Luxembourg asks for faster resolution in Fiat tax payback

In October, the Commission ordered Luxembourg to recover the tax from Fiat, saying that a tax ruling issued by the country gave a selective advantage to Fiat Finance and Trade, a Luxembourg company providing financial services to other Fiat group companies. It said that Fiat's activities were comparable to those of a bank and so its taxable profits should be calculated as a return on capital deployed by the company for its financing activities

However, the Commission said that due to "a number of economically unjustifiable assumptions and down-ward adjustments" the capital base of the company used in the tax ruling was much lower than the company's actual capital. It also said that the return made by the company on its activities was lower than the market rate.

Both Luxembourg and Fiat have appealed the decision, and Luxembourg has now asked for the case to be handled as an 'expedited procedure'. This simplified procedure would reduce the time taken to rule on the case from three years to around 10 months, MLex said.

Although the prospect of getting a fast resolution to these cases is no doubt very attractive, state aid expert Caroline Ramsay of Pinsent Masons, the law firm behind Out-Law.com said, "the expedited procedure could be a double-edged sword for those making claims. The time saved may ultimately give rise to a loss later with an the company which made the claim being unsuccessful because of a lack of support from other intervening parties and less of an opportunity to properly argue the case."

"Given the complexity of the tax cases and the novel legal arguments which need to be led, the decision to waive the opportunity of an oral hearing should not be taken lightly," said Ramsay.