By Foo Yun Chee
LUXEMBOURG (Reuters) - Belgium and EU competition regulators on Wednesday faced off again in Europe's second-highest court on whether Belgium's 700-million euro ($750 million) tax scheme for Magnetrol, BP (LON:BP) and 33 other multinationals was illegal state aid.
The European Commission in 2016 ordered Belgium to recover the money from the companies that benefited from the scheme, one of several high-profile cases in a crackdown on sweetheart tax deals between EU countries and multinationals.
Belgium won the first round of its fight in a lower tribunal, which annulled the Commission's ruling in 2019. But Europe's top court backed the EU regulator and referred the case back to the General Court.
Ireland had also won the first stage of its court fight against an order to recover some 13 billion euros from Apple (NASDAQ:AAPL) in 2016.
EU nations caught in the tax crackdown received a boost last year when the top EU court backed Fiat Chrysler in its fight against the regulator's order to pay 30 million euros in back taxes to Luxembourg.
Belgium on Wednesday brandished the Fiat ruling in its arguments to the General Court.
"The Commission wrongly identified the reference framework in breach of the method clearly set out in the Fiat judgment, namely the determination of the reference framework must follow from the examination of the content and specific effects of rules under the national laws of that state," Belgium's lawyer Marianne Clayton said.
She said the Commission also erred as it did not examine separately the issues of advantage and selectivity, and if this was granted to the companies.
Ireland's lawyer Paul Gallagher said the Commission's approach was technically flawed and breached the EU treaty and national sovereignty.
Commission lawyer Paul John Loewenthal said it was clear that the scheme offered tax breaks to multinationals, with Belgium widely advertising the measure.
"Multinationals are given tax breaks if they bring jobs and investment," he told the court, citing the Belgian finance ministry's advertisement.
The court will hear arguments from some of the companies on Thursday and next week. The case is T-131/16 RENV.
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