The French energy company wasn’t given an unfair advantage by its arrangements in Luxembourg, judges ruled, dealing a blow to EU efforts to curb tax avoidance
Engie has won a years-long legal battle over its Luxembourg tax affairs, overturning a decision from EU antitrust authorities that would have forced the French energy giant to repay €120 million.
The landmark ruling from the EU’s Court of Justice on Tuesday (5 December) overrules earlier decisions by both the European Commission and the lower-tier General Court, dealing a blow to EU efforts against tax avoidance.
“To support its decision, the Commission should have established that, in the tax rulings at issue, the Luxembourg tax authorities departed from their own practice,” judges said of the controversial sweetheart deals that the taxman struck with multinationals.
In 2018, EU Competition Commissioner Margrethe Vestager said the deal was an illegal benefit, as complex and inconsistent structures enabled the company to pay just 0.3% corporation tax for around a decade. That was upheld by a 2021 legal finding that agreed the arrangement had abused Luxembourg law, which is now overturned.
The news concerning Engie, formerly known as GDF Suez, represents the latest in a series of defeats for Vestager, who started a campaign against multinational tax-dodging after revelations in the LuxLeaks investigation.
Courts have already rejected EU action against the likes of Fiat and Starbucks – although Vestager's bid to get tech giant Apple to repay €13 billion in Irish taxes scored some support from a recent legal opinion written by Advocate General Giovanni Pitruzzella.
The European Commission's Didier Reynders told reporters he would apply the “clear” and “binding” ruling from the Court, but would also be analysing closely to see what room for manoeuvre he still has on tax policy.
“We want to have fair taxation in Europe, we want to avoid any discrimination,” said Reynders, who has temporarily taken over from Vestager as antitrust chief while she seeks appointment to head the European Investment Bank.
Spokespeople for Engie and Luxembourg did not immediately respond to request for comment.