French utility Engie on Tuesday won its fight against an EU order to pay 120 million euros (USD 130 million) in back taxes to Luxembourg, a blow to the European Commission’s crackdown on sweetheart deals between EU nations and multinationals.
The Commission, which is also the EU competition watchdog, in a 2018 decision said the French utility’s tax deal that treated the same transaction as both debt, which can be deducted from a tax bill, and equity, which is not subject to tax, artificially reduced its tax bill.
It said that arrangement with Luxembourg led to Engie paying as little as 0.3% tax on certain profits in the Grand Duchy for a decade. A lower tribunal upheld the Commission’s decision in 2021.
But the Court of Justice of the European Union (CJEU) disagreed with the tribunal.
“The European Commission’s review of the tax rulings granted by Luxembourg to the Engie group infringed EU law,” the CJEU said.
Judges cited various errors in the Commission’s analysis.
“Those errors vitiated the whole of the selectivity analysis and the Commission’s decision is therefore annulled,” they said.
The Commission got a big boost last month when a CJEU adviser said the lower tribunal should again review an appeal by Apple Inc against a record 13-billion-euro tax order because of legal errors in its earlier judgement backing the iPhone maker.
The Commission’s finding against a 700-million-euro Belgian tax scheme for 55 multinationals was upheld by the tribunal in September.
Automaker Stellantis, Amazon and Starbucks have won court backing for their challenges.
IKEA brand owner Inter IKEA’s Dutch tax arrangement, Nike’s Dutch tax rulings and Finnish food and drink packaging company Huhtamaki’s tax rulings granted by Luxembourg are currently in the EU crosshairs.
The cases are C-451/21 P Luxembourg v Commission and C-454/21 P Engie Global LNG Holding and others v Commission.