at the sitting on 25 May 2023,

gives the following

Judgment

By their appeal, Fachverband Spielhallen eV and LM ask the Court of Justice to set aside the order of the General Court of the European Union of 22 October 2021, Fachverband Spielhallen and LM v Commission (T‑510/20, EU:T:2021:745) (‘the order under appeal’), by which the General Court dismissed their action seeking the annulment of Commission Decision C(2019) 8819 final of 9 December 2019 on State aid SA.44944 (2019/C) (ex 2019/FC) – Tax treatment of public casinos operators in Germany and SA.53552 (2019/C) (ex 2019/FC) – Alleged guarantee for public casinos operators in Germany (Wirtschaftlichkeitsgarantie) (‘the decision at issue’).

Background to the dispute and the decision at issue

In paragraphs 1 to 18 of the order under appeal, the background to the dispute and the content of the decision at issue are summarised as follows:

‘1

On 22 March 2016, the [appellants], Fachverband Spielhallen eV, a trade association of 88 operators of gambling machines, and LM, an operator of gambling machines, lodged three complaints [with the European Commission] concerning the tax treatment of operators of public casinos in the Federal Republic of Germany [on the ground that it constitutes State aid prohibited by EU law].

[The third of those complaints related more specifically to the Land of] North Rhine-Westphalia, [in which] the gambling activities offered in casinos were governed by the Spielbank-Gesetz NRW (Law on casinos in the Land of North Rhine-Westphalia; “the Law on Casinos”) until it was replaced in 2020. [Pursuant] to that law, Westdeutsche Spielbanken GmbH & Co. KG (“WestSpiel”) was the sole public casino licensee in the Land of North Rhine-Westphalia.

In accordance with the Law on Casinos, the revenue generated by casinos was subject to two different tax systems. On the one hand, gambling-related income was subject to a specific tax system consisting of a tax on casinos. On the other hand, non-gambling-related income, such as restaurant and catering revenue, was subject to a normal tax system consisting of income or corporation tax and trade tax (“the normal tax system”).

In addition, Paragraph 14 of the Law on Casinos provided that 75% of the annual profits declared by operators of public casinos – whether gambling-related or not – was to be paid to the Land of North Rhine-Westphalia. However, in the event that the remaining quarter exceeded 7% of the sum of share capital, reserves and mutual funds, all of the profits were to be paid to the Land of North Rhine-Westphalia (“the levy on the profits”).

The levy on the profits, up to the amount deriving from non-gambling related income, was nevertheless deductible from the tax bases for trade tax and income or corporation tax in respect of “costs associated with commercial transactions”. It was this deductibility ([“deductibility of the levy on the profits” or] “the measure at issue”) which the [appellants] challenged in their … complaint …

After corresponding with the [appellants], the … Commission found, on 9 December 2019, that the measure at issue did not confer any selective advantage and did not, therefore, confer any aid and thus decided not to initiate the formal investigation procedure provided for in Article 108(2) TFEU with regard thereto …

7	In [the decision at issue], the Commission found that the non-gambling related income of operators of public casinos was subject, on the one hand, to the normal tax system and, on the other, to the levy on the profits, which it classified as a “specific tax”.

The Commission noted that that deductibility of the levy on the profits from the tax base for … corporation tax and trade tax was not derived from a specific provision, but from the application of general taxation rules under the normal tax system, according to which taxes are calculated on the basis of net profits, after the deduction of “costs associated with commercial transactions”, such as, in the present case, the levy on the profits. It followed, according to the Commission, that the deductibility of the levy on the profits did not constitute a selective advantage.

9	Following [the decision at issue], the Commission continued to analyse the measure at issue in the light of the arguments put forward by the [appellants] during the preliminary examination stage.

The Commission found, in the first place, that, by their arguments, the [appellants] implicitly maintained that the levy on the profits was a tax comparable to a tax on profits, which was not deductible under the general taxation rules of the normal tax system, in particular in accordance with Paragraph 4(5b) of the Einkommensteuergesetz (Law on Income Tax).

