Luxembourg to Challenge EU Over Fiat Tax Repayment Order

Luxembourg is appealing a European Union decision that it made illegal fiscal deals with a Fiat Chrysler Automobiles NV unit, vowing to show that the bloc’s antitrust regulator failed to establish any illegal state aid.

It’s the first challenge to reach the EU courts since the European Commission’s precedent-setting decisions in October that the Italian carmaker and Starbucks Corp. benefited from favorable tax deals by Luxembourg and the Netherlands. Each company was ordered to pay as much as 30 million euros ($32.8 million) in back taxes.

The European Commission “used unprecedented criteria” for its decision that a tax ruling for Fiat in Luxembourg violated state aid rules and put “into jeopardy the principle of legal certainty,” the nation’s finance ministry said in an e-mailed statement Friday. “The commission has not established in any way that Fiat received selective advantages.”

The Grand-Duchy’s decision to appeal comes a day after the Brussels-based watchdog opened a probe into whether McDonald’s Corp. unfairly exploited a fiscal deal with Luxembourg to avoid tax on hundreds of millions of euros in profits for more than half a decade. The McDonald’s case is the third to focus on Luxembourg, adding to the Fiat case and an ongoing probe into tax rulings obtained by Inc.

Luxembourg and the fiscal deals that international companies have received over the years there came out into the open last year, when hundreds of documents were leaked showing that more than 340 companies such as PepsiCo Inc., Ikea Group and FedEx Corp. transferred profits to the country through tax arrangements.

“The vast majority of EU member states use tax rulings to provide legal certainty for the taxpayer,” the finance ministry said, adding it “is strongly committed to tax transparency and the fight against harmful tax avoidance.”