Provisional text
OPINION OF ADVOCATE GENERAL
A. BIONDI
delivered on 5 November 2026 (1)
Case C‑424/25
Overgaard Gods A/S
v
Miljøstyrelsen
(request for a preliminary ruling from the Vestre Landsret (High Court of Western Denmark, Denmark))
( Reference for a preliminary ruling – State aid – Danish tax on groundwater extraction permits – Aid scheme incompatible with the internal market – Recovery – Implementation of the recovery decision – Amount of aid to be recovered – Method for calculating based on the permissible volumes of water extraction and not on those actually used – Principle of proportionality )
Introduction
1. The present reference for a preliminary ruling highlights some of the tensions inherent in the recovery of State aid unlawfully put into effect by the Member States. The recovery action, despite its somewhat circular nature with the money passing from the State to the undertaking and then back to the State, is firmly based on the imperative that the competitive situation which existed on the market prior to the grant of the aid be restored. It is therefore necessarily rigid and prescriptive, at least with regard to the result to be achieved.
2. Recovery is carried out following the procedures laid down by the law of the Member State concerned. However, national rules which unduly prevent or impede the achievement of such a result cannot be applied. This explains the rather limited role played by principles such as the principle of proportionality. There is little room for balancing conflicting objectives, as far the principle of recovery itself is concerned: the unlawful aid must be recovered, whatever the consequences that such recovery may have on the situation of the undertakings required to comply with it.
3. Those strict parameters pursue, however, a specific objective that is, to eliminate any obstacle that may hinder recovery. The question of the quantification of the amounts to be recovered is, however, of a different nature. It concerns, so to speak, the computation of the recovery: not whether recovery is to take place, but what exactly is to be recovered. Recovery is, as the Court has made clear, restitutory by nature, not punitive. Its purpose is to remove the advantage obtained by the beneficiary and thus restore the situation which existed before the aid was granted.
4. By the present request for a preliminary ruling, the referring court asks, in essence, whether, in order to determine the amount of aid that the beneficiary of a scheme declared incompatible with the internal market is required to repay, the competent authorities of the Member State concerned or the national court may depart from the method of calculation prescribed by the European Commission in the recovery decision, if the amount resulting from the application of that method of calculation appears disproportionate to the advantage actually obtained or, in any event, excessive with regard to the specific situation of the beneficiary.
5. That question was raised in proceedings concerning the legality of the decision of the Miljøstyrelsen (Environment Agency, Denmark; the ‘Agency’) by which it ordered Overgaard Goods A/S (‘OG’) to repay unlawful State aid declared incompatible with the internal market by the Commission, received in the context of the collection of a tax on groundwater extraction during the period from 2009 to 2011.
Background to the main proceedings and question referred for a preliminary ruling
6. On 1 January 2009, lov nr. 1402 om ændring af lov om vandforsyning m.v (Law No 1402 amending the Law on the supply of water) of 27 December 2008 (‘the 2008 Law’) entered into force, which introduced, in Denmark, an annual tax on groundwater extraction, with an eye to using the proceeds to fund surveys of and management planning for areas that are particularly important to the drinking water supply (‘the water extraction tax’).
7. Under Article 24 of that law, a tax per m³ was to be levied annually on groundwater extraction permits. (2)
8. Owners of public water supply facilities had to pay tax on the entire permissible annual volume of water extraction related to the facility (Article 24a).
9. By contrast, owners of water extraction facilities other than public water extraction facilities were required to pay tax only on one third of that volume (Article 24b(1)). Furthermore, if the permit related to a volume exceeding 25 000 m³, the holder paid one third of the tax calculated on 25 000 m³ (Article 24b(2)). Full exemption from tax was granted to holders of extraction permits for up to 6 000 m³ a year (Article 24c).
10. The tax was collected at State level and administered by the Agency. The tax was originally intended to apply until 2017, but it was repealed with effect from 1 January 2012 by lov nr. 1384 om ændring af lov om vandforsyning m.v. (Law No 1384 of 28 December 2011 amending the Law on the supply of water and other matters) and was therefore levied for only three years, from 2009 to 2011. The amount due was DKK (Danish kroner, ‘DKK’) 0.305 per m³ in 2009, DKK 0.315 per m³ in 2010 and DKK 0.310 per m³ in 2011.
11. By decision of 21 March 2012, (3) adopted following a prior notification by the Kingdom of Denmark, the Commission opened a formal examination procedure under Article 108(2) TFEU regarding certain characteristics of the scheme applicable to the aforementioned tax, namely the reduction by two thirds of the tax for owners of private water extraction facilities and the exemption for volumes of water greater than 25 000 m³ and less than 6 000 m³, provided for respectively in Article 24b and 24c of the 2008 Law. At the end of that procedure, by decision of 16 October 2017, (4) the Commission found that the tax ceiling set at 25 000 m³ constituted unlawful State aid incompatible with the internal market and ordered its recovery. (5) In recital 127 of that decision, the Commission pointed out that ‘the Danish authorities must … take all necessary measures to recover the incompatible aid from the beneficiaries. The present case concerns the difference between the amount that should have been paid by way of the tax based on the permissible volume and the amount paid on an extraction volume of 25 000 m3’. By contrast, the reduction by two thirds of the tax and the tax threshold of 6000 m³ were considered not to constitute State aid. (6)
12. OG, the applicant in the main proceedings, is an undertaking operating in the primary production sector. Between 2009 and 2011, it held a water extraction permit set at 3 000 000 m³ per year, issued at municipal level in 1995, for a period of between 10 and 15 years. On the basis of that permit, it extracted 96 033 m³ of water in 2009, 131 184 m³ in 2010 and 121 036 m³ in 2011. For each of those years, it paid an amount corresponding to an extraction volume of 25 000 m³ as water extraction tax, in accordance with Article 24b of the 2008 Law.
