The Court of Justice of the European Union on 10 September 2024 confirmed the European Commission's 2016 Apple state aid decision, ruling in Case C-465/20 P that Ireland granted Apple unlawful aid which it is required to recover. The Court set aside the 2020 judgment of the General Court and gave final judgment itself, according to the Court's press release.
Corporate INTL Newsroom · Tax
Court of Justice Upholds Commission Apple State Aid Decision on Irish Tax Rulings
By The Corporate INTL Newsroom · 10 September 2024
Background to the case
In 1991 and 2007, Ireland issued two tax rulings in favour of Apple Sales International (ASI) and Apple Operations Europe (AOE), companies incorporated in Ireland but not tax resident there. The rulings approved the methods used to determine the chargeable profits of their Irish branches.
In 2016, the Commission found that, by excluding from the tax base the profits generated by intellectual property licences held by the two companies, the rulings had conferred unlawful state aid from 1991 to 2014. The Commission estimated at the time that Ireland had given illegal tax benefits worth up to €13 billion and ordered recovery. In 2020, the General Court annulled the decision, holding that the Commission had not shown a selective advantage.
What the Court of Justice decided
The Court found that the General Court erred when it ruled that the Commission had not sufficiently proved that the intellectual property licences and related profits, generated by sales of Apple products outside the United States, should have been allocated for tax purposes to the Irish branches. It also held that the General Court erred in its treatment of the Commission's assessment of normal taxation under Irish law and of the activities of the branches.
Giving final judgment, the Court confirmed the Commission's approach that, under the relevant Irish provision on non-resident companies, the activities of the Irish branches had to be compared with those of other parts of the same companies, in particular their head offices outside Ireland, rather than with other Apple Group companies such as a parent in the United States.
Why it matters
The judgment brings the Apple case to an end and confirms that tax rulings allocating profits between a company's branches and head office can be reviewed under EU state aid rules. Multinational groups relying on historic advance rulings may wish to consider how profit allocation to EU branches would be assessed in light of the decision.
Sources
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