By contrast, according to the Commission, the levy on the profits could be regarded as a special tax on the profits. In that regard, it stated that Paragraph 4(5b) of the Law on Income Tax ruled out the qualification of a deductible occupational expense in respect only of the trade tax, and not in respect of all the taxes on the profits. According to the Commission, there was no provision precluding, in general terms, the deductibility of a specific tax on the profits. …

In that regard, in the second place, the Commission responded to an argument that the [appellants] had based on Paragraph 10(2) of the Körperschaftsteuergesetz (Law on Corporation Tax), according to which income tax and other personal taxes are not deductible for the purpose of establishing the tax base for corporation tax. It noted that that provision related to general taxes on the profits and that there was no indication that it also applied to an additional special tax, such as the levy on the profits paid only by operators of public casinos and the tax base for which did not correspond exactly to the income generated by the activity of those operators. …

In the third place, and in response to another argument put forward by the [appellants], alleging that dividends are not deductible from the tax bases for trade tax and income tax under the general taxation rules of the normal tax system, the Commission argued that the levy on the profits was not a dividend. …

14	In the light of the foregoing, the Commission found, in [the decision at issue], that the deductibility of the levy on the profits was consistent with the general rule of deductibility of the costs associated with commercial transactions and that it was not, therefore, selective.

Lastly, the Commission found, in paragraph 159 of [the decision at issue], that, in so far as concerns, more specifically, the criterion of advantage, other economic operators, and in particular operators of gambling machines, were not subject to the levy on the profits. Therefore, the fact that that levy was deducted from the tax base for other taxes could not confer any advantage on WestSpiel when compared with the normal tax system.

In that regard, the Commission argued that, in 2014, the levy on the profits amounted to EUR 82.02 million and that the rate of trade and corporation taxes was 17.7% and 15.6% respectively. It therefore noted that the deductibility of that levy, within the limits of Paragraph 14 of the Law on Casinos, precluded the application of those rates to the amount in question. Consequently, the total amount payable by WestSpiel under the normal tax system was reduced by EUR 27.3 million. However, the overall tax burden that WestSpiel had to bear was increased, at the same time, by a much higher amount; that is to say the EUR 82.02 million corresponding to the levy on the profits.

Based on [that] analysis … the Commission concluded … that the alleged advantage resulting from the possibility for an operator such as WestSpiel to deduct in part the levy on the profits from the tax bases for corporation tax and trade tax was in any event outweighed by the heavier burden associated with the payment of that levy, which was specific to operators of public casinos and always much higher than those two taxes.

In footnote 87 to [the decision at issue], the Commission stated that, in so far as corporation tax and trade tax are proportional and personal income tax is based on a progressive scale, the advantage conferred on operators of public casinos by the reduction in the tax base in the amount of part of the levy on the profits was less than the disadvantage resulting from the obligation on those operators to pay that levy.’

Proceedings before the General Court and the order under appeal

3	By application lodged at the Registry of the General Court on 14 August 2020, the appellants brought an action for annulment of the decision at issue.

In support of their action, they relied on a single plea in law alleging infringement of their procedural rights on account of the Commission’s refusal to initiate the formal investigation procedure provided for in Article 108(2) TFEU, although that institution had not been able, at the end of the preliminary examination stage, to overcome all the serious difficulties which it had encountered.

5	According to the General Court, that single plea in law consisted, in essence, of five parts.

By the first part, the appellants claimed that the Commission had wrongly assumed that they considered the levy on the profits to be a tax, even though the appellants had always indicated that it was a transfer of profits which would not be deductible under the normal tax system. By the second part, they claimed that the Commission had classified the levy on the profits as a ‘special tax’ by considering – incorrectly – that the way national law classifies a measure is not decisive. By the third part, they disputed the criteria used by the Commission to classify the levy on the profits as a ‘tax’. By the fourth part, they put forward a series of arguments to claim that, even if the levy on the profits were a tax, it could not be deducted from the tax bases for income or corporation tax and trade tax. By the fifth part, they put forward arguments against the statement made in footnote 77 to the decision at issue, which compares the levy on the profits with special payments imposed on undertakings, for example for anticompetitive conduct, which are deductible.

