The General Court of the European Union has annulled the Commission’s decision on Irish tax rulings involving Apple. The Commission had found that the rulings constituted unlawful state aid and instructed the Irish tax authorities to recover some €13bn from the company.
The General Court’s decision is taken on grounds that the Commission ‘did not succeed in showing to the requisite legal standard that there was an advantage for the purposes of article 107(1) of the Treaty on the Functioning of the EU’ and that there was therefore no granting of unlawful state aid. The court also found that the Commission had not proved that the tax rulings were the result of discretion exercised by the Irish tax authorities leading to an advantage being granted to Apple.
Commenting on the decision, Jason Collins, head of tax at Pinsent Masons, said: ‘Apple’s victory shows that European courts are unwilling to call beneficial tax regimes state aid, even when designed to attract foreign investment – provided they apply the rules consistently. This will be a very welcome outcome for other multinationals which have been watching this case closely.
‘Brussels will no doubt appeal. This isn’t the end of the story,’ Collins added. ‘In addition, reports suggest that the EU is looking at other ways to stop member states, such as Ireland, from offering low effective rates of corporate tax going forward. We expect the EU to continue applying pressure in this area.’
The General Court of the European Union has annulled the Commission’s decision on Irish tax rulings involving Apple. The Commission had found that the rulings constituted unlawful state aid and instructed the Irish tax authorities to recover some €13bn from the company.
The General Court’s decision is taken on grounds that the Commission ‘did not succeed in showing to the requisite legal standard that there was an advantage for the purposes of article 107(1) of the Treaty on the Functioning of the EU’ and that there was therefore no granting of unlawful state aid. The court also found that the Commission had not proved that the tax rulings were the result of discretion exercised by the Irish tax authorities leading to an advantage being granted to Apple.
Commenting on the decision, Jason Collins, head of tax at Pinsent Masons, said: ‘Apple’s victory shows that European courts are unwilling to call beneficial tax regimes state aid, even when designed to attract foreign investment – provided they apply the rules consistently. This will be a very welcome outcome for other multinationals which have been watching this case closely.
‘Brussels will no doubt appeal. This isn’t the end of the story,’ Collins added. ‘In addition, reports suggest that the EU is looking at other ways to stop member states, such as Ireland, from offering low effective rates of corporate tax going forward. We expect the EU to continue applying pressure in this area.’
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