They had claimed that they had always acted according to Luxembourg rules and today the European Court of Justice agreed with them and annulled the decision by which the EU Commission in 2015 asked the Grand Duchy to recover from Fiat Chrysler Finance Europe (today in the orbit of Stellantis ) the aid deemed illegal and incompatible with the single market obtained through the tax ruling mechanism. This involved at least € 20 million deemed to be state aid. European Commissioner for Competition Margrethe Vestager, who was always in charge of the European Antitrust when the Juncker commission promoted the action against FCA, speaks of “a serious defeat for fiscal fairness”. Today, Tuesday 8 November, the previous ruling of the EU Court in which the appeals by Luxembourg and Fiat Chrysler Finance Europe against the EU decision to reject the tax ruling in favor of the company was effectively annulled.
The case dates back to 2012
The Court, explains the EU Court, in its assessment made an “error of law” as it “erroneously confirmed the reference system adopted by the Commission for the purposes of applying the arm’s length principle to companies integrated in Luxembourg, omitting to take into account the specific rules implementing this principle in that Member State ‘. The case dates back to September 2012, when the Luxembourg tax authorities had adopted a tax ruling in favor of Fiat Chrysler Finance Europe approving a method for determining its remuneration which allowed the company to establish its taxable profit annually by way of corporation tax in Luxembourg.
Already in 2021 asked to cancel
In October 2015, the Commission determined that this was state aid incompatible with the internal market; hence the order to recover from Fiat the “undue” tax advantage he had enjoyed. Vestager then observed: “National authorities cannot give unfair advantages” to those companies, such as multinationals, which can organize sophisticated fiscal architectures “. The Luxembourg courts conclude that – since outside the areas in which EU tax law is subject to harmonization – it is for the Member State concerned to determine, through the exercise of its powers in the field of direct taxation and in compliance with its own fiscal autonomy, the constitutive characteristics of the tax, “only the national law applicable in the Member State concerned must be taken into consideration in order to identify the reference system for direct taxes” to assess “not only if there is a tax advantage” , “But even if the latter is selective in nature”. The ruling comes after in December 2021 the advocate general of the EU Court of Justice, Pritt Pikamae, had asked to invalidate the decision by which the EU Commission in 2015 asked Luxembourg to recover from Fiat Chrysler Finance Europe the aid deemed illegitimate and incompatible with the single market obtained through the tax ruling mechanism. Today’s is the last level of judgment of the EU justice, appeals are not admissible. Therefore FCA and the Grand Duchy win over the EU Commission.
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