13. On 5 November 2020, applying Danish rules adopted to implement the decision of 16 October 2017, the Agency issued an order requiring OG to repay a sum of DKK 922 250.00, together with interest due under those rules (‘the contested measure’). In that measure, the amount of aid to be repaid by OG was calculated, for each of the three years in which the tax was levied, as one third of the part of the permissible volume of water extraction exceeding 25 000 m³, multiplied by DKK 0.310 per m³, corresponding to the average of the coefficients applied during the three years in which the tax was levied.
14. In its application, OG claims that it used only just over 5% of the volume of water stated in its permit. In those circumstances, calculating the amount of aid to be recovered on the basis of the permissible water volume and not on the basis of that actually consumed would be contrary to the principles of proportionality, legal certainty, the protection of legitimate expectations and ultra posse nemo obligatur. Repayment based on the permit does not in fact reflect the real economic advantage it gained, which in its case, consisted of the part of the actual consumption exceeding the tax ceiling of 25 000 m³. The applicant in the main proceedings observes that the unused portion of the permit could only have been used by over-watering crops, contrary to their biological needs and infringing the regulations governing the agricultural use of fertilisers and on nutrient-reducing measures. The situation of the applicant in the main proceedings is not comparable to that of other beneficiaries, which include, inter alia, food production undertakings. Such undertakings derived an actual economic advantage by making full use of their permits and, among those undertakings, those which consumed more than their permit allows will be able to derive a competitive advantage due to the fact that they are required to repay only on the basis of the permit. Based on the actual consumption, the applicant in the main proceedings calculated the State aid actually received at DKK 28 294.73, excluding interest (DKK 33 603.69 including interest).
15. The Agency contends that it follows from the decision of 16 October 2017 that the unlawful State aid identified by the Commission must be determined on the basis of the permissible volume of water extraction, and not of actual consumption. It also follows from that decision, and the discussions between the Commission and the Danish authorities subsequent to its implementation, that recovery on that basis is not contrary to general principles of law, including the principle of the protection of legitimate expectations or the principle of proportionality. The decision of 16 October 2017 thus leaves the Agency and Danish courts no discretion to annul the claim for recovery on the basis of general principles of law such as those on which the applicant relies or to set the amount of the recovery at a lower amount, for example on the basis of actual consumption.
16. The Vestre Landsret (High Court of Western Denmark, Denmark) is uncertain whether, in cases such as the one at issue in the main proceedings, where the volume actually extracted constitutes only a small fraction of the permissible volume, and where the beneficiary cannot be said to have derived any actual economic benefit from the entire permissible volume, the application of general principles of law such as those mentioned above can lead to the determination of the amount to be recovered being based on the volumes actually extracted or to the obligation to recover being extinguished entirely. According to that court, it is not clear whether the decision can legitimately and exhaustively determine how to calculate the amount of aid to be recovered, with the result that beneficiaries are totally denied the possibility of relying on general principles of law, including those mentioned in specific situations such as that at issue in the main proceedings.
17. Lastly, the Vestre Landsret (High Court of Western Denmark) notes that even though the legality of the decision of 16 October 2017 was not challenged by the applicant or the Danish authorities during the main proceedings, the position of the Court of Justice on the questions raised casts doubt on the validity of the Commission decision. That would raise the question as to whether the fact that no action for annulment has been brought within the time limit for instituting proceedings under Article 263 TFEU means that the validity of the decision cannot be challenged in connection with the present reference for a preliminary ruling, in accordance with the case-law arising from the judgment of 9 March 1994, TWD Textilwerke Deggendorf (7) (‘the judgment in TWD’).
18. It is apparent from the order for reference that recovery of the State aid declared unlawful and incompatible in the decision of 16 October 2017 has been completed for the vast majority of the beneficiaries and that, in total, approximately 6 400 beneficiaries held extraction permits exceeding 25 000 m³.
19. In those circumstances, the Vestre Landsret (High Court of Western Denmark) decided to stay the proceedings and to refer the following question to the Court of Justice for a preliminary ruling:
‘In situations such as the one at issue in the main proceedings, where the volume actually extracted constitutes only a small fraction of the permissible volume and where the beneficiary cannot be said to have derived any actual economic benefit from the entire permissible volume, do fundamental principles of EU law, including the principle of proportionality, preclude the unlawful and incompatible State aid, which the Danish State is recovering under the Law on recovery and the Decree on recovery in order to enforce the repayment obligation imposed by … Decision of 16 October 2017 …, from being determined on the basis of permissible volumes, so that the claim must be extinguished or determined on the basis of the volume actually extracted?’
