European justice this Tuesday overturned a European Commission fine of up to 30 million euros on Fiat for unpaid taxes in Luxembourg. The European Commission announced in October 2015 that the multinational Fiat returned €30 million in tax benefits received in Luxembourg, concluding that they constituted illegal state aid.
“Tax rulings” (advance tax rulings) that artificially reduce the tax burden on companies do not comply with EU state aid rules. This is illegal”, said the Commissioner of Competition, Margrethe Vestager, after announcing the decision of Brussels. “Governments and companies of member states will hear this message. Every company, big or small, multinational or not, has to pay its fair share of taxes,” he added.
In the Fiat case, which was upheld by the General Court in 2019 and now overturned by the Court of Justice, the Community’s enforcement authority concluded during an investigation that the Luxembourg authorities “inappropriately reduced” the company’s tax burden in 2012 by between 20 and 30 million euros. .
Thus, in this Tuesday’s order, the Court of Justice annuls the TGUE decision appealed by Fiat, “because the European Commission made an error in determining the effective rules in accordance with the relevant national law and, therefore, in identifying the taxation considered ‘normal’ against which to assess the expected decision, it invalidates all arguments concerning the existence of a selective advantage”.
Thus, the Court of Justice concludes that the legal grounds of the contested decision, according to which there was an exception to the general system of company tax in Luxembourg, “suffer from a legal error which does not take into account the principle. Free competition as established by the Luxembourg Tax Code and specified in the determination of the reference system to determine whether the said prior ruling confers a selective advantage on its beneficiary”.
Therefore, the Court of Justice states that the General Court erroneously confirmed the reference framework chosen by the European Commission for the application of the principle of access to companies based in Luxembourg and did not take into account the specific rules establishing this principle. practice in this Member State. Thus, the Court of Justice annuls the controversial decision of the European Commission and points out that its analysis of the existence of the reference system and, subsequently, of the selective advantage granted to Fiat, is wrong.
According to the CJEU, when the TGUE accepted that the European Commission could rely on rules that were not part of Luxembourg law, even though it recalled that this institution did not have the power to allow it to autonomously determine the taxes that are considered “normal “. The company’s integrated system, ignoring national tax rules, “ruled by the General Court that it violated the provisions of the Treaty on the Functioning of the European Union regarding the adoption by the European Union of measures to approximate the laws of member states on direct taxation.”
Source: El Diario