Fiat deal with Luxembourg seen illegal by EU image

According to a statement from the European Commission, a tax break accord negotiated between a subsidiary of the Italian carmaker Fiat SpA and Luxembourg could be in fact an illegal form of state assistance.

Inside a 33-page letter sent from the offices of EU Competition Commissioner Joaquin Almunia to the Luxembourg government explains the reasons the Commission is following with its investigation into a 2012 deal to have a transfer pricing arrangement for Fiat Finance and Trade Ltd.

“At present, the Commission has no evidence indicating that the measure in question could be considered as compatible with the [EU’s] internal market,” said the letter.

Almunia also said that Luxembourg officials did not give the Commission all the data, an embarrassing fact considering that the incoming European Commission President is Jean-Claude Juncker, who served as Luxembourg’s Prime Minister when the government made the arrangement with Fiat.

The investigation will start officially only after a formal notice is made into the EU’s Official Journal, which could take weeks, after which the parties involved would have a month to voice their opinion. If the Commission analyzes the facts and finds the deal to break competition laws because it’s an illegal state aid, Fiat could be coerced into repaying the savings – there are no fines involved though.

Via Automotive News Europe