International Tax Review is part of the Delinian Group, Delinian Limited, 8 Bouverie Street, London, EC4Y 8AX, Registered in England & Wales, Company number 00954730
Copyright © Delinian Limited and its affiliated companies 2023

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

CJEU annuls Volotea and easyJet state aid cases

Nose to nose with a beautiful private business Gulfstream G-V je

The CJEU said the General Court erred in law when it ruled that both companies benefitted from Italian state aid.

The Court of Justice of the EU decided on Friday, November 17, to set aside and annul a General Court judgment concerning airline companies Volotea and easyJet in joined cases C-331/20 P and C-343/20 P.

It followed a European Commission investigation into an Italian regional law after airports in Sardinia were granted state financing for the development of air routes on the island.

In a decision in July 2016, the Commission ruled that the measures were unlawful and that Volotea and easyJet benefited from state aid that was deemed incompatible with the internal market in connection to activities in Cagliari-Elmas and Olbia airports.

Both airlines demanded the actions be annulled.

In May 2020, the General Court dismissed the actions before Volotea and easyJet appealed to the CJEU for the judgment to be set aside.

Under Article 107 of the Treaty on the Functioning of the EU (TFEU), a state measure can be considered state aid if it offers an advantage to the recipient over its competitors. The TFEU prohibits state aid unless justified by reasons of economic development.

The CJEU ruled that the General Court’s judgment did not prove that the Commission determined whether contracts for the services made between the airports and the airlines followed market conditions.

By stating that Volotea and easyJet had benefited from an advantage under the contracts with the airports, the General Court also erred in law as the services provided did not meet the needs of Sardinia, the CJEU found.

The General Court also ruled there was no tender procedure before the contracts were concluded, said the CJEU in its ruling.

According to the CJEU, the General Court failed to apply the “market economy operator principle” in the case.

The court therefore set aside and annulled the decision concerning Volotea and easyJet. The aid granted to both airlines was ruled legitimate.

Other EU state aid cases, including the CJEU ruling against the Fiat-Chrysler group this month, show that companies and jurisdictions are under increasing scrutiny.

In its November 8 decision, the court said the Commission and General Court had incorrectly ruled that Luxembourg breached state aid rules in approving an advance transfer pricing agreement for Fiat Chrysler Finance Europe, formerly known as Fiat Finance and Trade.

more across site & bottom lb ros

More from across our site

Premier League football clubs are accused of avoiding paying up to £470 million in UK tax, while Malta is poised to overhaul its unique corporate tax system.
Bartosz Doroszuk of MDDP offers insights on Poland’s new tax legislation on shifted profits, as the implementation deadline looms nearer.
Four tax specialists preview the UK’s transfer pricing requirements, which come into effect on April 1.
The rise of the QDMTT will likely change how countries compete on tax and transfer pricing policy, but it may not reverse decades of falling corporate tax rates.
ITR’s latest quarterly PDF is going live today, leading on the EU’s BEFIT initiative and wider tax reforms in the bloc.
COVID-19 and an overworked HMRC may have created the ‘perfect storm’ for reduced prosecutions, according to tax professionals.
Participants in the consultation on the UN secretary-general’s report into international tax cooperation are divided – some believe UN-led structures are the way forward, while others want to improve existing ones. Ralph Cunningham reports.
The German government unveils plans to implement pillar two, while EY is reportedly still divided over ‘Project Everest’.
With the M&A market booming, ITR has partnered with correspondents from firms around the globe to provide a guide to the deal structures being employed and tax authorities' responses.
Xing Hu, partner at Hui Ye Law Firm in Shanghai, looks at the implications of the US Uyghur Forced Labor Protection Act for TP comparability analysis of China.