Preferential Corporation Tax and Tax Credit regimes operating in the Basque regions of Northern Spain have been held to be contrary to the State Aid rules of the EU treaty, in a case notable for its longevity as much as anything else.

The Basque preferential tax treatment for certain companies commenced back as far as 1993, and applied to start up companies with a minimum share capital, a minimum fixed asset base and which created at least 10 jobs. The tax credit regime was somewhat younger, and offered direct tax credit incentives for investment in various categories of fixed assets. One of the planks of the defence mounted by the Spanish authorities was the amount of time which had elapsed since the schemes commenced. This defence did not persuade the Court of First Instance.

The case is heavy in its consideration of procedural issues, but the fundamental points about the State Aid rules were restated – “a specific tax measure escapes classification as State Aid if it is justified by the internal logic of the tax system”. However economic policy objectives extraneous to the tax system such as the encouragement of investment don't bring measures outside of State Aid.