EU court to hear Government appeal on tax deal ruling

Court to examine challenges by State, Fiat Chrysler and Luxembourg on state aid ruling

The European Union's top court will this week hear an appeal by the Irish Government against a decision of the European Commission requiring car manufacturer Fiat Chrysler to repay about €30 million to Luxembourg.

The case before the Court of Justice of the European Union (CJEU) on Monday will examine separate challenges by Fiat Chrysler, Luxembourg and Ireland against the finding of its general court in September 2019 that the company’s tax deal with the Luxembourg government constituted illegal state aid.

The Government is appealing a case in which it is a third party because it is seen as relevant to Ireland's own ongoing legal battle with the European Commission over its finding in 2016 that the Irish tax authorities should recover an estimated €13 billion in unpaid taxes from Apple.

As part of its crackdown on tax avoidance by large multinationals, the commission has made a number of findings in recent years against some of the best-known global corporations, including Apple, Amazon, Fiat Chrysler and Starbucks, requiring them to repay large sums of unpaid taxes.



The action taken by the commission’s competition division has caused particular concern among several EU member states including Ireland, Luxembourg and the Netherlands, which have faced accusations of offering unfair tax advantages to large multinationals.

However, legal challenges in the cases involving Starbucks and Apple have annulled the commission’s findings and raised issues over the interpretation of complex state-aid rules.

Ireland successfully appealed the commission’s finding in the Apple case when the CJEU’s lower court ruled in July 2020 that the commission “did not succeed in showing the requisite legal standard” that there had been any illegal state aid in tax arrangements between the Government and Apple.

However, the commission has appealed that ruling in a case that has still to come before the CJEU’s highest court.


A spokesperson for the Department of Finance said Ireland had lodged the appeal in the Fiat Chrysler case due to specific points of state-aid law.

“The reason for this is that this is the first time that some of the novel legal principles invoked by the Commission in fiscal state-aid cases will be heard by the CJEU,” the spokesperson added.

Among the legal team representing the Government in this week’s case is former attorney general Paul Gallagher SC.

The Government is arguing that the CJEU’s lower court erred in law and misapplied legislation governing state aid in its approach to the so-called “arm’s-length principle”.

It claims the ruling breached the principle of legal certainty by agreeing that the commission could review decisions of national tax administrations by referring to the commission’s version of the “arm’s-length principle” which it argues is “unpredictable and whose content is unknown”.

The Government also claims the ruling on Fiat Chrysler impermissibly used state-aid rules to harmonise direct taxation rules in EU member states.