Luxembourg wins Fiat ruling in ECJ

The Court of Justice of the European Commission annuls the European Commission’s 2015 finding that Luxembourg granted selective tax advantages to Fiat through a transfer pricing ruling, in breach of EU state aid rules.

According to the Court of Justice, the General Court committed an error of law by failing to take account of the requirement arising from the case-law, according to which, “in order to determine whether a tax measure has conferred a selective advantage on an undertaking, it is for the Commission to carry out a comparison with the tax system normally applicable in the Member State concerned, following an objective examination of the content, interaction and concrete effects of the rules applicable under the national law of that State.”
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“The General Court was wrong to endorse the approach consisting in applying an arm’s length principle different from that defined by Luxembourg law, confining itself to identifying the abstract expression of that principle in the objective pursued by the general corporate income tax in Luxembourg and to examining the tax ruling at issue without taking into account the way in which the said principle has actually been incorporated into that law with regard to integrated companies in particular,” the Court said.