ECJ T-561/21 State aid – Postal sector – VAT exemption for certain transactions carried out by the universal service provider

Facts & summary

Post Danmark is a universal postal service provider in Denmark that is wholly owned by PostNord, which is, in turn, owned by the public authorities (Kingdom of Denmark and  Kingdom of Sweden). It benefited from a series of measures granted by the public authorities which formed the subject of a complaint from a competing undertaking concerning, inter alia, compensation for the provision of the universal postal service in Denmark, which had been notified to the Commission.

By its decision of 28 May 2018 (‘the contested decision’), the Commission found that the compensation for the provision of the universal postal service over the period from 2016 to 2019, notified by the Danish authorities, constituted State aid compatible with the internal market. The Commission also took a view on the measures challenged in the complaint of one of the applicants. First, it found that the guarantee provided by the public authorities under which, in the event of the undertaking’s bankruptcy, they undertook to pay, without any consideration in return, the costs relating to the redundancy payments for former civil servants, constituted existing aid. Secondly, the Commission considered that a Danish administrative practice that allowed exemption from VAT for customers of mail-order companies when those companies chose to purchase a transport service from Post Danmark and a capital increase made in February 2017 by PostNord to its subsidiary Post Danmark, did not constitute State aid.

The Court annuls that decision in so far as it found, at the end of the preliminary examination stage, that, first, the exemption from VAT and, secondly, PostNord’s capital increase in favour of Post Danmark did not constitute State aid.

In its judgment, by which the Court partially annuls the contested decision, clarification is given concerning the criteria for assessing the compatibility of compensation for the cost of the universal service obligation, the starting point for the limitation period for recovery of the aid, the classification of a guarantee as State aid, the imputability to the State of national measures taken pursuant to a directive and measures taken by a public undertaking, and on the private investor in a market economy test in assessing a measure taken in favour of a company  on the verge of bankruptcy


The Court finds that the Commission did not carry out a complete and sufficient examination when it concluded that the administrative practice of exempting from VAT the supply of
goods carried out by Post Denmark in transactions between mail-order companies and end customers was attributable to the European Union and not to the Danish State, in so far as that practice followed from Article 132(1)(a) of the VAT Directive. 127 In that regard, the Court points out that a national administrative practice establishing a tax exemption must be imputed to the European Union where it merely fulfils a clear and precise obligation laid down in a directive, whereas it must be regarded as imputable to the State where that State adopted it by making use of its discretion in the transposition of a directive. In the present case, the Court observes that it is clear and precise from Article 132(1)(a) of the VAT Directive that the transactions carried out by a universal service provider and which fall within the scope of the universal service obligation are exempt from that tax. The exemption from VAT permitted by the Danish administrative practice covers services invoiced by mailorder companies to their end customers, which do not therefore fall within the scope of the universal service obligation, or, therefore, of the exemption provided for in Article 132(1)(a) of the VAT Directive.

Furthermore, the Court states that, when assessing whether the effects of the administrative practice at issue were attributable to the European Union or to the Danish State, the Commission failed to examine the links between that practice and the rule laid down in point (c) of the first paragraph of Article 79 of the VAT Directive relating to the taxable amount, on which it was based.


1.      Annuls Commission Decision C(2018) 3169 final of 28 May 2018, State aid SA.47707 (2018/N) on State compensations granted to PostNord for the provision of the universal postal service – Denmark, in so far as it found, at the end of the preliminary examination phase, that, first, the exemption from value added tax (VAT) introduced by Administrative Decision No 1306/90 and Administrative Regulation F 6742/90, adopted by the Danish tax authorities, and, secondly, the capital increase of DKK one billion made to Post Danmark A/S by PostNord AB on 23 February 2017, did not constitute State aid;

2.      Dismisses the action as to the remainder;

3.      Orders ITD, Brancheorganisation for den danske vejgodstransport A/S and Danske Fragtmænd A/S to bear half of their own costs, with the rest of their costs being borne by the European Commission;

4.      Orders the Commission, the Kingdom of Denmark, Jørgen Jensen Distribution A/S and Dansk Distribution A/S to bear their own costs.