CJEU - Recent Developments in Direct Taxation 2025

1. Background

The case at hand concerns the compatibility of tax privileges for non-profit undertakings with State aid provisions. Many such privileges have been in place for decades. As existing aid can only be tackled by the Commission for the future, such exemptions are then immune to (retroactive) State aid control. However, the provision at issue (in the following referred to as the cooperation clause) in the case under discussion was introduced only in 2020. Under the provision, an undertaking can qualify for non-profit status where it does not pursue the non-profit purpose directly but systematically cooperates with another non-profit undertaking.

The case is significant as it presents one of the first opportunities for the CJEU to rule on the selectivity of tax benefits after its seminal Grand Chamber judgment in Prezydent Miasta Mielca, which seems to have cemented the more restrictive recent case law on fiscal State aid law.

S. 86At the same time, it is somewhat atypical: The cooperation clause does not grant a particular tax advantage. Instead, it relaxes one criterion for the recognition of non-profit status, which subsequently entails a number of tax privileges. It is therefor...