Analysis
Admissibility of the request for a preliminary ruling
20. The Danish Government and the Commission observe that OG did not challenge the decision of 16 October 2017 before the EU courts, although it was undoubtedly entitled to do so. Referring to the case-law arising from the judgment in TWD, they express doubts as to the admissibility of the present request for a preliminary ruling, in so far as it seeks to call into question the validity of that decision.
21. According to settled case-law of the Court of Justice, the possibility for a person to rely, in an action brought before a national court, on the invalidity of provisions contained in a measure of the European Union, which constitutes the basis of a national decision taken concerning him or her, presupposes either that he or she has also brought, pursuant to the fourth paragraph of Article 263 TFEU, an action for annulment of that measure within the prescribed time limits, or that he or she has not done so, as a result of not having a right to bring such an action. (8) That case-law is based on the consideration that the periods within which applications must be lodged are intended to safeguard legal certainty by preventing EU measures which involve legal effects from being called in question indefinitely, (9) and on the need to prevent any abuse of process. (10)
22. In that context, the Court has also stated that the actual beneficiaries of individual aid, granted under an aid scheme, of which the Commission has ordered the recovery must be regarded, in principle, as directly and individually concerned within the meaning of the fourth paragraph of Article 263 TFEU. (11)
23. In the present case, it seems to me unquestionable that, as a beneficiary of the aid scheme in question, OG was undoubtedly entitled to bring a direct action, within the meaning of the fourth paragraph of Article 263 TFEU, against the decision of 16 October 2017. (12) It cannot therefore now plead the invalidity of that decision before the national court in order to challenge the recovery order issued against it when the decision was implemented.
24. That does not mean, however, that any challenge to the amount to be recovered is necessarily precluded. A distinction must be made between challenging the validity of the Commission’s decision and questions relating to its interpretation and application. The former is subject to the limits established by the case‑law resulting from the judgment in TWD. The latter may nevertheless be examined by the national court, if necessary with the assistance of the Court by means of the preliminary ruling procedure, provided that this does not call into question the binding conclusions of the Commission decision.
25. Admittedly, that distinction is not entirely straightforward in the present case. OG claims that the calculation method established by the Commission, if applied to its particular circumstances, results in an amount of aid to be recovered which is disproportionate to the advantage actually received. That line of reasoning could be understood as challenging the validity of the method itself. The referring court does not, however, ask the Court to rule on the validity of the decision of 16 October 2017. (13) Rather, it seeks to ascertain whether, when implementing that decision, the general principles of EU law allow national authorities to take into account the individual circumstances of the beneficiary and, if so, to depart from the method of calculation indicated by the Commission.
26. In those circumstances, the request for a preliminary ruling by the Vestre Landsret (High Court of Western Denmark), in which that court is uncertain only as to the interpretation and application of the decision of 16 October 2017, is admissible.
Merits
27. The referring court asks, first, whether the decision of 16 October 2017 must be interpreted as setting out the Commission’s ‘exhaustive’ position on the method for calculating the aid to be recovered and therefore requires the Danish authorities to determine the amount due in every case on basis of the permissible volume of water rather than the volume actually extracted. Second, if no derogation is permitted, the referring court asks whether, in the event that the application of that method of calculation leads to a disproportionate result, the general principles of EU law allow the amount to be repaid to be determined according to the volume extracted or whether that amount may be regarded as zero.
28. The first question which arises is therefore whether the authorities of the Member State, to which a decision declaring an aid scheme unlawful and incompatible with the internal market and ordering its recovery is addressed, have a margin of discretion in the application of the method of calculation indicated by the Commission in that decision.
29. In that regard, it should be noted that, when ordering the recovery of aid declared incompatible with the internal market, the Commission is not required to determine the exact amount of the sums to be repaid, provided that its decision contains the necessary information to enable the authority ordered to work out that amount without undue difficulty. (14) In particular, when dealing with an aid scheme, the Commission is not normally in a position to identify the beneficiaries precisely or to quantify the aid received by each of them. It may therefore confine itself to examining the general characteristics of such a scheme, without being required to examine each individual case to which it applies. (15)
30. Recovery is carried out, as has been stated, in accordance with the procedures laid down by the national law of the Member State concerned, (16) in compliance with the principles of effectiveness and equivalence (17) and the relevant disputes arising are a matter for the national court alone. (18) It is at that stage that the situation of each undertaking concerned is assessed, (19) including circumstances which may affect the extent of the advantage received and the calculation of the amount of aid to be repaid. (20) In carrying out that assessment, however, the competent authorities or the national court may not depart from the binding findings and instructions contained in the recovery decision, (21) including those relating to the quantification of the aid to be recovered. In that regard, the Court has repeatedly held that, when the Member State concerned deals with that quantification, it must do so on the basis of the method set out in the decision ordering recovery. (22)
31. The judgments in Mediaset, (23) in Fossil (24) and in Commission v Fútbol Club Barcelona, (25) which were discussed both in the written submissions to the Court and at the hearing, cannot, in my view, be relied upon in support of a different interpretation.
