On October 6, 2021, the Court of Justice dismissed eight appeals[1] brought against the 2019 judgments of the General Court, upholding the classification of Spanish tax rules on the amortization of financial goodwill as State aid incompatible with the internal market. The judgments are noteworthy as the Court of Justice, sitting as the Grand Chamber, shed light on the interpretation of the notion of selectivity—one of the cumulative criteria required for a national measure to qualify as State aid contrary to EU law. In particular, it clarified that even a measure of general nature that is open to all undertakings can be selective, if it benefits certain undertakings depending on whether they decide to carry out certain transactions.


The judgments concern a Spanish tax measure under which companies subject to taxation in Spain can deduct from their taxable base the financial goodwill arising from an acquisition of a shareholding in a foreign company. In two related decisions from October 2009 and January 2011 respectively, the Commission declared that the tax amortization measure at issue constituted State aid incompatible with the internal market because it introduced an unjustified difference in treatment between undertakings that have decided to carry out comparable transactions (i.e., acquisitions of a shareholding in foreign, as contrasted from Spanish, companies).[2]

In November 2014, the General Court annulled the Commission’s decisions because the Commission had not established that the tax measure at issue was selective, as it was open to all companies subject to taxation in Spain, rather than aimed at a particular category of undertakings or at the production of a particular type of goods.[3] In December 2016, the Court of Justice in turn quashed the General Court’s judgments because they were based on an incorrect understanding of selectivity, and referred the cases back to the General Court.[4]

In November 2018, the General Court held that the tax measure at issue was indeed selective and dismissed the actions for annulment brought against the Commission’s decisions.[5] After over a decade of back-and-forth between the courts, the Court of Justice upheld the General Court’s judgments, confirming the Commission’s characterization of the measure as unlawful State aid.

The Notion of selectivity

The Court of Justice from the outset recalled the three-step test for selectivity of national tax measures that the Commission must apply. First, it must identify the common or normal tax system applicable in the Member State. Second, it must demonstrate that the tax measure at issue is a derogation from that reference tax system, differentiating between undertakings that—in light of the objective pursued by the legal system—are in a comparable factual and legal situation. Third, it must ascertain whether that differentiation is justified as a corollary to the nature or general structure of the reference tax system.

Upholding the General Court’s novel interpretation on the second limb of this test, the Court of Justice confirmed that a national tax measure may be selective even if its scope of application is not restricted to a group of undertakings with specific characteristics. As in the present case, a national measure of general application may be selective if it has different effects on undertakings, depending on whether they carry out a certain type of transaction (e.g., buying shares in a foreign company) or another comparable transaction (e.g., buying shares in a Spanish company).


These judgments endorse a novel and broad interpretation of the notion of selectivity, now covering selectivity based on the specific transactions that economic operators may decide to carry out. In practical terms, the judgments provide the Commission with ammunition to assess the lawfulness of an increasing number of national tax measures of general application: it can now qualify a tax measure as unlawful State aid, based on the different nature of transactions carried out by the potential beneficiaries and without the need to identify a specific category of beneficiaries targeted by the measure.

[1] Sigma Alimentos Exterior v Commission (Case C-50/19) EU:C:2021:792; World Duty Free v Commission (Joined Cases C-51/19 and C-64/19) EU:C:2021:793; Banco Santander v Commission (Case C-52/19) EU:C:2021:794; Banco Santander and Santusa v Commission (Joined Cases C-53/19 and C-65/19) EU:C:2021:795; Axa Mediterranean v Commission (Case C-54/19) EU:C:2021:796; Prosegur Compañía de Seguridad v Commission (Case C-55/19) EU:C:2021:797.

[2] Commission Decision C (2009) 8130 of October 28, 2009 (State Aid C 45/2007 (ex NN 51/2007)), OJ 2011 L 7/48. See also Commission Decision C (2013) 3204 of January 12, 2011 (State Aid C 45/2007 (ex NN 51/2007)), OJ 2011 L 135/1.

[3] Autogrill España v Commission (Case T-219/10) EU:T:2014:939; Banco Santander and Santusa v Commission (Case T-399/11) EU:T:2014:938, as reported in our October–December 2014 EU Competition Report.

[4] Commission v World Duty Free Group and Others (Joined Cases C-20/15 and C-21/15) EU:C:2016:981.

[5] Sigma Alimentos Exterior v Commission (Case T-239/11) EU:T:2018:781; RENV Banco Santander and Santusa v Commission (Case T-399/11) EU:T:2018:784; Banco Santander v Commission (Case T-227/10) EU:T:2018:785; Axa Mediterranean v Commission (Case T-405/11) EU:T:2018:780; Prosegur Compañia de Seguridad v Commission (Case T-406/11) EU:T:2018:793; RENV World Duty Free Group v Commission (Case T-219/10) EU:T:2018:784; Deutsche Telekom v Commission (Case T-207/10) EU:T:2018:786.