CJEU - Recent Developments in Direct Taxation 2020

S. 161. Introduction

On 6 July 2016, a retail sales tax law was adopted in Poland and although it entered into force in September 2016, the tax only started to apply on 1 January 2021. In October 2016, the European Commission blocked the new retail tax, arguing that it discriminates against larger stores and constitutes State aid. The tax rates are 0.8% for the portion of monthly turnover between PLN 17 million and PLN 170 million, and 1.4% for the portion of monthly turnover above that. The tax was expected to bring in an additional PLN 1.9 billion in 2017 alone and was one of the government’s main strategies of financing its spending plans. The collection of retail sales tax was suspended due to the decision of the European Commission of 30 June 2017 questioning the compliance of this tax with EU standards in the field of public aid.

The case does not only raise the question whether a progressive retail sales tax can actually constitute a selective advantage for the purposes of Article 107(1) TFEU. The General Court rejected such an advantage in its judgment at first instance. The question also arises whether the rules on State aid are the proper instrument for reviewing national tax le...