32. Admittedly, it is apparent from those judgments that the quantification of the amount of aid to be repaid is not a purely mechanical operation and that, in order to implement the recovery decision, it is necessary to assess the circumstances, both legal and factual, which have an impact on the actual extent of the advantage enjoyed by the individual beneficiary. However, in none of those judgments did the Court authorise the national authorities of the Member State concerned to depart from the method of calculation laid down by the Commission.
33. Furthermore, the circumstances which gave rise to those rulings differed significantly from those applying in the main proceedings.
34. In the proceedings which gave rise to the judgment in Mediaset, the matter for examination was whether, in the order contested before the national court, the competent authorities had correctly applied the method for calculating the amount to be repaid contained in the recovery decision. However, the question as to whether or not it applied to the undertaking to which that measure was addressed was not at issue. (26)
35. In the proceedings which gave rise to the judgments in Fossil and in Commission v Fútbol Club Barcelona, the question was, in essence, how should account be taken of provisions relating to the tax scheme applicable to the recipient undertakings which permitted the advantage they had enjoyed to be reduced. By contrast, in the present case, the question raised is whether it is possible to derogate from the tax regime to which the recipient undertaking would be subject once the aid element has been removed, where the application of that regime leads to amounts to be recovered which are regarded as exorbitant.
36. In fact, as the Court has held, where State aid is found to be incompatible, the role of the national authorities is to give effect to the Commission's decisions. Where the Commission, in a decision which has not been the subject of legal proceedings, orders the recovery of unduly paid sums, the national authorities are not entitled to reach any other finding, (27) save those, as already mentioned, which are necessary in order to identify the beneficiaries, particularly in the case of an aid scheme, and to quantify the amounts to be recovered on the basis of the information contained in the recovery decision and, where appropriate, in correspondence with the Commission during the implementation of that decision. (28)
37. In the present case, Articles 4 and 6 of the decision of 16 October 2017 require the Kingdom of Denmark to recover the unlawful and incompatible aid granted by setting the tax ceiling at 25 000 m³. Recital 127 of that decision sets out the method of calculation for quantifying the amounts to be recovered, without providing for any derogation. It in fact specifies the criterion on the basis of which the tax advantage being the subject of the recovery obligation imposed must be determined. It follows that the Agency could not depart from the detailed rules set out in that recital, which, as reiterated by the Commission, applied to all beneficiaries, even after the adoption of the decision. The same applies, in principle, to the referring court when reviewing the legality of the measure taken by the Agency, unless it decides to make a reference for a preliminary ruling on validity.
38. This raises a further question arises as to whether the recovery from OG of the amount resulting from the application of the calculation method set out in recital 127 of the decision of 16 October 2017 infringes the principles of legal certainty, proportionality and the protection of legitimate expectations, given that, during the period in which the tax was collected, that undertaking extracted only a small fraction of the volume of water indicated in its permit.
39. In my view, that question can easily be resolved with regard to the principles of legal certainty and the protection of legitimate expectations. First, it cannot be held that the recovery of aid declared unlawful and incompatible with the internal market, the amount of which is determined on the basis of the method of calculation clearly defined in the Commission decision ordering its recovery and which has become final, (29) infringes the principle of legal certainty. (30) Second, in view of the mandatory nature of the supervision of State aid by the Commission, undertakings to which aid has been granted may not, in principle, entertain a legitimate expectation that the aid is lawful unless it was granted in compliance with the procedure laid down in Article 108 TFEU, (31) which was not the case here.
40. I shall therefore analyse the issue solely with regard to the principle of proportionality, on which, moreover, the referring court and OG place greater emphasis. That principle requires that acts adopted by EU institutions do not exceed the limits of what is appropriate and necessary in order to attain the legitimate objectives pursued by the legislation in question; where there is a choice between several appropriate measures, the least onerous must be adopted, and the disadvantages caused must not be disproportionate to the aims pursued. (32)
41. Compliance with the general principles of EU law limits the Commission’s obligation to order the recovery of unlawful aid declared incompatible with the internal market. (33) Recovery cannot therefore be required if this would be contrary to the principle of proportionality.
42. In the present case, the Danish authorities had objected, during the formal investigation procedure, to a possible recovery order. Those authorities had argued, inter alia, that recovery placing all undertakings on an equal footing was impossible to achieve (34) and that, if the ceiling of 25 000 m³ were removed, this would have the biggest impact on those with the greatest need for irrigation due to weather conditions. For those producers, in particular those in the primary production sector, recovery would have led to a disproportionate increase in production costs. (35) Although it did not expressly take a position on those arguments, the Commission concluded, in recitals 125 and 126 of the decision of 16 October 2017, that there were no grounds for ruling out recovery.
