The Contents of Highlights & Insights on European Taxation, Issue 9 2026

Please find below a selection of articles published this month (September 2026) in Highlights & Insights on European Taxation, plus one freely accessible article.

Highlights & Insights on European Taxation (H&I) is a publication by Wolters Kluwer Nederland BV.

The journal offers extensive information on all recent developments in European Taxation in the area of direct taxation and state aid, VAT, customs and excises, and environmental taxes.

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Year 2026, no. 9      

TABLE OF CONTENTS 

INDIRECT TAXATION, CASE LAW

– Rapera (T-356/25). Limits on joint and several liability for VAT representatives. General Court

(comments by Fotini Stefopoulou) (H&I2026/256)

– G Kft. (Régularisation de la TVA apres un contrôle fiscal) (T-198/25). Fiscal neutrality and the right to adjust VAT after tax inspections. General Court

(comments by Tamás Fehér) (H&I 2026/255)

– Peckeger (T-413/25). Scope and direct effect of the VAT transfer-of-a-going-concern regime. General Court

(comments by Giorgio Beretta) (H&I 2026/247)

CUSTOMS AND EXCISE

– European Council endorses new Union Customs Code and EU Customs Authority

(comments by Giorgio Emanuele Degani) (H&I2026/240)

STATE AID

– Schoger II (C-360/25). Selective VAT exemptions for financial services amount to State aid. Court of Justice

(comments by Julia Huber) (H&I 2026/257)

– Utiledulci (C-545/24). Guarantees do not justify suspension of recovery of unlawful State aid. Court of Justice

(comments by Anna Gunn) (H&I 2026/242)

FREE ARTICLE

– Schoger II (C-360/25). Selective VAT exemptions for financial services amount to State aid. Court of Justice

(comments by Julia Huber) (H&I 2026/257)

 Admissibility before the Court

The admissibility assessment in the judgment is not analysed in detail in this note. The considerable attention devoted to it in the judgment can be explained by the first request for a preliminary ruling, which the Court declared manifestly inadmissible (CJ 5 May 2025, C-460/24 Schoger, ECLI:EU:C:2025:346).

Regarding the second request in the case at hand, the Austrian court elaborated on the procedural steps required to rule on the exemption's compatibility with Article 107(1) TFEU, even though it was not contested in the complaint brought before it. The CJ now considered this second request admissible.

From State Action to State Budget: Imputability and Impact on State Resources

 Initially, it should be mentioned that Article 107(1) TFEU speaks of ‘any aid granted by a Member State or through State resources’ (emphasis added by JH). However, the CJ has already made it clear in its case law that the granting by a Member State and through its resources are cumulative requirements (see to that effect, CJ 16 May 2002, C-482/99 France v Commission, ECLI:EU:C:2002:294, paragraph 24 and the case law cited; CJ 20 November 2003, C-126/01 GEMO SA, ECLI:EU:C:2003:622, paragraph 24; CJ 15 July 2004 and C-345/02 Pearle and Others, ECLI:EU:C:2004:448, paragraph 35). While the Court did not elaborate on that aspect in the present case, it nevertheless followed the aforementioned line of jurisprudence by examining both elements cumulatively and as separate conditions. 

The first element – the granting by a Member State – refers to the imputability of a national tax measure to the Member State in question. Since State aid applies only to ‘State’ measures, attributability must be ensured (see, in that regard, the wording of Article 107(1) TFEU referring to the granting ‘by a Member State’ and through ‘State resources’).

In its case law on State aid, the CJ only then considers a national measure not imputable to the Member State but to the EU itself, where the State merely reproduces a clear and precise obligation laid down in an EU Directive (CJ 23 April 2009, C-460/07 Puffer, ECLI:EU:C:2009:254, paragraph 70; cf. the case law of the General Court in GC 5 April 2006, T-351/02 Deutsche Bahn, ECLI:EU:T:2006:104, paragraph 102). In the case at hand, however, the Austrian tax exemption clearly did not follow from any obligation laid down in the VAT Directive. Quite the contrary, Austria went beyond the provisions stipulated therein and introduced a new exemption with no legal basis in the VAT Directive. Unsurprisingly, the Court had no difficulty in considering the imputability criterion fulfilled.

More interesting, however, could be the decision on imputability concerning a German request for a preliminary ruling equally relating to a VAT measure (the Bundesfinanzhof has lodged a request for a preliminary ruling with the CJ in C-477/25). In this case, still pending before the CJ, the measure does not implement a legal obligation (nor does it introduce a measure without any legal basis like the Austrian exemption) but instead, makes use of an option provided for in the VAT Directive.

Although the present decision concerning the Austrian tax exemption cannot help to clarify imputability between the Member States and the EU, since the case was straightforward in that regard, it may nevertheless serve as a point to bear in mind for the future. The decision may also put derogations from the VAT Directive in other Member States on notice; not only with regard to possible infringements of secondary EU law, but especially with regard to breaches of State aid law as primary EU law.

