EU court advisor's opinion boosts Ireland's tax appeal case
The decision is another setback to Margrethe Vestager’s probes of national tax rulings.
Italian carmaker Fiat Chrysler need not pay €30m in back taxes to Luxembourg, an adviser to Europe's top court has said.
The Fiat case was part of European Competition Commissioner Margrethe Vestager's crackdown on sweetheart deals between European Union countries and multinationals, the most high profile of which were Apple's Irish deal and Amazon's Luxembourg deal.
Fiat Chrysler, which merged with Peugeot maker PSA earlier this year and rebranded itself Stellantis, had challenged the EU tax order at the General Court but lost. It then appealed to the Court of Justice of the European Union (CJEU).
Ireland, which last year won its fight against an EU tax order requiring it to recoup a record €13bn in back taxes from Apple, also appealed against the Fiat order.
Pronouncing on both appeals yesterday, Priit Pikamae, advocate general at the EU Court of Justice, said Ireland's appeal against the EU tax order should be upheld and the Commission decision annulled.
The result would mean Fiat not having to pay the extra tax bill, even though the adviser said Fiat's appeal should be dismissed because of what he found unconvincing arguments.
In its 2015 decision, the Commission said Fiat Chrysler set prices for goods and services sold between subsidiaries, known as transfer prices, that were below market rates and which artificially lowered their taxes.
The CJEU, which usually follows four out of five such non-binding opinions, will rule in the coming months.
Ireland is a third-party in the case appealing the court decision as it views the matter as relevant to its own ongoing legal battle in relation to the taxation of tech giant Apple.
The EU Commission had ordered Ireland to claim back €13bn from Apple which both Apple and Ireland rejects. The General Court of the EU had annulled the Commission's decision ruling that Apple did not need to pay back the money and rejecting claims that Ireland granted the company illegal State aid through selective tax breaks.
However, the Commission is seeking to overturn the court decisions, saying judges used “contradictory reasoning” when they found the company’s units located in Cork weren’t liable for huge payments.
A summary of the appeal shows the EU’s determination to challenge the critical General Court judgment. The decision was a dramatic setback to Commissioner Vestager’s probes of national tax rulings that she says were an illegal subsidy for some large multinational firms.
Slapping Apple with a multi-billion order in 2016 was a landmark case for Vestager, showing she had no fear of upsetting the world’s most valuable tech company or the US Treasury. The move helped fuel an EU push to close tax loopholes that allowed some multinational companies to legally pay less tax in Europe.
Additional reporting Reuters and Bloomberg
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