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EU Court of Justice Rules that EU Lacks an Autonomous Arm's-Length Principle
Observations on the FIAT Case
The Court of Justice of the European Union (CJEU) on the Fiat case reversed the General Court’s decision from 2019 and the European Commission’s decision from 2015 on EU state aid. The CJEU ruled that the Commission had erroneously defined the principles against which the relevant measure must be evaluated to determine whether it imposes “a selective advantage on the beneficiary”. Fiat might constitute a landmark case since it will impact pending state aid cases such as Apple, Amazon, and ENGIE.
1. Background and Facts of the Case
Fiat Chrysler Finance Europe (FFT), a Fiat group subsidiary that provides treasury and financial services to the group’s European subsidiaries, received a tax ruling from the Luxembourg tax authorities in 2012 that benefited it. The questioned tax ruling approved a method for calculating FFT’s payment for these services, allowing FFT to compute its annual taxable profit for Luxembourg’s corporate income tax.
The European Commission (EC) concluded constituted state aid under Article 107 of the Treaty on the Functioning of the EU (TFEU) in October 2015 incompatible with the internal market. According to the EC, the Grand Duchy of Luxembourg was required to rec...