10th Mar 2022 | News

3 Hare Court’s Daniel Feetham QC (door tenant) and Rowan Pennington-Benton succeed before the Advocate-General of the Court of Justice in high profile State Aid and Corporation Tax challenge: Fossil (Gibraltar) Limited v The Commissioner of Income Tax Case C-705/20.

Counsel represent Fossil, a subsidiary of well-known US fashion brand. The A-G recorded that “due to the United Kingdom’s exit from the [European Union]” this is “the last time” UK reference will be heard by the Court of Justice.

The reference proceedings relate to a Commission decision categorising a tax exemption for passive interest and royalty income as State Aid. Fossil argued that nonetheless it was entitled to set-off against its Gibraltar tax liability on royalty income, taxes paid in the US by its holding company. The Tax Authorities refused, saying that such relief would undermine the State Aid ruling. The Directorate-General for Competition agreed.

Mr Feetham QC and Mr Pennington-Benton challenged these decisions before the Court of Justice, arguing that the refusal of relief undermined EU and international provisions on double-taxation and that the Tax Authorities and Director of Competition had misunderstood the Commissions’ ruling on State Aid. The Advocate-general agreed, advising that the domestic relief provisions “concern a very different case from that which led the Commission to its finding of prohibited aid in Decision 2019/700”.  Furthermore “the avoidance of double taxation is a recognised objective of the European Union”. The Commission (which opposed the reference) “does not explain, in its observations, why Gibraltar …supposedly exceeded the limits of its discretion in that respect.”.

Next, will follow the decision of the full Court.  The Advocate-General’s decision can be read here:

EUR-Lex – 62020CC0705 – EN – EUR-Lex (europa.eu)


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