The advance tax rulings (ATRs) granted by Luxembourg to the Engie group in 2008 and then in 2014 do, in fact, constitute illegal State aid, the General Court of the European Union ruled on Monday 12 May (cases T-516/18 and T-525/18).
In 2018, the European Commission took a decision condemning this illegal aid and obliged Engie to pay €120 million to Luxembourg. The latter two brought an action for annulment of the contested decision before the General Court of the EU.
In its judgment, the General Court considers, on the one hand, that the Commission is legitimate to examine the taxes paid in the framework of the tax package operated by Engie, and it agrees, on the other hand, with the Commission’s claim of a selective advantage.
“The General Court finds that it cannot be disputed that the Engie group benefited from preferential tax treatment, due to the non-application, in the ATRs, of the provision relating to abuse of rights”, the judgment states.
Abuse of law refers to transactions that aim to circumvent the law in order to avoid tax. The Court considers that the Commission has demonstrated that the criteria for abuse of rights were met in this case. Finally, it adds that Engie and its holding companies cannot benefit from a non-application of this provision relating to abuse of rights.
Reacting to the judgment, Luxembourg said it would analyse it “with all due diligence”. And added that this judgment does not call into question its commitment to tax transparency.
On the same day, the Court validated the tax rebates granted by Luxembourg to Amazon (see other news).
See the judgment: https://bit.ly/3w2hkaW (Original version in French by Léa Marchal)