43. Observance of the principle of proportionality is also binding during the recovery stage and must be assessed in the light of the objective pursued, (36) which, as mentioned, is to restore the situation which existed on the internal market prior to the payment of that aid. (37)
44. The recovery of State aid unlawfully granted for the purpose of re-establishing the previously existing situation is the logical consequence of a finding that it is unlawful and cannot in principle be regarded as disproportionate to the objectives of the Treaty with regard to State aid. The measure is in breach of the principle of proportionality only if the amount which the beneficiary is required to repay exceeds the discounted value of the aid received. (38)
45. In the present case, the premiss on which the referring court proceeds is that OG did not derive ‘any real economic advantage’ from the entire volume of water stated in its permit, since it did in fact extract only a small fraction of that volume, nor could it have used a larger fraction of that volume in view of the climatic conditions and restrictions imposed by legislation applicable in the sector in which it operates.
46. In that regard, it is important to make one point clear. It is certainly correct to state that, over the three-year period in which the tax was collected, whilst exceeding the 25 000 m³ ceiling each year and thus benefiting from the scheme provided for in Article 24b(2) of the 2008 Law, OG utilised only a minimal portion of its permissible extraction volume, for reasons linked to the exercise of its production activities, and therefore did not derive a direct economic advantage from the permissible, but unused, volumes.
47. However, that finding has no bearing on the extent of the advantage obtained by OG as a beneficiary of the aid scheme identified by the Commission, or on the quantification of the amount which that undertaking is required to repay.
48. In the decision of 16 October 2017, the Commission considered that the ceiling of 25 000 m³ introduced an exception that, in fact, derogated from the principle according to which all undertakings subject to the tax scheme provided for in Article 24b of the 2008 Law were to pay one third of the tax, conferring a selective advantage on undertakings with an extraction permit for quantities exceeding that limit. (39) The amount that undertakings holding permits for quantities exceeding 25 000 m³ were required to pay was, in fact, lower than what they would have paid without the ceiling. Moreover, the higher the volume of water permitted to be extracted, the lower the tax will be in relative terms. (40) The determination of the ceiling therefore amounted to a partial exemption from tax which applied only to some of the undertakings subject to the tax regime laid down in the aforementioned Article 24b, even if, according to the Commission’s findings, (41) those undertakings were in the same factual and legal situation.
49. That said, it should be pointed out that a tax represents a burden for the undertakings which are liable to pay it, and not an advantage. The provisions of the Treaty on State aid come into play when the tax measures of Member States give rise to more favourable tax treatment for their beneficiaries by comparison with other taxpayers, (42) affecting the advantage provided by that treatment.
50. It follows that, as the Court has stated, recovery of aid granted in the form of a tax advantage means that the transactions carried out by the recipients must be subject to the tax treatment which the recipients would have received in the absence of that aid. (43) Re-establishing the status quo ante merely enables account to be taken of potentially more favourable tax treatment, which, in the absence of unlawful aid, would have been granted on the basis of the operation actually carried out. (44)
51. As the Court has also stated, recovery of unlawful aid entails the restitution of the advantage procured for the recipient and not of any economic benefit the recipient may have enjoyed as a result of exploiting the advantage. That benefit may not be the same as the advantage constituting the aid and there may indeed be no such benefit, but that cannot justify failure to recover that aid or the recovery of a different sum from that constituting the advantage procured by the unlawful aid in question. (45)
52. In the present case, the advantage identified by the Commission in the decision of 16 October 2017 corresponds to the tax exemption resulting from the application of the ceiling of 25 000 m³. That means, as stated in recital 127 of that decision, that, for the purposes of recovery, holders of permits relating to private water extraction facilities who benefited from that ceiling must be subject to pay one third of the tax on the total volume recorded in their permits, in accordance with the tax regime to which they were subject under Article 24b of the 2008 Law.
53. Consequently, the sums which OG is required to pay under the measure contested in the main proceedings, in so far as they result from the correct application of that method of calculation, which it is for the referring court to verify, reflect the advantage from which that undertaking benefited. Their recovery does not therefore infringe the principle of proportionality.
54. The fact that OG used only a small portion of the volumes of water indicated in its permit and therefore did not fully exploit the taxable goods does not entitle it to have a different taxable amount applied for the purposes of calculating the amount of aid which it is required to repay, let alone to have that amount reduced to zero. (46) As the Commission rightly points out, the disproportion between actual consumption and the amount of tax payable at issue in the main proceedings results from the decision of the Danish legislature to tax the undertakings subject to the scheme under Article 24b of the 2008 Law on the basis of the permissible extraction volume, without taking account of their actual consumption. (47)
55. Moreover, it cannot be ruled out that other undertakings subject to the tax scheme provided for in Article 24b of the 2008 Law may have used their permits to a lesser extent than one third of the volumes ascribed to them, even if not to the same extent as in the case of OG. A derogation from the application of the method for calculating the amount of aid solely in favour of OG, allowing it to pay the tax on the basis of actual consumption or not to pay it at all beyond the limit of 25 000 m³ provided for by the ceiling, could result in those undertakings being unequally treated.
