The Court of Justice of the European Union has overturned a 2015 tax ruling against Fiat Chrysler to recover up to 30 million euros in back taxes from Fiat. The decision on Tuesday November 8 by the European Court of Justice, the highest court in the bloc, overturned the 2019 decision of the Supreme Court and the decision of the EU Commission.
The decision of the Court of Justice of the European Union overturns the 2015 directive
More specifically, the European Commission said in 2015 that Luxembourg had granted Fiat, now part of Stellantis, tax benefits that have reduced its tax burden since 2012 and ordered the country’s authorities to recover between 20 and 30 million euros from the carmaker. . The head of the European Union’s antitrust organization, Margrethe Vestager, said at the time that decisions to arbitrarily reduce the company’s tax burden violated state aid laws in the union.
Luxembourg and Fiat have filed an appeal with the General Court of the European Union hoping to annul the order of the European Union Commission. However, the High Court had confirmed this order in a judgment issued in 2019. However, the Court of Justice has now overturned the decision, saying that the High Court erred in law when it confirmed the commission’s approach. “The Supreme Court erroneously approved an approach consisting of applying the arm’s length principle different from that defined by Luxembourg law, limiting itself to recognizing the abstract expression of that principle in the objective pursued by the general corporate income tax in Luxembourg and reviewing the competing ones. decision of tax without taking into account the way in which the principle has been adopted for the law on the incorporation of companies in particular,” the Court of Justice said in a statement.
Vestager: We will read the judgment and its implications carefully
“The Commission will carefully examine the decision of the European Court of Justice that annulled the 2015 decision of the European Union Commission, which defined the conduct of Luxembourg against Fiat Chrysler as illegal”, emphasized the Commissioner of Competition Margrethe Vestager after the decision of the Court of Justice of Europe. Luxembourg’s conduct, according to the European Union Commission, represented an unfair tax advantage, authorizing artificial and complicated methods that reduced the company’s taxes. “We will carefully study the decision and its implications,” Vestager said.
“Even if the Commission’s decision has been overturned, the decision provides an important indication on the application of EU rules on state aid in the tax sector”, said the commissioner. “The court confirmed that the actions of the Member States in areas not related to EU law are not excluded from the scope of application of the provisions of the Convention on the monitoring of state aid,” he added. “The Commission is determined to continue using all the tools at its disposal to ensure that fair competition is not distorted in the Common Market by Member States that provide illegal tax breaks to international companies,” concluded Vestager. (All rights reserved)