Selectivity of State Aid and Progressive Turnover Taxes – Leaving the Door (Too) Wide Open? : Commission V. Poland

In case C-562/19, Commission v. Poland, the Court of Justice confirmed its settled case law that the EU rules on State aid apply to tax measures which have not been harmonized under EU law. The Court also reaffirmed that tax measures must be reviewed under Article 107(1) TFEU using the three-element selectivity test. The ruling, however, brought important new developments. The case annotation discusses the shortcomings of the Court’s approach to the selectivity test, in particular in relation to the finding that a progressive tax rate must be considered a part of the reference system. It also explains why turnover is not necessarily – contrary to the Court’s view – a neutral criterion. Finally, it explains why the ruling opens the door for Member States to introduce such turnover tax systems which are de facto selective and may aim at pushing an anti-EU, patriotic economic agenda