56. In short, the national authorities competent for recovery are certainly required to assess the situation of each undertaking benefiting from an aid scheme in order to determine the amount of the advantage received and the amounts to be recovered. However, that does not authorise them to apply the recovery decision selectively, deviating from the binding findings confirming the existence of an advantage or from the calculation method prescribed by the Commission to quantify it. Authorising the authorities of the Member States or the national courts, which are called upon to assess the lawfulness of the former’s actions, to derogate from the calculation method set out by the Commission for the quantification of the amounts to be repaid risks compromising the effectiveness of the State aid recovery mechanism.
57. Nevertheless, I consider that the particular circumstances of the case in the main proceedings merit a final reflection. Those circumstances illustrate rather well, and not without a certain degree of severity towards the undertaking concerned, the tensions inherent in the recovery of unlawful State aid. Recovery serves a remedial purpose and is not a punitive remedy. Nevertheless, the obligation to restore the situation that existed before the aid was granted may have particularly far-reaching consequences in specific cases.
58. According to the request for a preliminary ruling, in the tax years at issue, OG used only approximately 5% of the permissible water volume, as opposed to an average of 34% for agricultural holdings engaged in primary production, according to the data set out in the Commission decision. It does not even appear that, in view of the nature of its activities and the restrictions to which it was subject, OG could have made significantly greater use of its extraction permit. Those circumstances help to explain why the amount to be recovered is particularly large compared to the volume of water actually extracted.
59. The decisive question here, however, is whether the amount to be recovered exceeds the advantage actually obtained. In the present case, the advantage results from the application of a ceiling which reduced the tax normally payable on the permissible water volume. The limited use by OG of its permit does not alter that advantage.
60. In recital 127 of the decision of 16 October 2017, the Commission determined the amount to be recovered by reference to the difference between the amount due on the permitted volume and the amount of tax that was actually paid. It is for the national authorities to determine the amount received by each beneficiary, but they cannot replace the method of calculation established by the Commission with another. The particular difficulties encountered by OG, however understandable they may be, cannot justify such a derogation. Recovery may be onerous without, however, losing its remedial character. What is important is that it does not exceed the advantage from which the beneficiary has benefited.
I. Conclusion
61. In the light of all the foregoing considerations, I propose that the Court answer the question referred by the Vestre Landsret (High Court of Western Denmark, Denmark) as follows:
‘The fundamental principles of EU law, including the principle of proportionality, do not preclude the amount of unlawful State aid declared incompatible with the internal market in Decision (EU) 2018/884 of 16 October 2017, and resulting from the imposition of a ceiling of 25 000 m³ for the application of the tax on groundwater extraction permits, from being calculated, for the purposes of recovery, on the basis of the permissible volume of water extraction, in accordance with recital 127 of that decision, rather than on the volumes actually used, even in circumstances such as those in the main proceedings, where the volume actually extracted by the recipient undertaking represents only a small portion of the permissible volume’.
1 Original language: Italian.
2 These are water extraction rights granted or established under lov nr. 54 om vandforsyningsanlæg (Law No 54 on water supply facilities of 31 March 1926) or lov nr. 169 om vandforsyning (Law No 169 of 18 April 1969 on water supply).
3 OJ 2012 C 114, p. 4.
4 Decision (EU) 2018/884 on aid measure SA.32874 (2012/C) (ex SA.32874 (2011/NN)) implemented by Denmark (OJ 2018 L 157, p. 1) (‘the decision of 16 October 2017’).
5 See Articles 2, 4 and 6 of the decision of 16 October 2017.
6 See Articles 1 and 3 of the decision of 16 October 2017.
7 C‑188/92, EU:C:1994:90.
8 See, in this regard, in addition to the judgment in TWD, paragraph 23, the judgments of 25 July 2018, Georgsmarienhütte and Others (C‑135/16, EU:C:2018:582, paragraph 17 and the case-law cited); of 21 December 2021, Vítkovice Steel (C‑524/20, EU:C:2021:1048, paragraph 59); and of 22 June 2023, Vitol (C‑268/22, EU:C:2023:508, paragraph 34).
9 See the judgment in TWD, paragraphs 15 and 16.
10 See the Opinion of Advocate General Jacobs in Cassa di Risparmio di Firenze and Others (C‑222/04, EU:C:2005:655, point 63).
11 The recovery obligation imposed by a Commission decision in respect of an aid scheme sufficiently singles out all the beneficiaries of the scheme in question. They are exposed, as soon as that decision is adopted, to the risk that the benefits which they have received will be recovered, and their legal position is thus affected; see judgment of 25 July 2018, Georgsmarienhütte and Others (C‑135/16, EU:C:2018:582, paragraphs 29 to 33).
12 The argument put forward by OG that it could not have been aware of the harmful consequences that it would have suffered as a result of the method for calculating the aid to be recovered, on the ground that it was not reproduced in the operative part of the decision, must be rejected. Recital 127 of that decision, reproduced in point 12 of the present Opinion, makes it unequivocally clear how the Danish authorities are required to calculate the amount of aid to be recovered from the beneficiaries, specifying that the basis for that calculation is the permissible volume of water stated in the extraction permits and not the quantity actually consumed. The mere fact that the content of that recital was not included in the operative part of the decision, which is inseparable from the grounds supporting it (see, to that effect, inter alia, the judgment in TWD, paragraph 21), does not imply that it is not binding on those authorities.