In paragraphs 48 and 57 of the order under appeal, the General Court took as the starting point for its examination of that single plea the fact that the appellants were exclusively criticising the alleged shortcomings of the decision at issue inasmuch as, in that decision, the Commission had found that the measure at issue was not selective. According to the General Court, in that decision, the Commission did not carry out an overall examination of the criteria relating to the existence of an advantage and selectivity, but sought to demonstrate, first, in response to the appellants’ arguments, that the alleged selectivity was lacking in the case at hand and, second and separately, that there was no economic advantage, irrespective of any question of selectivity.

In paragraph 58 of the order under appeal, the General Court observed that the appellants had, in particular, not disputed the finding, set out in recital 159 of the decision at issue and footnote 87 thereto, that the deductibility of the levy on the profits was not such as to confer an advantage on an operator of a public casino such as WestSpiel, because the burden on that operator in terms of the levy on the profits is inevitably always much greater than the tax that would have been due on the amount corresponding to that levy.

In paragraphs 60 to 66 of the order under appeal, the General Court nevertheless examined the relevance, for the purpose of establishing the existence of the advantage allegedly conferred by the deductibility of the levy on the profits, of annexes to the appellants’ reply relating to different ‘tax scenarios’ based on accounting data for the financial years 2014 and 2019, but held that those various items of evidence were out of time and inadmissible.

In paragraph 67 of the order under appeal, the General Court recalled that, according to the case-law, classification as ‘aid’, within the meaning of Article 107(1) TFEU, requires all the conditions set out in that provision to be fulfilled and, as regards the condition relating to the existence of a selective advantage, the existence of an advantage must be assessed independently of selectivity.

The General Court concluded from this, in paragraph 68 of that order, that, as the appellants had not demonstrated that the assessment of the information and evidence which the Commission had at its disposal during the preliminary examination phase of the measure at issue should have raised doubts and serious difficulties on its part as to whether the deductibility of the levy on the profits constituted an advantage in favour of WestSpiel, the appellants were manifestly not justified in maintaining that the decision at issue had infringed their procedural rights.

After holding, in paragraphs 69 and 70 of the order under appeal, that the appellants’ argument that the decision at issue was vitiated by a contradiction inasmuch as it classified the levy on the profits as both a specific tax and a special payment comparable to fines for anticompetitive conduct was also manifestly unfounded, the General Court concluded that the single plea in law had to be rejected as manifestly lacking any foundation in law and that, accordingly, the action had to be dismissed in its entirety for the same reason.

Forms of order sought by the parties to the appeal

The appellants claim that the Court of Justice should:

–	set aside the order under appeal;

–	refer the case back to the General Court; and

–	reserve the costs.

The Commission contends that the Court of Justice should:

–	dismiss the appeal and

–	order the appellants to pay the costs.

The appeal

Arguments of the parties

In support of their appeal, the appellants put forward a single ground of appeal by which they submit, in essence, that, by dismissing their action on the ground that the measure at issue is not capable of conferring any economic advantage, without having examined whether that advantage is materially selective, the General Court erred in law in the application of the conditions laid down in Article 107(1) TFEU which must be satisfied in order for that measure to be classified as ‘State aid’, within the meaning of that provision.

16	As the General Court acknowledged in paragraph 52 of the order under appeal, referring to the settled case-law of the Courts of the European Union concerning national tax measures, the conditions relating to economic advantage and selectivity must be examined together.

The appellants submit that it follows, moreover, from the three-stage method for examining the condition relating to material selectivity laid down in the settled case-law of the Court of Justice that, in order to be able to conclude that there was no economic advantage, the General Court should have started by defining the ‘normal’ tax system.

According to the appellants, before the General Court they had specifically disputed that, as the Commission had asserted in recital 159 of the decision at issue, the levy on the profits could be classified as a ‘specific tax’ which could be deducted from the tax bases for income or corporation tax and trade tax under the general taxation rules of German law.

19	However, according to the appellants, in the order under appeal, the General Court did not address, in its legal assessment, that point of contention and it therefore adopted the definition of the ‘normal tax system’ set out in recital 159 of the decision at issue.

