European Court of Justice Issues Judgment Clarifying State Aid Recovery Rules

The European Court of Justice (ECJ) Sept. 15 issued a judgment for Case No. C-705/20, clarifying the interpretation of state aid recovery rules under European Commission (EC) Decision No. 2019/700. The EC found Gibraltar’s non-application of corporate income tax to passive interest and intellectual property royalties, was unlawful state aid incompatible with the internal market under the Treaty on the Functioning of the European Union (TFEU). The U.K. was then required to recover all incompatible aid. It required repayment by the taxpayer at issue, a Gibraltar subsidiary of a U.S. parent. The taxpayer filed the action against the repayment order. ...