(Reuters) – The Court of Justice of the European Union (CJEU) ruled in favor of Engie on Tuesday, ruling that the French company did not have to pay 120 million euros in tax arrears to Luxembourg, as the European Commission had ordered it, dealing a hard blow to the fight against tax optimization by multinationals.
In 2018, the European executive noted that Engie had benefited from tax agreements (“tax rulings”) with Luxembourg which had allowed it to avoid taxation on almost all of the profits made by its subsidiaries established in this country. country, or a tax rate of 0.3% on some of these profits for a decade.
Brussels concluded that these tax rulings constituted state aid incompatible with the rules of the internal market, which must therefore be recovered by the Luxembourg tax authorities.
A first appeal filed by Engie and Luxembourg was rejected by the General Court of the European Union in 2021 but the CJEU, seized in turn, reached an opposite conclusion, considering that the European Commission had “committed errors in its different analyzes of the reference frameworks defining the normal tax system”.
“These errors vitiated the entire selectivity analysis and the Commission’s decision is therefore annulled,” concluded the Court.
(Written by Foo Yun Chee and Bart Meijers, Tangi Salaün, edited by Kate Entringer)
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