13 In that regard, I note that the case-law appears to recognise that the national court may, of its own motion, raise a question regarding the validity of an EU act in proceedings in which the lawfulness of a national measure adopted for the implementation of that act is contested, even where the act in question has become final without the Member State to which it is addressed or the parties to the dispute, who undoubtedly had the opportunity to do so, having challenged it before the Courts of the European Union; see, to that effect, judgment of 10 January 2006, Cassa di Risparmio di Firenze and Others (C‑222/04, EU:C:2006:8, paragraphs 72 to 74); see also judgment of 21 December 2021, Vítkovice Steel (C‑524/20, EU:C:2021:1048, paragraph 60). See, to the same effect, the Opinion of Advocate General Campos Sánchez-Bordona in Georgsmarienhütte and Others (C‑135/16, EU:C:2018:120, points 36 and 37); that of Advocate General Jacobs in Cassa di Risparmio di Firenze and Others (C‑222/04, EU:C:2005:655, point 63); and that of Advocate General Tesauro in Eurotunnel and Others (C‑408/95, EU:C:1997:250, point 18). By contrast, it seems inconceivable that, in circumstances where the time-bar provided for in the judgment in TWD applies, the Court could examine of its own motion the validity of the act at issue, where the reference for a preliminary ruling relates solely to the interpretation of that act, or reformulate the questions of interpretation referred by the national court as questions of invalidity; see judgments of 17 September 2020, Compagnie des pêches de Saint-Malo (C‑212/19, EU:C:2020:726, paragraphs 28 to 31), and of 18 July 2007, Lucchini (C‑119/05, EU:C:2007:434, paragraph 56).
14 See, to that effect, judgments of 12 October 2000, Spain v Commission (C‑480/98, EU:C:2000:559, paragraph 25 and the case-law cited); of 20 March 2014, Rousse Industry v Commission (C‑271/13 P, EU:C:2014:175, paragraph 77); and of 6 May 2015, Commission v Germany (C‑674/13, EU:C:2015:302, paragraph 40); see also judgment of 13 November 2025, Commission v Bulgaria (Forest land swaps II) (C‑632/23, EU:C:2025:890, paragraph 92).
15 See judgment of 15 December 2005, Unicredito Italiano (C‑148/04, EU:C:2005:774, paragraph 67 and the case-law cited).
16 See Article 16(3) of Council Regulation (EU) 2015/1589 of 13 July 2015 laying down detailed rules for the application of Article 108 [TFEU] (OJ 2015 L 248, p. 9).
17 See judgments of 13 June 2002, Netherlands v Commission (C‑382/99, EU:C:2002:363, paragraph 90), and of 13 February 2014, Mediaset (C‑69/13, ‘the judgment in Mediaset’, EU:C:2014:71, paragraph 34 and the case-law cited).
18 See the judgment in Mediaset, paragraph 34.
19 See the judgment in Mediaset, paragraph 22 and the case-law cited; see also judgments of 9 June 2011, Comitato ‘Venezia vuole vivere’ and Others v Commission (C‑71/09 P, C‑73/09 P and C‑76/09 P, EU:C:2011:368, paragraph 63), and of 4 March 2021, Commission v Fútbol Club Barcelona (C‑362/19 P, ‘the judgment in Commission v Fútbol Club Barcelona, EU:C:2021:169, paragraph 65).
20 See the judgment in Mediaset, paragraph 22.
21 See, to that effect, judgment of 9 June 2011, Comitato ‘Venezia vuole vivere’ and Others v Commission (C‑71/09 P, C‑73/09 P and C‑76/09 P, EU:C:2011:368, paragraph 121). Such a decision is binding on the Member State to which it is addressed and on all its bodies, including the courts (see, to that effect, judgment of 21 May 1987, Albako Margarinefabrik, 249/85, EU:C:1987:245, paragraph 17) and may not be applied incompletely, selectively or partially.
22 See the judgment in Mediaset, paragraphs 21 and 23; see also judgment of 19 October 2023, Ministar na zemedelieto, hranite i gorite (C‑325/22, EU:C:2023:793, paragraph 48).
23 In the judgment in Mediaset, paragraphs 36 and 37, the Court clarified that the calculation made by the national court on the basis of all the relevant information submitted for its examination may result in an amount of aid lower than that resulting from taking into account, in isolation, the Commission decision ordering the recovery of the aid declared incompatible with the internal market, or even in an amount equal to zero; see also judgment of 15 September 2022, Fossil (Gibraltar) (C‑705/20, ‘the judgment in Fossil’, EU:C:2022:680, paragraph 41).
24 In the judgment in Fossil, paragraph 43, the Court clarified that the beneficiaries of a tax aid scheme may, at the recovery stage, rely on the deductions and reliefs provided for by domestic law when, having regard to the operations actually carried out, they were in fact entitled to benefit from them; see also, to that effect, judgment of 15 December 2005, Unicredito Italiano, C‑148/04, EU:C:2005:774, paragraphs 114 to 119.
