National tax law is influenced in particular by European law and European law principles. An influence is the prohibition of tax aid under Article 107 TFEU. It stipulates that tax support for individual companies that have a distortive effect on competition is prohibited in principle. This contribution clarifies how the ban on State aid is enforced by the European Union in the Member States and that the standstill ban is a prohibition subject to authorisation.

The basic prohibition of aid of art. 107 I TFEU is intended to ensure undistorted competition in the internal market and thus safeguard intergovernmental free trade. It precludes tax concessions for companies. This is because these advantages can reduce the loads normally borne. The measure must confer a selective advantage on undertakings in the form of a tax relief. It is therefore necessary that the tax relief is only accessible to certain undertakings or sectors and that other undertakings are excluded from it. In addition, the discharge must be qualified as a state and state-funded measure. It must also affect trade between Member States.

Finally, the discharge must have a distortive effect on competition. However, it should be noted that aid is only eligible if the undertakings benefiting from the advantage are essential to those not benefiting from the aid. They must therefore be genuinely and legally comparable. Consequently, the prohibition of aid is close to the general level of equality, which is limited only in its scope to company tax benefits.

Therefore, any exemption from the standard burden can be considered as tax aid. However, it is not necessary for the advantage to be explicitly designed as an exception, for example as a tax exemption. State aid is, in principle, subject to a standstill obligation.

The prohibition of fiscal aid is regulated by Article 107 I TFEU. However, it is not directly applicable due to the reservation of approval, which is predominantly at the discretion of the Council and the Commission. Nevertheless, there is a prohibition of implementation in Article 108 III 3 TFEU. This applies to aid within the meaning of Article 107 I TFEU, which the Commission has not yet taken a final decision on. Consequently, the Member State may not implement the intended measure. The tax concession may therefore not be granted for the time being. Therefore, the underlying legal regime is inapplicable in the tax assessment procedure. If tax advantages have nevertheless been granted, they must be recovered from the beneficiaries. Therefore, the standard taxation should be established on a provisional basis pending the Commission decision. Liquidity benefits are neutralised by remunerating the recovery claim.

If the Commission decides that the tax aid is compatible with the internal market, infringements of the standstill obligation will not be remedied. The interest benefit resulting from the early use of the advantage shall be absorbed. Competitors excluded from the tax relief can enforce the prohibition of implementation by negative competitor action in court. In this context, however, interim relief must only be granted if the tax relief is clearly to be classified as aid.

If the Commission considers that aid is incompatible with the internal market, the unlawful aid is repealed. Consequently, taxes must be levied in so far as the tax credit has already been used by taxpayers. Interest must also be paid for the liquidity advantages that have arisen. Tax concessions must be recovered only from actual beneficiaries and only to the extent that they have conferred on them advantages prohibited by Article 107 I TFEU. Especially in the case of indirect taxes, such as sales tax, it cannot be assumed that they also benefited the taxpayer.

If the Commission decides that the aid is prohibited, it is a decision within the meaning of Article 103 II 1, 288 IV TFEU which is binding on the Member State. The Member State must then implement it. To this end, it shall examine on a case-by-case basis whether the conditions for recovery have been met and shall apply national procedural law. Consequently, the aid is subject to a standstill obligation. The taxable person may bring an action for annulment under Article 263 TFEU against the Commission decision. Nevertheless, the Member State must implement the recovery decision. In the event of serious doubts as to the legality of the decision, the taxable person shall be granted interim protection.

The Commission shall refrain from recovery if the recovery would infringe a general principle of law of Union law. This is especially the case when principles of legitimate expectations are opposed. However, only measures attributable to the Union institution may constitute a suitable measure of confidence. It is therefore appropriate to make statements by the Commission on the compatibility of the tax relief in question or similar measures taken by such tax regimes in other Member States. In this case, the recovery of the aid can be waived despite the standstill obligation.