EU and State Aid

The definition of state aid is found in Article 107(1) TFEU. In order for state aid to be present all of the following four conditions need to be fulfilled:

  • Aid must be present; i.e. a financial advantage such as a tax benefit. Such aid must be granted by an EU Member State (or any lower level of government) or through state resources, in a manner attributable to that state.
  • Such aid should distort or threaten to distort competition and affect trade between EU Member States.
  • Such aid should favor certain undertakings or the production of certain goods; i.e. it needs to be ‘selective’.

In 2001, the EU Commission launced a number of investigations into “transfer pricing schemes” launched by Belgium, Luxembourg and the Netherlands in relation to Apple, Starbucks, Fiat,  and Amazon.