While the granting by a Member State did not pose any interpretation problems in the present case, the granting through State resources was somewhat less straightforward to answer – following from an unicum of VAT law. In particular, the question arose as to how far the missing right to deduct input VAT and the thereby higher tax burden on the side of the taxpayer could have an effect on the decrease in State resources. Like VAT charging, the (missing) deduction of input VAT paid could also affect a State's budget.

Notwithstanding this, the Court rejected limitations on the deduction of input VAT as an argument against classifying it as State aid. The CJ therefore emphasized the assessment at the level of the State concerned and its budget. In that sense, it must only be ascertained whether State revenue is decreasing. This does not necessitate an actual reduction, but only the potential to reduce that revenue (thereby applying an ex ante approach) for which a sufficiently concrete economic risk of burdens being imposed on the State budget suffices (the Court here refers to CJ 8 June 2023, C-50/21 Prestige and Limousine, ECLI:EU:C:2023:448, paragraph 54 and the case law cited).

Put differently, the specific circumstances of the individuals and whether State resources decreased in the individual case, when taking into account the absence of a right to deduct input VAT, cannot play a role in classifying a measure as State aid. While the CJ's interpretation of EU law must, by its very nature, be assessed on the basis of a specific case brought before it, the individual situation of the parties to the proceedings is irrelevant for the analysis under Article 107(1) TFEU. The concept of ‘aid’ is to be interpreted on the basis of objective factors (see to that effect CJ 22 December 2008, C-487/06 P British Aggregates v Commission, ECLI:EU:C:2008:757, paragraph 111; CJ 4 September 2014, C-533/12 P and C-536/12 P SNCM and France v Corsica Ferries France, ECLI:EU:C:2014:2142, paragraph 15).

The specific circumstances of the individuals merely form part of the Commission’s recovery decision. For the classification of a national tax incentive as State aid, however, it cannot and should not be allowed to enter the assessment because the classification as aid only examines the objective fulfilment of the requirements stipulated in Article 107(1) TFEU in a general manner.

To benefit or not to benefit: that is the question

In the present case, the presence of an advantage raises special questions and is scrutinized separately from the selectivity criterion. In particular, the question is how far the existence of an advantage can be assumed where the ‘advantage’ conferred by the measure in question is offset or overcompensated by the absence of the right to deduct input VAT. The CJ rejected this argument at the stage of the classification as ‘aid’. As in the assessment of effects on the State budget (paragraph 43), the individual situation of the undertakings does not play a role in the characterization as State aid, including in examining the presence of an advantage. The specific circumstances of the individuals concerned are only examined within the Commission’s recovery decision.

On the side of the national legislature, the Court rejected another argument related to a possible compensation. In particular, the CJ emphasized that the objective of offsetting structural disadvantages imposed on some undertakings cannot preclude classification as State aid. The CJ had already decided in its earlier case law that the Member States cannot deprive a measure of its State aid character by trying to approximate the conditions of competition by unilateral measures (the Court here refers to Heiser (C-172/03, paragraph 54, and the case law cited). The conclusion in the present case was therefore predictable.

Turning to the annual or periodic basis of VAT, the Court emphasizes with reference to its previous case law (CJ 4 March 2021, C-362/19 P Commission v Fútbol Club Barcelona, ECLI:EU:C:2021:169, paragraphs 87 and 88; cf. CJ 8 December 2011, C-81/10 P France Télécom v Commission, ECLI:EU:C:2011:811, paragraphs 19 and 24) that – also with regard to VAT – the Commission only needs to demonstrate ex ante that the aid scheme is, as a whole, capable of resulting at the time of its adoption in the tax liability being lower than it would have been without its adoption. Whether the scheme actually conferred an advantage on the individuals concerned, again, forms only part of the Commission's recovery assessment, for which the exact amount of aid for each year has to be established. 

In the end, the Court apparently considered the undertakings providing the services covered by the Austrian exemption to be the legal beneficiaries of that exemption. The advantage lies in being able to supply the same services to undertakings which are not entitled to deduct input VAT without needing to charge VAT, while undertakings not covered by the exemption are required to charge VAT for their services to the same undertakings.

One may ask whether the Court thereby could have established a general rule that supplying undertakings are the beneficiary of a VAT incentive. However, in my view, this cannot be conclusively inferred from the present judgment. Moreover, the Court referred to ‘the absence of information contrary in the documents before the Court’ (paragraph 47) while identifying the supplying undertakings as beneficiaries of the measure. In a similar vein, the CJ decided in Heiser (C-172/03, paragraph 47) that ‘there was no indication in the case-file put before the Court by the referring court that the benefit of that measure was systematically passed on by them to the sickness insurance bodies so that the advantage was, in the end, cancelled out for medical practitioners’. Although Heiser (C-172/03) raised the question of a possible passing on of the advantage in question, and this was not explicitly examined in the present case, both VAT cases concern identifying the beneficiary and point to a lack of information to the contrary. Yet, the Court does not clarify – neither in Heiser (C-172/03) nor in Schoger II (C-360/25) – what can be inferred exactly from this absence of contrary information for the classification of the beneficiary.

