By Foo Yun Chee and Bart H. Meijer
LUXEMBOURG (Reuters) – French utility Engie on Tuesday won its fight against an EU order to pay 120 million euros ($130 million) in back taxes to Luxembourg, dealing a blow to the European Commission’s crackdown on sweetheart deals between EU countries and multinationals.
The EU competition watchdog in a 2018 decision said the French utility’s tax deal that treated the same transaction both as debt, which can be deducted from a tax bill, and equity, which is not subject to tax, artificially reduced its tax burden.
It said that arrangement with Luxembourg led to Engie paying as little as 0.3% tax on certain profits in the Grand Duchy for a decade.
A lower tribunal upheld the Commission’s decision in 2021.
But the Court of Justice of the European Union (CJEU) disagreed with the tribunal.
“The European Commission’s review of the tax rulings granted by Luxembourg to the Engie group infringed EU law,” the CJEU said.
Judges cited various errors in the EU competition enforcer’s analysis.
“Those errors vitiated the whole of the selectivity analysis and the Commission’s decision is therefore annulled,” they said.
The cases are C-451/21 P Luxembourg v Commission and C-454/21 P Engie Global LNG Holding and others v Commission.
($1 = 0.9240 euros)
(Reporting by Foo Yun Chee and Bart Meijers; Editing by Kirsten Donovan)
