Court of Justice (Second Chamber) 15 September 2022, C-705/20 (Fossil (Gibraltar) Limited v Commissioner of Income Tax.)

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In Case C‑705/20, Fossil (Gibraltar) Ltd challenged the legality of Gibraltar's corporate income tax regime, specifically regarding the non-taxation of passive interest and royalty income, which the European Commission deemed unlawful state aid incompatible with the internal market. The Court ruled that while the recovery of such aid is mandated, national authorities may apply domestic provisions allowing for the set-off of taxes paid abroad against Gibraltar tax liabilities, provided these provisions were applicable at the time of the operations in question. This decision clarifies the interaction between EU state aid rules and national tax mechanisms aimed at preventing double taxation.AI