This decision inflicts a new snub on the European executive, who saw it as illegal state aid and had already lost in other cases against Apple, Amazon and Starbucks, in other tax disputes in Ireland, Luxembourg and in the Nederlands.
In October 2015, the Commission ordered Luxembourg to recover some 30 million euros from Fiat Chrysler Finance Europe, a Fiat group company which provided financing services, considering that the company had benefited from undue discounts in terms of tax on its profits in the Grand Duchy.
Luxembourg is regularly denounced by NGOs for its aggressive tax practices aimed at attracting investment from multinationals.
In September 2019, the EU court dismissed appeals from Fiat and Luxembourg asking for the Brussels decision to be overturned.
But the Court of Justice of the EU, seised at second instance, on Tuesday annulled this judgment of the court as well as the decision of the Commission, considering that it had made an “error of law” by not taking into account in its analysis of the specificities of Luxembourg tax law.
Taxation is a national competence in the European Union. “Apart from the areas in which the tax law of the Union is subject to harmonisation, it is the Member State concerned which determines, through the exercise of its own powers in the field of direct taxation (.. .) the constitutive characteristics of the tax”, underlined the Court in particular.
This litigation is part of a broad campaign by the European Commission against tax evasion by multinationals within the EU. Investigations have been opened in recent years under pressure from the revelations of the LuxLeaks scandal in 2014, then the Panama Papers in 2016.
The Commission’s biggest setback dates from July 2020, when European judges canceled the reimbursement to Ireland of 13 billion euros in tax benefits considered undue by the Commission.
In May 2021, European justice validated 250 million euros in tax rebates obtained by Amazon in Luxembourg.
In 2019, the American coffee chain Starbucks had already won against Brussels, which had imposed on it to reimburse 30 million euros in the Netherlands.