The European Court of Justice on Tuesday 8 November stated that the European Commission had been wrong to try to get Fiat Chrysler to pay back some €30m in taxes to Luxembourg because the grand duchy had given the company an unfair tax advantage by endorsing artificial and complex methods to lower its tax bill. The case dates back to 2015 and the decision by the European Commissioner for competition, Margrethe Vestager, was upheld by a lower tribunal in 2019.

But now the ECJ has stated that that the General Court in 2019 “was wrong to confirm the reference framework used by the Commission to apply the arm’s length principle to integrated companies in Luxembourg.” The move will be a blow to the EU competition watchdog and Vestager was quick to express her disappointment via Twitter on Tuesday morning.

“Only the national law applicable in the member state concerned must be taken into account in order to identify the reference system for direct taxation, that identification being itself an essential prerequisite for assessing not only the existence of an advantage, but also whether it is selective in nature," the ECJ said in its ruling.