Though widely leaked, the formal decision that the European Commission is to open a formal investigation into the competition implications of Apple’s tax arrangements with Ireland was published on 30 September (or can be downloaded from the panel opposite). The decision rests on an analysis of the arrangements made between Apple and the Irish tax authorities, principally as regards assessed profits. The Commission expresses its opinion that the arrangements do not comply with the arm’s length principle and that the Irish authorities confer an advantage on Apple, which is ‘obtained every year and on-going, when the annual tax liability is agreed upon’.
On a first look at the basis for that Commission opinion, it is hard to see grounds for differing from it but there may be much more information to come and Ireland may argue that any aid was ‘compatible’ in that it is directed at development which overcomes an economic handicap.
If the aid is deemed to be unlawful, it may be recovered from the recipient. One report suggests that a billion euros may be at stake.
The Irish Government has already published a statement which explains the position concisely and which puts many of the more extreme reactions in context. The proceedings have after all been going on for some time and have a long way still to go. The statement is reproduced below:
On June 11th 2014, the European Commission publicly opened formal State aid investigations into certain multinational companies in a number of EU member states. Ireland is confident that there is no breach of State aid rules in this case and has already issued a formal response to the Commission earlier this month, addressing in detail the concerns and some misunderstandings contained in the Opening Decision. Ireland welcomed that opportunity to clarify important issues about the applicable tax law in this case and to explain that the company concerned did not receive selective treatment and was taxed fully in accordance with the law.
In the case of Ireland, the Commission is focussed on advance opinions provided to a company a number of years ago which address the calculation of the taxable base of profits of this company. The enquiry relates to a technical tax issue in respect of this one company and does not relate to Ireland’s corporation tax rate or the Irish corporate tax system more generally.
Later this week the Commission are due to publish the formal letter that was sent to the Irish authorities in June, setting out the ‘Opening Decision’ in this case. This is simply the next normal procedural step in the State aid investigation process. At this stage, the Commission has not formally decided that there is State aid, only that it is formally examining this case. It is expected that a final decision in relation to this investigation will take a considerable period of time. The purpose of the publication of the Opening Decision is to give interested parties the opportunity to submit comments directly to the European Commission.
As this is an ongoing legal process, Ireland will not be commenting further on any individual aspects of this case.
