The General Court’s Judgment in Engie: The Non-application of a National GAAR Confers State Aid

In this article, the authors discuss the unprecedented alternative line of reasoning of the European Commission and the General Court in the Engie-case, according to which the non-application of the Luxembourg General Anti-Abuse Rule (‘GAAR’) is considered state-aid. Engie had set up a complex intra-group financing structure between Engie-companies located in Luxembourg, which was endorsed by tax rulings issued by the Luxembourg tax authorities. The European Commission found the structure abusive on the basis of the GAAR and decided that the Luxembourg tax authorities had granted state aid to Engie by not applying the GAAR and endorsing the abusive structure in the tax rulings. The General Court agreed. The article starts with an overview of the facts (section 2) and then discusses the decision of the European Commission (section 3) and the judgement of the General Court (section 4), focusing on the alternative line of reasoning, i.e., the non-application of the GAAR. In the last section some observations are made on the General Court’s judgement. Engie-case – State aid – non-application GAAR – tax avoidance – tax rulings – selective advantage – General Court – Commission Decision – ZORA – national mismatch