Clash of the Titans

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The European Union’s top court overturned a 2015 tax ruling against carmaker Fiat Chrysler on Tuesday, dealing a significant blow to the bloc’s regulators as they crack down on multinational corporations – especially American ones trying to avoid paying taxes, the Wall Street Journal reported.

The slapdown follows reversals in cases involving Apple, Amazon and Starbucks, the newspaper noted.

The current case began in 2015 when the European Commission, the EU’s executive body, ruled that the automaker – now part of Stellantis NV – took advantage of a tax deal that was granted to the company in Luxembourg – but has since been deemed illegal.

The commission said the deal amounted to a state subsidy and ordered Luxembourg to recover the equivalent of about $30 million from the company. In 2019, the EU’s General Court – the bloc’s second-highest court – ruled in favor of the commission.

But on Tuesday, the European Court of Justice (ECJ) reversed that ruling, saying that the lower court’s analysis of the case “and by extension, the existence of a selective advantage” to Fiat Chrysler was incorrect. Essentially, the court ruled that the prior judgment failed to consider the prevailing laws at the time in Luxembourg, the Associated Press wrote.

The decision is a major setback for EU Executive Vice President Margrethe Vestager, who is driving a campaign to curtail what she says are excesses by some of the world’s top tech companies and ensure fair competition.

She said the commission will closely review the judgment and its implications.

Meanwhile, Vestager has pending cases involving Apple, Amazon and Starbucks. The General Court ruled against the commission in all other cases, prompting regulators to appeal two of these to the ECJ.

These types of tax cases are part of the reason more than 140 countries agreed last year to establish a worldwide minimum corporation tax of 15 percent.

However, the agreement’s implementation has stalled due to pending approval by the countries involved, including the EU’s 27 nations.