In the process of globalization, incentives occupy an increasingly important place on the legal scene. Given the critical importance of taxation systems, fiscal measures have become decisive tools to confer incentives in the different stages of the tax raising process. Yet the application of tax incentive rules (via such measures as exemptions, credits, deferrals, cancellations or allowances) remains complex and intricate. Against this background, the regulatory framework of tax incentives, which applies at national levels, derives from two major sources: the law of State aid under EU law and the law of subsidies under WTO law. These two legal systems affect and shape the internal structure of national tax systems. Their adaptation to direct taxation may however be fraught with difficulties. Given that aids and subsidies granted in the form of tax advantages have proliferated over the last decade, it is crucial to investigate whether EU and WTO regulation in this regard is compatible with national tax systems.

This book provides clear guidance on what constitutes State Aid in the area of tax law. It clearly explains the situations in which beneficial tax provisions for the taxpayer - e.g., lower tax rates for certain industries or for certain economic zones, advantageous depreciation rules, or exemptions - can be declared void by the European Commission. The difficult controlling concept of 'selectivity' of an aid is dealt with extensively. Drawing on familiarity with the practice of the Commission, as well as the jurisprudence of the General Court and of the Court of Justice, thirteen knowledgeable contributors present valuable arguments in case the Commission requires the repayment of advantages received. Among the topics and issues covered are the following: how unregulated tax incentive competition between States leads to a 'win' by one State and a 'loss' by another; the legal uncertainty attached to the Commission's decision following notification of a proposed tax incentive; the role of the Commission's Code of Conduct; calculating the amount of recovery of illegal State Aid; application of State Aid rules in the area of indirect taxation (e.g., VAT and excise duties); investment fund regimes; subnational regional aid; 'patent box' regimes; foreign source income; and taxpayers' exclusion from infringement proceedings and subsequent appeals.

Rules controlling State aid and subsidies on the EU and the WTO level can have a decisive influence on both regulatory and distributive decision-making. This field of law has grown exponentially in importance and complexity over the past decades. Rules on State aid and subsidies control are one of the key instruments to ensure that public spending and regulatory measures do not lead to discriminatory distortions of competition. As a consequence, hardly any part of national law is free from review under criteria of State aid and subsidy regulation. In turn, State aid and subsidies law is linked to economic, constitutional, administrative law of the EU and the Member States as well as to public international law. This book brings together leading experts from academia, the judiciary, civil servants from the European Commission, and practising lawyers to provide expert opinion and commentary on the diverse dimensions of the complex and vital area of law. Critically analysing and explaining developments and current approaches in State aid law and subsidies, the chapters take into account not only the legal dimensions but also the economic and political implications. They address the EU law applicable to State aid in the aftermath of the recent State Modernisation reform, and coverage includes: an in-depth analysis of the notion of State aid as interpreted by the Court's cases-law and the Commission's practice; the rules on compatibility of State aid with the internal market; the rules governing the procedure before the Commission; the litigation before the Court of Justice of the European Union; and analysis of the other trade defence instruments, including WTO subsidy law and EU anti-subsidy law.