The ECJ held that German legislation on the deductibility of school fees from income tax, where the tax relief does not apply to school fees paid to schools situated in other Member States, is contrary to EU law.

This is not an unexpected decision. A similar relief in Ireland in relation to third level fees should not be affected by the decision as the Irish relief applies to Irish colleges and colleges in a Member State of the EU.

Partial Annulment of Commission decisions

The ECJ Court of first instance has partly annulled the Commission's decision on the Netherlands scheme for international financing activities and also the Commission's decision on Olympic Airways.

The Netherlands

The Netherlands Law on Corporation Tax provides for a special scheme in respect of the international financing activities of companies belonging to a group.

The Commission declared that the scheme was incompatible with the common market and decided that it should be gradually terminated by 31 December 2010 in such a way that the companies covered by the scheme as at the date on which the formal investigation procedure was initiated could still benefit from it until the end of the 10-year period granted to them by the Netherlands tax authority.

In August 2003, the Netherlands tax authority rejected the scheme request by a particular taxpayer on the grounds that it was excluded from the transitional provisions of the Commission's decision declaring the scheme to be incompatible with the common market.

The Court considered that the taxpayer was justified in having a legitimate expectation that a reasonable transitional period would be granted to enable it to adjust to the consequences of the contested decision. Accordingly, the Court found that, by failing to grant the taxpayer such a transitional period, the Commission had infringed the principle of protection of legitimate expectations.

Greece

Over time the measures granted to Olympic Airways by Greece were disallowed on the basis of State Aid rules. As a result the Commission required Greece to take the necessary measures to recover from the company, with interest, GRD 14 billion (EUR 41 million) corresponding to the restructuring aid and the value of the debts tolerated.

Olympic Airways asked the Court of First Instance to review the validity of the decision in question in regard both to the restructuring aid and to the new, non-notified, aid. The Court has partially annulled the Commission decision in regard to certain new, non-notified, aid.

According to the press release, an appeal, limited to points of law only, may be brought before the Court of Justice of the European Communities against a decision of the Court of First Instance, within two months of its notification.