European Commission Vs. FIAT Group: A Consistent And Satisfactory Decision

• Published date: 16 November 2022
• Subject Matter: Finance and Banking, Tax, Financial Services, Transfer Pricing
• Law Firm: Bonn & Schmitt
• Author: Mr Gabriel Bleser and Stéphane Ebel

On November 8, 2022, in joint cases 885/19 and 898/19 (appeal against the judgment of the General Court of the European Union - the "General Court" of September 24, 2019, Luxembourg and Fiat Chrysler Finance Europe v. Commission, Cases T-755/15 and T-759/15) the Court of Justice of the European Union ("CJEU") annulled the decision of the European Commission (the "Commission") dated October 21, 2015, which ordered the Grand-Duchy of Luxembourg to claim from the FIAT group an amount of approximately EUR 30 million.

As a reminder, in the context of an advance tax clearance granted by the Grand Duchy of Luxembourg in 2012, the transfer pricing analysis and its compliance with Luxembourg tax laws and administrative circulars of application of a company of the FIAT group had been validated.

The Commission subsequently considered that the granting of the above-mentioned advance tax agreement was to be qualified as state aid within the meaning of Article 107 (1) of the Treaty on the Functioning of the European Union ("TFEU"), which states that "save as otherwise provided in the Treaties, any aid granted by a Member State or through State ressources in any form whatsoever, which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the internal market" and that the Grand Duchy of Luxembourg had granted selective tax advantages to the FIAT group.

Following the conclusions of Advocate General...