Some observations on Starbucks, Fiat, and their potential impact on future amendments to the arm’s length principle

Abstract

The General Court of the European Union has issued two awaited rulings in the Starbucks and Fiat cases. The length and the depth of the analysis made by the judges of the General Court should be acknowledged, even if certain key issues are perhaps too rapidly dealt with. Although the Commission lost in Starbucks, the cases can be interpreted as a victory for the Commission and several of the arguments it has been relying on since these cases were initiated. These cases also point to potential conflicts between the State aid rules and the amendments to the arm’s length principle currently considered by the OECD so as to move part of the corporate tax base to market jurisdictions. It will, however, be necessary to wait until the CJEU rules on these issues to have a clearer view on the relation between the State aid rules and both the arm’s length principle and other tax rules. This blog post aims at emphasising certain important points made in the two judgments, together with considering their potential impact on the ongoing project in relation to the tax challenges of the digitalization of the economy.