The appellants submit that, if, under German tax law, the classification of the levy on the profits as a ‘specific tax’ was inaccurate and if, as the appellants argued before the General Court, the levy on the profits constituted a transfer or a distribution of profits, the deductibility of that levy would represent a derogation from the ‘normal’ tax system and the measure at issue would be selective.

Given that the ‘normal’ tax system necessarily follows from the applicable rules of German tax law, the appellants submit that there is no doubt and, moreover, it is not disputed that a transfer or distribution of profits cannot be deducted from the tax bases for corporation or trade tax. Those rules prohibit the economic disadvantages suffered as a result of the levy on the profits from being offset against the advantages resulting from the deductibility of that levy.

The appellants conclude from this that, in the order under appeal, the General Court misapplied the concept of ‘State aid’, referred to in Article 107(1) TFEU, by denying the existence of an economic advantage without having first defined the ‘normal’ tax system independently of the Commission’s assessment in the decision at issue. Determining the ‘normal’ tax system is an essential step in establishing whether or not there is an economic advantage.

23	For its part, the Commission contends that the single ground of appeal is ineffective and, in any event, entirely unfounded.

That ground of appeal is based on a misinterpretation of the order under appeal given that, by that order, the General Court dismissed the action not on the ground that there was no economic advantage, but essentially on the ground that the application did not contain any plea directed against the absence of an advantage generated by the measure at issue as found in the decision at issue.

The Commission argues that where there is no advantage, the measure cannot under any circumstances constitute State aid. Consequently, even if the measure at issue were selective, as the appellants argued at first instance, they did not demonstrate that the Commission’s conclusion, namely that there was no State aid, was incorrect. In those circumstances, the General Court was not required to examine whether or not there was an advantage in the case at hand and was entitled to confine itself to finding that the action did not concern that condition relating to the existence of aid.

In the alternative, the Commission argues that, in accordance with the principle ne ultra petita, the General Court could not, in any event, make a finding that there was no economic advantage, as that issue was not the subject matter of the action at first instance and did not have to be raised by the Court of its own motion as a matter of public policy.

According to the Commission, the appellants are wrong to rely on the alleged distinctive characteristics of tax aid. While it is true that, as regards such aid, the criteria relating to advantage and selectivity respectively may be examined together, those criteria are conceptually different. Moreover, proof of the existence of an advantage and proof of its selectivity do not overlap either entirely or systematically. The Commission thus notes that, in this instance, the measure at issue was not intended to reduce the tax normally due under the general tax system. On the contrary, the possibility of deducting the levy on the profits from the tax bases for income or corporation tax and tax on profits is intended to reduce the tax burden borne by public casinos in North Rhine-Westphalia as a result of the levy on the profits.

The Commission also argues that the General Court examined, in the alternative and carefully, in paragraphs 60 to 66 of the order under appeal, the evidence submitted out of time by the appellants which might present a vague link with a potential argument relating to the existence of an advantage. In that regard, the General Court showed that that inadmissible evidence was in any event irrelevant, as it did not make it possible to successfully challenge the finding, in the decision at issue, that there was no advantage.

Findings of the Court

According to the settled case-law of the Court, classification of a national measure as ‘State aid’, within the meaning of Article 107(1) TFEU, requires all the following conditions to be fulfilled. First, there must be an intervention by the State or through State resources. Secondly, the intervention must be liable to affect trade between the Member States. Thirdly, it must confer a selective advantage on the recipient. Fourthly, it must distort or threaten to distort competition (judgment of 19 December 2018, A-Brauerei, C‑374/17, EU:C:2018:1024, paragraph 19 and the case-law cited).

As regards specifically the selective nature of national tax measures, the Court has held that, in order to be able to classify a measure of that nature as ‘selective’, the Commission must carry out a three-step examination. As a first step, the Commission must identify the reference system, that is, the ‘normal’ tax system applicable in the Member State concerned; then, as a second step, it must demonstrate that the tax measure at issue is a derogation from that reference system, in so far as it differentiates between operators who, in the light of the objective pursued by that system, are in a comparable factual and legal situation. The concept of ‘State aid’ does not, however, cover measures that differentiate between undertakings which, in the light of the objective pursued by the legal regime concerned, are in a comparable factual and legal situation, and are, therefore, a priori selective, where the Member State concerned is able to demonstrate – as a third step – that that differentiation is justified, in the sense that it flows from the nature or general structure of the system of which those measures form part (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, paragraph 68 and the case-law cited).

