Short Reads

European Commission orders Ireland to recover illegal tax benefits worth up to €13 billion from Apple

European Commission orders Ireland to recover illegal tax benefits worth up to €13 billion from Apple

European Commission orders Ireland to recover illegal tax benefits worth up to €13 billion from Apple

03.10.2016 NL law

On 30 August 2016, the European Commission concluded that two tax rulings issued by Ireland in 1991 and 2007 to Apple constituted State aid. According to the Commission, these tax rulings have substantially and artificially lowered the tax paid by Apple in Ireland since 1991.

The legal presence of Apple in Europe consists of two Irish incorporated companies, namely Apple Sales International and Apple Operations Europe. The first company is responsible for buying Apple products from equipment manufacturers around the world and selling these products in Europe. The second company focuses on manufacturing certain lines of computers for the Apple group. 

After an in-depth investigation which started in June 2014, the Commission concluded that the two tax rulings gave Apple Sales International and Apple Operations Europe a selective advantage. This means that other undertakings, which were in the same factual and legal circumstances, did not enjoy the same benefits as these companies. The Commission considered that Apple Sales International and Apple Operations Europe were allowed, due to these rulings, to allocate their profits to their "head office". The head office was not subject to tax in any country under specific provisions of the Irish tax law and existed 'only on paper' as it did not have any employees or own premises. The Commission stressed that tax rulings as such are perfectly legal. However, it was of the opinion that the tax rulings issued by Ireland endorsed an 'artificial internal allocation of profits' within Apple Sales International and Apple Operations Europe. In particular, it held that this allocation had 'no factual or economic justification' as only the Irish branch of Apple Sales International and Apple Operations Europe had the capacity to generate income. Therefore, the Commission concluded that the sales profits of these companies should have been taxed in Ireland. The rulings endorsed a way to establish the taxable profits which did not correspond to economic reality according to the Commission.

The Commission ordered Ireland to recover the illegal State aid received by Apple as a result of the two tax rulings between 2003 and 2013. The Commission can only order the recovery of illegal State aid granted ten years before its first request for information on the matter. In this case this first request was made in 2013.

 

This article was published in the Competition Law Newsletter of October 2016. Other articles in this newsletter:

  1. Court of Justice ends Pilkington's fight against fine in the car glass cartel
  2. General Court upholds Commission's decision that reverse payment settlements constitute a 'by object' infringement
  3. European Commission puts price signalling on the agenda
  4. European Commission orders Ireland to recover illegal tax benefits worth up to €13 billion from Apple
  5. Commission publishes Preliminary Report on the e-commerce sector inquiry
  6. Brussels Court of Appeal confirms interim measures against exclusive TV broadcasting rights

Team

Related news

06.02.2020 NL law
Pay-for-delay: brightened lines between object and effect restrictions

Short Reads - In its first pay-for-delay case, the ECJ has clarified the criteria determining whether settlement agreements between a patent holder of a pharmaceutical product and a generic manufacturer may have as their object or effect to restrict EU competition law. The judgment confirms the General Court’s earlier rulings in Lundbeck and Servier (see our October 2016 and December 2018 newsletters) in which it was held that pay-for-delay agreements (in these cases) constituted a restriction ‘by object’.

Read more

06.02.2020 NL law
Consumers and Sustainability: 2020 competition enforcement buzzwords

Short Reads - The ACM will include the effects of mergers on labour conditions in its review. It will also investigate excessive pricing of prescription drugs. As well as these topics, the ACM has designated the digital economy and energy transition as its 2020 focus areas. Companies can therefore expect increased enforcement to protect online consumers, and active probing of algorithms.

Read more

06.02.2020 NL law
The ACM may cast the net wide in cartel investigations

Short Reads - Companies beware: the ACM may not need to specify the scope of its investigation into suspected cartel infringements in as much detail as expected. On 14 January 2020, the Dutch Trade and Industry Appeals Tribunal upheld the ACM’s appeal against judgments of the Rotterdam District Court, which had quashed cartel fines imposed on cold storage operators. The operators had argued that the ACM was time-barred from pursuing a case against them, because the ACM had not suspended the prescription period by beginning investigative actions specifically related to the alleged infringements.

Read more

06.02.2020 NL law
Den Bosch Court of Appeal revives damages claims in Dutch prestressing steel litigation

Short Reads - On 28 January 2020, the Court of Appeal of Den Bosch issued a ruling in the Dutch prestressing steel litigation. In its ruling, the Court of Appeal overturned a 2016 judgment of the District Court of Limburg, in which it was held that civil damages claims brought by Deutsche Bahn were time-barred under German law (see our January 2017 newsletter).

Read more

06.02.2020 NL law
CDC/Kemira: Amsterdam Court of Appeal applies European principle of effectiveness to limitation periods

Short Reads - In a private enforcement case brought by CDC against Kemira, the Amsterdam Court of Appeal applies the European principle of effectiveness and rules that claims are not time-barred under Spanish, Finnish and Swedish law. With reference to the Cogeco judgment of the ECJ, the Court considers that claimants must be able to await the outcome of any administrative appeal against an infringement decision, even in relation to respondents who themselves have not filed appeals against the infringement decision.

Read more

This website uses cookies. Some of these cookies are essential for the technical functioning of our website and you cannot disable these cookies if you want to read our website. We also use functional cookies to ensure the website functions properly and analytical cookies to personalise content and to analyse our traffic. You can either accept or refuse these functional and analytical cookies.

Privacy – en cookieverklaring