Tax ruling: Advocate General Priit Pikamäe urges the Court to annul the judgment in the Fiat State aid case

The Advocate General, in his Opinion delivered on 16 December 2021, proposes that the Court allow the appeal brought by Ireland and annul the Commission’s decision declaring aid which Luxembourg granted to Fiat as being incompatible with the internal market.

Background to the dispute

A ‘tax ruling’ is a common practice enabling undertakings to ask the tax administration for an advance decision as to the tax they will be liable to pay. The taxpayers are thus seeking binding assurances from the administration as regards the tax treatment of their transactions.

In June 2014, the European Commission launched a series of investigations into the conformity with Treaty rules on State aid of the practices of the tax authorities of several Member States with respect to multinational undertakings, particularly as regards the allocation of profits between the various States in which those undertakings conduct their activities. One of these investigations led to the adoption of the decision on State aid that has been granted by the Luxembourg tax authorities to the Fiat group. [1]

The decision at issue

On 3 September 2012, the Luxembourg tax authorities issued a tax ruling in favor of Fiat Finance and Trade Ltd (FFT) endorsing the remuneration method for the treasury and financing intra-group services provided by FFT. The ruling enabled FFT to determine its taxable profit on a yearly basis for corporate income tax in Luxembourg.

On 11 June 2014, the Commission decided to initiate the formal investigation procedure under Article 108(2) TFEU in respect of the tax ruling at issue.

According to the Commission, under Luxembourg corporate income tax (the reference tax system) the arm’s length principle strives to tax integrated companies in the same way as standalone companies. However, the tax ruling granted to FFT did not comply with the arm’s length principle and it derogated from the reference tax system. The Commission found that the derogation was not justifiable under the inherent logic and objectives of the reference system, so the tax ruling at issue granted a selective advantage to FFT.

On 21 October 2015, the Commission adopted the decision at issue, declaring the tax ruling to constitute State aid for the purposes of Article 107(1) TFEU. The decision also obliged Luxembourg to recover the unlawful and incompatible aid from FFT.

The procedure before the General Court and the judgment under appeal

Luxembourg and FFT each brought an action before the General Court of the European Union for annulment of the Commission’s decision. In its judgment of 24 September 2019 (T-755/15), the General Court dismissed the action brought by Luxembourg and FFT to annul the Commission’s decision and required Luxembourg to recover the unlawful and incompatible State aid. (A summary of the judgment is available HERE.)

Ireland (C-898/19 P) and Fiat Chrysler Finance Europe (C-885/19 P) therefore brought two separate appeals against that judgment before the Court of Justice.

The claimants challenged inter alia the General Court’s analysis of the existence of an economic advantage, focusing in particular on the choice of legal basis and the alleged breach of the principle of legal certainty.

Opinion of the Advocate General

Advocate General Priit Pikamäe proposes that the Court uphold the actions brought by Luxembourg and Fiat Chrysler Finance Europe before the General Court of the Europe Union, and annul the Decision of the Commission.

Ireland versus Commission (Case C-898/19 P)

As a preliminary point, the Advocate General notes that the judgment under appeal endorsed the approach of the Commission consisting in introducing the arm’s length principle into the examination of the existence of an economic advantage. The Court is thus led to question the border drawn by the Treaty between fiscal autonomy of the Member States and the prohibition of State aid.

Ireland challenges in several respects the analysis carried out by the General Court to determine whether there was an economic advantage, in particular from the perspective of the rules applicable to State aid.

The Advocate General recalls that the arm’s length principle used in the decision at issue is not a rule which is expressly codified in national law. In this context the Advocate General considers that the judgment under appeal disregards the Treaty provisions governing the division of competences between the European Union and the Member States and providing for a prohibition of harmonisation in the field of taxation. It follows from this point that the General Court committed an error of law.

Advocate General Pikamäe suggests that the Court give final judgment in the matter and hold that the General Court infringed the provisions governing the division of competences between the European Union and its Member States.

Fiat Chrysler Finance Europe versus Commission (Case C-885/19 P)

However, in relation to the other separate appeal, the Advocate General proposes that the Court dismiss the appeal in its entirety.

As regards the complaints concerning the arm’s length principle: in the opinion of the Advocate General, since the General Court’s reasoning with regard to this principle meets the requirements of clarity and consistency imposed by the case-law, it would be appropriate for the Court of Justice to dismiss the first part of the present ground of appeal.

The Advocate General considers that the General Court correctly held that the Commission was not required to take account of the intra-group and cross-border dimension of the effects of the tax ruling at issue when determining whether that ruling conferred an economic advantage.


Though the Advocate General’s Opinion is not binding on the Court of Justice, the Court follows, on average, four out of five such non-binding opinions. The Court will rule in the coming months.


Author: Krisztina Széles, PhD Student, University of Debrecen, Marton Géza Doctoral School of Legal Studies

The full texts of the Opinions are available here:

Ireland versus Commission (Case C-898/19 P):;jsessionid=27BB3EC4E5D9C02E4054B57E209131A5?text&docid=251308&pageIndex=0&doclang=EN&mode=req&dir&occ=first&part=1&cid=4027336&_x_tr_sl=en&_x_tr_tl=hu&_x_tr_hl=hu

Fiat Chrysler Finance Europe versus Commission (Case C-885/19 P):;jsessionid=CEDA6BD3D1CBB2102AB2227256DE5113?text&docid=251307&pageIndex=0&doclang=EN&mode=req&dir&occ=first&part=1&cid=3426724#Footref2

The press release of the Court concerning the Opinions is available here:

Further reference:

[1] Commission Decision (EU) 2016/2326 of 21 October 2015 on State aid SA.38375 (2014/C ex 2014/NN) which Luxembourg granted to Fiat (OJ 2016 L 351, p. 1, ‘the decision at issue’).