In their single ground of appeal, the appellants complain that the General Court failed to examine their central line of argument, set out in the first three of the five parts of the single plea relied on in support of their action, seeking to criticise the decision at issue in so far as, in that decision, the Commission, in its assessment of the condition relating to selectivity, incorrectly identified the reference system or the ‘normal’ tax system applicable in the Member State concerned during the first step of the examination which the Commission is required to carry out in accordance with the case-law referred to in paragraph 30 of the present judgment.

The Commission’s error relates in particular to the fact that it classified the measure at issue, namely the levy on the profits borne by public casinos, as a ‘specific tax’, or even as an ‘additional special tax’, which enabled it to conclude that the amounts paid in respect of that levy were deductible from the taxes bases for income or corporation tax and trade tax under the general taxation rules of the normal tax system laid down by the applicable German tax law, which allow the deductibility of ‘costs associated with commercial transactions’.

The appellants submit that the levy on the profits must be classified as a ‘transfer’ or a ‘distribution’ of profits, and not as a ‘tax’ or a ‘specific tax’, with the result that, in accordance with the applicable German tax law, that levy on the profits should not have been deducted from the tax base for trade tax. According to the appellants, the deduction actually made therefore represents a derogation from the ‘normal’ tax system and, therefore, a selective advantage.

The question arises in that regard whether the General Court was entitled – given that the Commission concluded in the decision at issue, which was delivered at the end of the preliminary examination procedure referred to in Article 108(3) TFEU, that the measure at issue does not constitute ‘State aid’ within the meaning of Article 107(1) TFEU, on the ground both that no economic advantage has been conferred by that measure and that it is not selective – to hold that an action which is directed exclusively against the finding of a lack of selectivity must be dismissed as ineffective and, therefore, as manifestly lacking any foundation in law because, even if that plea were well founded, the measure at issue would still not constitute State aid owing to a lack of economic advantage as found in the decision at issue.

In that regard, it is true that the Court of Justice has already held that 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).

That said, the Court has emphasised that the determination of the reference system is of particular importance in the case of national tax measures, as the existence of an economic advantage for the purposes of Article 107(1) TFEU may be established only when compared with ‘normal’ taxation (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).

For the purpose of assessing the selective nature of a tax measure, it is, therefore, necessary that the common tax regime or the reference system applicable in the Member State concerned be correctly identified in the Commission decision and examined by the court hearing a dispute concerning that identification. As the determination of the reference system constitutes the starting point for the comparative examination to be carried out in the context of the assessment of selectivity, an error made in that determination necessarily vitiates the whole of the analysis of the condition relating to selectivity (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 71 and the case-law cited).

In that context, the Court has 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 Member State (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 72 and the case-law cited).

The Court has also held 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 (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 73 and the case-law cited).

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 (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 74).

As the Advocate General also observed in point 60 of his Opinion, the General Court’s approach, summarised in paragraph 34 of the present judgment, is at odds with the principles enshrined in the case-law of the Court of Justice, recalled in paragraphs 36 to 40 of the present judgment, according to which the examination that the Commission must carry out in order to establish the selectivity of a fiscal aid scheme coincides, so far as concerns the identification of the reference system or ‘normal’ tax system, with the examination that must be carried out in order to verify whether the measure at issue has the effect of conferring an advantage on its beneficiaries.

In accordance with those principles, if the General Court had examined, in the exercise of its full judicial review of the Commission’s interpretation of the applicable national law in the decision at issue, the appellants’ arguments directed against the identification in that decision of the reference system as summarised in paragraphs 32 and 33 of the present judgment, and if the General Court had reached the conclusion, following that examination, that – in the light of the rules and principles of German tax law applicable in that field and their interpretation in the national case-law and legal literature – the Commission had in fact erred in that identification, such an error would necessarily have vitiated the Commission’s entire analysis of the condition relating to the existence of a selective advantage, in terms of both of its two components, namely the condition relating to selectivity and the condition relating to an economic advantage.

