The following is an article by tax partner Cormac Doyle that recently appeared on Bloomberg Tax.
The General Court of the EU recently found in favor of Apple and the Irish government in a case concerning alleged breach of EU state aid rules. Tax partner assesses the significance and potential impact of the judgment going forward.
The General Court of the EU ruled on July 15, 2020 to annul the previous decision of the European Commission to direct Ireland to raise a tax assessment of circa 13 billion euros (circa $15.2 billion) in taxes and circa 1 billion euros of interest on that tax against Apple Sales International and Apple Operations Europe, two companies in the Apple corporate group. A full transcript of the ruling, which also outlines some of the background to the case, can be found here: Court Ruling.
In summary, the ruling was on the basis that the Commission failed to show sufficient legal standing that there was an economic advantage, and by extension state aid, provided to Apple by Ireland.
The Irish government has consistently maintained that it did not provide state aid through providing tax advantages to Apple and that the correct amount of Irish tax was charged in line with domestic legislation.
It was a significant outcome for Ireland and for Apple, for different reasons. However, it is generally expected that the Commission will appeal the judgment to the Court of Justice, the highest court in the EU.
So what does it all mean for Europe, Ireland, and other companies operating in and through Ireland?
If you are a business with operations in Ireland, or are considering using Ireland as a base for trading in or through, you should consider the following:
If your business has cross-border transactions or has utilised an international structure that could be affected by any of the developments noted here, please contact tax partner Cormac Doyle or your existing Crowe contact for further information.