18.2.2012   

EN

Official Journal of the European Union

C 49/26

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annul in its entirety the defendant’s decision of 26 January 2011 in the procedure on State aid C 7/2010 (ex CP 250/2009 and NN 5/2010) ‘KStG, Sanierungsklausel’ (‘Law on corporation tax, provision enabling the fiscal carry forward of losses to allow for the restructuring of companies in difficulty’);

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in the alternative, annul that decision at least in so far as it does not provide for any exception on the basis of the principle of the protection of legitimate expectations in favour of undertakings in the applicants’ position to the obligation to recover aid set out in Articles 4 and 5 of that decision or at least does not provide for any transitional provisions in favour of such undertakings;

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order the defendant to pay the costs.

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The defendant incorrectly comes to the conclusion in the contested decision that the provision enabling the fiscal carry forward of losses in Paragraph 8c(1a) of the German Körperschaftsteuergesetz (KStG) (Law on corporation tax) is unlawful State aid pursuant to Article 107(1) TFEU. In that regard the applicants submit inter alia that the defendant incorrectly assumes that the provision in Paragraph 8c(1a) of the KStG is selective and constitutes an unjustified exception to the principle set out in Paragraph 8c(1) of the KStG according to which the tax losses of a corporation are under certain conditions extinguished if there is a change in the shareholders of that corporation. The applicants take the view that the provision in Paragraph 8c(1) of the KStG is incorrectly regarded by the defendant as the relevant domestic reference system for the investigation of the aid.

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The relevant reference system is the possibility, which is fundamentally given under German law, of transferring losses between different tax periods, which arises out of the principle known as the principle of net profit or loss. The applicants take the view that that reference system is merely confirmed by the provision enabling the fiscal carry forward of losses in Paragraph 8c(1a) of the KStG. In addition, Paragraph 8c(1) of the KStG cannot constitute the relevant domestic reference system because that legal provision is unconstitutional according to the requirements of the German Basic Law.

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Moreover, the provision in Paragraph 8c(1a) of the KStG constitutes what is known as a general measure, which potentially benefits all economic operators encumbered with losses and does not give preference to a delimited group of operators on the market. The applicants take the view that the provision enabling the fiscal carry forward of losses is not therefore selective.

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The provision enabling the fiscal carry forward of losses in Paragraph 8c(1a) of the KStG is also justified on the basis of the nature and general scheme of the German tax system because that provision limits the effects of the restriction on the deduction of losses in Paragraph 8c(1) of the KStG. The applicants submit in that regard that the original version of Paragraph 8c of the KStG was a provision to avoid abuse which had become too wide and that the subsequent (and retroactive) amendment of that provision by Paragraph 8c(1) of the KStG merely reduced the surplus normative content of Paragraph 8c(1) of the KStG and in that respect restored the general transfer of losses between different tax periods as the relevant reference system.

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Lastly, the applicants submit that they have legitimate expectations because the defendant’s negative decision was unforeseeable and the defendant did not complain about the similarly structured preceding provision in Paragraph 8(4) of the older version of the KStG and comparable provisions in other Member States.