Selectivity in the Spanish Tax Lease case: Discretion of public authorities

In what has been described by AG Pikamäe as a ‘veritable legal saga’ that lasted almost 10 years and implied five rounds of judgments from the EU Courts, the Court of Justice definitely confirmed that the Spanish Tax Lease (STL) constituted illegal State aid.

As previously discussed here, the STL saga deals with a complex tax scheme which allowed for accelerated and early depreciation of new vessels (subject to prior authorisation from the Spanish tax authorities) during their construction. This generated a tax expense in favour of Economic Interest Groupings (EIGs) formed by various investors. Since EIGs were fiscally transparent, the tax expense was passed on to its investors, who in turn deducted it for tax purposes achieving a tax advantage. These tax advantages were then partially transferred to the shipping companies that bought a new ship.