25 In the judgment in Commission v Fútbol Club Barcelona, paragraphs 88 and 101, the Court confirmed that it is at the time of recovery that account must be taken of the possibility of neutralising the tax advantage granted under an aid scheme that is unlawful and incompatible with the internal market.
26 In the proceedings which gave rise to the judgment in Mediaset, the national court, dealing with the matter brought before it regarding the exact determination of the amount to be repaid by one of the beneficiaries, doubted the accuracy of the data on which the competent authorities had relied when applying the calculation method indicated by the Commission in the recovery decision, in order to determine the additional profit generated by the aid in question.
27 See, to that effect, judgment of 20 March 1997, Alcan Deutschland (C‑24/95, EU:C:1997:163, paragraph 34).
28 By virtue of the principle of sincere cooperation laid down in Article 4(3) TEU, the national court must take account of the statements of position by the Commission in the context of such exchanges as a factor in the assessment of the dispute before it; see the judgment in Mediaset, paragraphs 31 and 32.
29 Since the national authorities have no discretion in the matter, the recipient of unlawfully granted aid ceases to be in a state of uncertainty once the Commission has adopted a decision finding the aid incompatible with the common market and requiring recovery; see judgment of 20 March 1997, Alcan Deutschland (C‑24/95, EU:C:1997:163, paragraph 36).
30 That principle requires that the rules of law be clear and precise and that their application be foreseeable for those subject to the law, in particular where those rules may have adverse consequences; see, most recently, judgment of 16 July 2026, Lin II (C‑280/25, EU:C:2026:586, paragraph 118).
31 See judgment of 24 November 2020, Viasat Broadcasting UK (C‑445/19, EU:C:2020:952, paragraph 42, and the case-law cited).
32 See judgment of 29 July 2024, Koiviston Auto Helsinki v Commission (C‑697/22 P, EU:C:2024:641, paragraph 77).
33 See Article 16(1) of Regulation 2015/1589.
34 According to the Danish authorities, an effective equalisation would have required recalculating the tax on water extraction for all undertakings on the basis of their actual consumption in the period 2009-2011, with the result that any excess tax would have to be repaid and that undertakings that had not paid enough would have to pay arrears. However, according to those authorities, this was not a feasible model, seeing that in most cases it is impossible to determine the exact consumption for undertakings operating private extraction facilities (see recital 59 of the decision of 16 October 2017).
35 See recitals 55, 57 and 59 of the decision of 16 October 2017.
36 See judgment of 29 July 2024, Koiviston Auto Helsinki v Commission (C‑697/22 P, EU:C:2024:641, paragraph 78).
37 See judgment of 21 May 2026, Utiledulci (C‑545/24, EU:C:2026:412, paragraph 24 and the case-law cited).
38 See judgment of 21 May 2026, Utiledulci (C‑545/24, EU:C:2026:412, paragraph 36 and the case-law cited).
39 In assessing whether the reduction by two thirds of the tax contained an element of aid, the Commission, by contrast, compared the situation of undertakings subject to the tax regime provided for in Article 24a of the 2008 Law, which are taxed (indirectly) on the basis of actual consumption, with that of undertakings subject to the regime provided for in Article 24b of that Law.
40 See recitals 77 and 80 of the decision of 16 October 2017.
41 See recital 77 of the decision of 16 October 2017.
42 See, to that effect, judgment of 21 December 2016, Commission v Aer Lingus and Ryanair Designated Activity (C‑164/15 P and C‑165/15 P, EU:C:2016:990, paragraph 68).
43 See, to that effect, judgments of 15 December 2005, Unicredito Italiano (C‑148/04, EU:C:2005:774, paragraph 119), and of 21 December 2016, Commission v Aer Lingus and Ryanair Designated Activity (C‑164/15 P and C‑165/15 P, EU:C:2016:990, paragraph 93).
44 See judgment of 15 December 2005, Unicredito Italiano (C‑148/04, EU:C:2005:774, paragraph 119).
45 See judgment of 21 December 2016, Commission v Aer Lingus and Ryanair Designated Activity (C‑164/15 P and C‑165/15 P, EU:C:2016:990, paragraph 92).
46 Similarly, mutatis mutandis, in the case of the disposal of assets by a public authority at a price other than the market price, the amount of aid from which the purchaser has benefited is determined by assessing ex ante the market value of the property concerned at the time of the exchange transaction, without therefore taking into account circumstances arising subsequently, including statutory prohibitions, which affected the purchaser’s ability to exploit the property economically (see, to that effect, judgment of 19 October 2023, Ministar na zemedelieto, hranite i gorite (C‑325/22, EU:C:2023:793, paragraph 52), and of 6 May 2002, France v Commission (C‑482/99, EU:C:2002:294, paragraphs 71 and 72).
47 On the other hand, the economic value of the permit held by OG cannot be regarded as limited to its actual use. Such a permit enables it to obtain quantities of water independently, which then also enable it to deal with particularly unfavourable climatic conditions or to foresee any increases in production.