EU court sides with Fiat Chrysler in tax advantage case

LUXEMBOURG — The European Union’s top court on Tuesday overturned a decision requiring automaker Fiat Chrysler to pay up to 30 million euros ($30 million) in back taxes to Luxembourg.

The European Commission, the EU’s executive arm and anti-trust regulator, had determined in 2015 that a 2012 Luxembourg tax ruling favored Fiat companies in Europe and was incompatible with state aid rules in the 27-nation bloc.

A European court ruled in the commission’s favor in 2019, ordering the automaker to return the tax break. Fiat Chrysler, which last year merged with France’s PSA Peugeot to form Stellantis, asked the higher court to set aside the order.

The Court of Justice of the EU said Tuesday that the commission failed to take into account the typical tax laws in Luxembourg when it was determining whether the automaker got a tax advantage and that the EU’s General Court “committed an error of law” in upholding that approach three years ago.

EU competition commissioner Margrethe Vestager tweeted that Tuesday’s ruling was a “big loss for tax fairness.”

“The Commission is committed to continue using all the tools at its disposal to ensure that fair competition is not distorted in the Single Market through the grant by Member States of illegal tax breaks to multinational companies,” she said in a statement.

It comes as countries in Europe and around the world are working to enshrine into law a global minimum tax deal that more than 130 nations signed on to last year, designed to create a more equal footing in attracting and keeping multinational companies.

It aims to deter multinationals from stashing profits in countries where they pay little or no taxes — commonly known as tax havens.

Stellantis is “pleased that the Court of Justice has confirmed our view that the Commission was wrong to consider our tax ruling to be unlawful state aid,” spokeswoman Valerie Gillot said.