The recent CJEU judgment in the Fiatcase sets a precedent in state aid investigations concerning transfer pricing. By rejecting the European Commission’s definition of ‘normal taxation’ and thus the reference system against which to assess whether a taxpayer received a selective advantage, the CJEU has set limits to veiled attempts to enforce a harmonised arm’s length principle across the EU. While the European Commission may suffer further legal defeats in the short term, the CJEU does leave the door open to further state aid investigations in transfer pricing matters based on a different approach.
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The recent CJEU judgment in the Fiatcase sets a precedent in state aid investigations concerning transfer pricing. By rejecting the European Commission’s definition of ‘normal taxation’ and thus the reference system against which to assess whether a taxpayer received a selective advantage, the CJEU has set limits to veiled attempts to enforce a harmonised arm’s length principle across the EU. While the European Commission may suffer further legal defeats in the short term, the CJEU does leave the door open to further state aid investigations in transfer pricing matters based on a different approach.
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