Unfotunately, the Court also did not address whether the corporate customers of the supplying undertakings could equally qualify as beneficiaries, even though, at the outset, it referred to the very broad concept of advantage, which encompasses all measures which are likely directly or indirectly to favour certain undertakings or are to be regarded as an economic advantage which the recipient undertaking would not have obtained under normal market conditions (the Court here refers to CJ 8 May 2013, C-197/11 and C-203/11 Libert and Others, ECLI:EU:C:2013:288, paragraph 83 and the case law cited).

Interestingly, however, the Court addressed the corporate customers within its assessment of the distortion of competition. More precisely, the Court stated that the distortion results in the present case ‘from the advantage enjoyed by the exempt undertakings, and, moreover, the corporate customers’ (paragraph 58). Unfortunately, the CJ did not elaborate on that any further. 

Selectivity in harmonized VAT law

Normally, the selectivity assessment forms the core of the State aid classification examination. However, in the present case, the analysis of imputability and effect on State resources, as well as the presence of an advantage, appears relatively evenly represented. 

The Court followed its three-step analysis established in its case law (the Court here refers to CJ 29 April 2025, C-453/23 Prezydent Miasta Mielca, ECLI:EU:C:2025:285, paragraph 44 and the case law cited). The analysis begins with identifying the reference framework from which the derogation must be demonstrated. The Court agreed with the referring court and the parties that, in the present case, this must be the harmonized general system of charging VAT. This appears straightforward where there is a clear deviation from the Directive, as with the Austrian exemption. However, one may ask whether the situation would differ in other cases, and in particular to what extent the concept of a ‘harmonised’ system can apply where a Member State makes use of an option provided for in the VAT Directive. 

The Court considered the fact that only services between certain undertakings were exempted, even though the other competing undertakings were in a comparable factual and legal situation, as the derogation from the reference system. Since the exemption not only included undertakings with a banking lience and subject to specific regulatory requirements, these factors could not constitute a distinguishing factor; nor does the lack of input VAT deduction distinguish them, since it follows from the application of the measure under examination itself. 

As regards the justification based on the nature or general structure of the system of which the measure forms part, the preservation of fiscal neutrality, the prevention of overlapping taxes and administrative simplification were invoked by the Austrian Government. Although these grounds are somehow associated with the harmonized VAT system under the VAT Directive, the CJ rejected them as a justification for introducing new exemptions in national VAT systems without any legal basis in the Directive. The Court thereby also referred to Recital 5 of the VAT Directive according to which: ‘a VAT system achieves the highest degree of simplicity and of neutrality when the tax is levied in as general a manner as possible’ (see Paragraph 55 of the Judgment). However, the rejection of the aforementioned justification grounds should not, in my view, be read as implying that they can never justify a derogation in the VAT context. Rather, the Court appears to have regarded them as inadequate only to support the introduction of new exemptions not envisaged by the VAT Directive. 

Putting a Time Limit on a CJ's judgment

The Austrian Government requested a limitation of temporal effects, which the Court rejected because it did not provide details on the extent of services between the exempted undertakings and, therefore, the potential impact of an obligation to pay VAT.

For future proceedings, including those involving other Member States, the main takeaway appears to be that requests for a limitation of the temporal effects of a judgment must be substantiated in detail; a general reference to significant consequences without providing any details will not suffice. 

Even then, a limitation of the judgment's temporal effects is not guaranteed. While – having found that the first condition was not met – the CJ did not go on to address the second condition in the present case, its general case law on the protection of legitimate expectations in the context of State aid and, more precisely, its recovery adopts a rather strict approach. Particularly, the CJ requires a diligent businessman to determine whether the State aid measure followed the procedure laid down in Article 108 TFEU (CJ 20 September 1990, C-5/89 Commission v Germany, ECLI:EU:C:1990:320, paragraphs 13 and 14; CJ 14 January 1997, C-169/95 Spain v Commission, ECLI:EU:C:1997:10, paragraph 51; and CJ 20 March 1997, C-24/95 Land Rheinland-Pfalz v Alcan Deutschland, ECLI:EU:C:1997:163, paragraph 25); substantially limiting the possibilities to argue in favour of the presence of good faith.

Future directions

In conclusion, the judgment marks a milestone in the history of State aid law as regards VAT measures, given the limited number of CJ's judgments concerning State aid in the field of VAT. While the Court clarifies some questions, many remain open and require further elaboration through the CJ's case law. It also remains to be seen to what extent the judgment will influence subsequent decisions and whether VAT may assume a more prominent role in State aid case law in the future.

Julia Huber