It follows that the General Court erred in law in holding that it was not necessary to examine those arguments put forward by the appellants on the ground that, even if they were well founded, they would in any event be ineffective as they would affect only the Commission’s analysis, in the decision at issue, of the condition relating to selectivity and not the condition relating to an economic advantage examined separately in that decision.

That conclusion cannot be called into question by the argument put forward by the Commission in the alternative that the General Court would have been in breach of the principle ne ultra petita if it had examined the legality of the decision at issue not only as regards the examination of the condition relating to selectivity, but also as regards the analysis of the condition relating to the existence of an economic advantage.

As the Court of Justice has held on many occasions, given that the court reviewing the legality of an act cannot rule ultra petita, it cannot grant an annulment which goes beyond that sought by the applicant (judgment of 14 November 2017, British Airways v Commission, C‑122/16 P, EU:C:2017:861, paragraph 81 and the case-law cited).

That being so, although the EU judicature must rule only on the heads of claim put forward by the parties, whose role it is to define the framework of the dispute, it cannot confine itself, in accordance with the principle ne ultra petita, to the arguments put forward by the parties in support of their claims, or it might be forced, in some circumstances, to base its decisions on erroneous legal considerations (see, to that effect, judgment of 20 January 2021, Commission v Printeos, C‑301/19 P, EU:C:2021:39, paragraph 58).

At first instance, the appellants sought the annulment of the decision at issue, arguing, inter alia, that, in that decision, the Commission had carried out an examination of the condition of selectivity which was contrary to EU law, given that that examination was based on an identification of the reference system or the ‘normal’ tax system which was itself based on an inaccurate interpretation of the rules and principles of German tax law on the deductibility of ‘costs associated with commercial transactions’.

While it is true that, formally, the appellants’ action concerned only the Commission’s assessment, in the decision at issue, of the condition relating to selectivity and not the condition relating to the existence of an economic advantage, the fact remains that, as has already been pointed out, their line of argument was, on the substance, equally relevant to the assessment of both conditions, because it concerned the identification, in that decision, of the reference system or the ‘normal’ tax system, an examination which is identical for both of those conditions and which, if it were contrary to the applicable national law, would necessarily vitiate the assessment of both conditions to the same extent.

Consequently, if the General Court had, as it was required to do, examined that line of argument put forward by the appellants, it would not in any way have altered the subject matter of the head of claim as set out in the action and, therefore, would not have been in breach of the principle ne ultra petita.

50	Similarly, the General Court would not have been in breach of that principle if, following that examination, it had concluded that the decision at issue had to be annulled because, in that decision, the Commission had incorrectly identified the reference system or the ‘normal’ tax system.

51	In the light of all the foregoing considerations, the order under appeal must be set aside.

Referral of the case back to the General Court

In accordance with Article 61 of the Statute of the Court of Justice of the European Union, if the appeal is well founded, the Court of Justice is to set aside the decision of the General Court. It may itself give final judgment in the matter, where the state of the proceedings so permits, or refer the case back to the General Court for judgment.

53	By the present judgment, it has been held that the General Court erred in law by failing to examine the line of argument put forward by the appellants criticising the identification by the Commission, in the decision at issue, of the reference system or the ‘normal’ tax system.

As the General Court did not review the Commission’s interpretation of the applicable national law for the purpose of determining the reference system or the applicable ‘normal’ tax system, which it was required to do in the light of the line of argument specifically put forward before it by the appellants, the Court of Justice considers that the state of the present proceedings does not permit final judgment to be given. Accordingly, the case must be referred back to the General Court.

Costs

55	As the case has been referred back to the General Court, the costs must be reserved.

On those grounds, the Court (Second Chamber) hereby:

1.	Sets aside the order of the General Court of the European Union of 22 October 2021, Fachverband Spielhallen and LM v Commission (T‑510/20, EU:T:2021:745);

2.	Refers the case back to the General Court of the European Union;

3.	Reserves the costs.

[Signatures]

( *1 ) Language of the case: German.