Spain: Challenge to Spanish tax leasing system (CJEU Advocate General opinion)

Opinion proposing that a judgment of the General Court and a decision of EC regarding the “Spanish tax leasing scheme” ought to be partially annulled

CJEU Advocate General opinion

The Advocate General of the Court of Justice of the European Union (CJEU) today issued an opinion proposing that a judgment of the General Court and a decision of European Commission regarding the “Spanish tax leasing scheme” be partially annulled.

Today’s CJEU release [PDF 100 KB] outlines the case, as follows:

  • The EC in 2006 received a number of complaints concerning the application of the Spanish tax leasing system to certain finance lease agreements in so far as it allowed shipping companies to benefit from a 20% to 30% price reduction when purchasing ships built by Spanish shipyards.
  • The EC found that the objective of the Spanish tax leasing system was, first, to generate a tax advantage for the economic interest groupings and investors who purchased shares therein, and who then transferred part of those advantages to the shipping companies that purchased a new vessel.
  • In July 2013, the EC found that certain tax measures of which the Spanish tax leasing system was comprised, including the discretionary application of early depreciation of leased assets, as well as the Spanish tax leasing system as a whole, constituted State aid in the form of a selective tax advantage which was partly incompatible with the internal market. The EC ordered the Spanish authorities to recover the aid from investors in so far as the aid scheme had been implemented since 1 January 2002 in breach of the notification requirement.
  • In September 2013, Spanish entities brought actions for annulment of the EC's decision. In its judgment of December 2015, the General Court of the European Union annulled the EC’s decision, considering in particular, that the existence of a discretionary power conferred on the tax administration was not sufficient to render the advantages resulting from the Spanish tax leasing system as a whole selective, as those advantages were available under the same conditions to any investor who decided to take part in transactions under the system. The EC appealed.
  • The CJEU set aside, in its judgment of July 2018, the judgment of the General Court and held that the General Court had erred in law in that it had based its analysis of the selective nature of the tax measures on the erroneous premise that investors were the beneficiaries of the tax benefits. Noting that the General Court had not ruled on all the pleas in law raised before it, the CJEU found that the proceedings did not allow it sufficient information to give a final judgment and, accordingly, referred the case back to the General Court.
  • In September 2020, General Court dismissed the actions brought by the appellants, and this appealed followed.

The Advocate General today issued an opinion concluding that:

  • The method used by the General Court to examine the selectivity of the Spanish tax leasing system was correct.
  • The grant of those tax benefits under the Spanish tax leasing system was conditional on companies obtaining prior authorization for early depreciation, which was granted by the tax authorities under a broad discretionary power.
  • That discretionary power, framed by vague and non-objective criteria, allowed the tax administration to determine the beneficiaries of early depreciation or the conditions of such depreciation, which makes it possible to consider that the selectivity criterion is satisfied.
  • However, as regards the method of calculating the incompatible aid, the Advocate General’s opinion was that the judgment of the General Court is vitiated by a failure to state reasons, as a result of which it must be partially annulled. 

KPMG observation

The Advocate General’s opinion is not binding on the CJEU. The role of the Advocates General is to propose to the court, a legal solution to the cases for which they are responsible. The CJEU judges will now begin their deliberations in this case with a judgment to be given at a later date.


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