• Fiat/Starbucks Tax Rulings Constitutive of Illegal State Aid
  • November 12, 2015 | Authors: Nicolas Andre; Siamak Mostafavi
  • Law Firm: Jones Day - Paris Office
  • On October 21, 2015, the European Commission concluded, following its investigations, that the tax rulings granted to (i) a Luxembourg subsidiary of Fiat by the Luxembourg tax authorities and (ii) a Dutch subsidiary of Starbucks by the Dutch tax authorities were constitutive of illegal State aid to such companies under EU law.

    The European Commission further ordered that the corresponding tax advantage (between EUR 20 million and EUR 30 million, according to the European Commission press release) be repaid by such companies to the relevant tax authorities. Notwithstanding any further court action, such decision is immediately applicable, and Luxembourg and the Netherlands thus have the obligation to compute and recover the amount of the relevant illegal tax advantage.

    Neither the decisions nor the legal reasoning behind the European Commission decision are currently available.

    Decisions in respect of the tax rulings granted to (i) Irish subsidiaries of Apple by the Irish tax authorities and (ii) a Luxembourg subsidiary of Amazon by the Luxembourg tax authorities remain to be issued.

    Likewise, the Belgian excess profits tax rulings regime (décisions fiscales anticipées relatives aux bénéfices excédentaires) and the special tax regimes for IP income of 10 Member States are currently being investigated and could lead to additional decisions.

    Please see the JD Commentary issued in October 2015 for further details on the European Commission decision and on the potential consequences for multinationals enterprises with European operations.