EU Court Overturns Order That Fiat Chrysler Repay Tax

The carmaker Fiat Chrysler defeated the European Commission in the EU's top court Tuesday, overturning an order that it repay Luxembourg 30 million euros ($30 million) in disputed tax advantages

Brussels, (APP - UrduPoint / Pakistan Point News - 8th Nov, 2022 ) :The carmaker Fiat Chrysler defeated the European Commission in the EU's top court Tuesday, overturning an order that it repay Luxembourg 30 million Euros ($30 million) in disputed tax advantages.

The decision by the Court of Justice of the European Union (CJEU) dealt a blow to the EU executive's attempt to crack down on what it sees as sweetheart tax deals between multinational corporations and EU member states.

Tuesday's ruling has implications for Ireland, whose tax regime is also designed to attract international companies. A similar case, challenged by Dublin, was joined to the Fiat Chrysler Luxembourg case.

"We will carefully study the judgment and its implications," EU vice-president Margrethe Vestager said.

She confirmed the decision was annulled, but insisted: "The commission is committed to continue using all the tools at its disposal to ensure that fair competition is not distorted in the Single Market through the grant by member states of illegal tax breaks to multinational companies." The CJEU found that a lower EU court which had sided with the commission, the General Court, "committed an error of law" by failing to take account of Luxembourg's national legislation where it comes to direct taxation.

"The General Court was wrong to endorse the approach consisting in applying an arm's length principle different from that defined by Luxembourg law," the CJEU said in a statement.

The lower court, it said, failed to take into account "the way in which the said principle has actually been incorporated into that law with regard to integrated companies in particular." As such, it annulled the lower court's judgments in the Fiat Chrysler case and in the similar one brought by Ireland. The repayment order against Fiat Chrysler dated back to October 2015.

It was based on Brussels' argument that the tax advantages the auto group received from having its Europe-wide financing unit set up in Luxembourg constituted unfair state aid.

At the time, Fiat Chrysler was an Italian-US vehicle manufacturer.

It has since been merged into Stellantis, a bigger multinational corporation including France's Peugeot that was formed last year and which is headquartered in the Netherlands.