The Government has said that it will respect the findings of the EU’s highest court, which this morning (10 September) gave its final judgment in the long-running tax case involving Apple, Ireland, and the European Commission.
The Court of Justice of the European Union (CJEU) judgment means that Ireland must recover €13 billion in tax arising from a 2016 European Commission decision that two tax rulings linked to two Apple subsidiaries amounted to illegal state aid.
A Government statement said that the process of transferring the assets linked to the ruling, which have been held in an escrow account pending the outcome of the case, would now begin.
After an appeal by Apple and Ireland, the General Court had annulled the commission’s decision in 2020, finding that the EU body had not shown that there was an advantage from the adoption of the tax rulings.
The CJEU has now upheld an appeal against that ruling by the commission, setting aside the 2020 ruling and giving its final judgment in the matter.
Subsidiaries
According to the Court of Justice, the General Court erred when it ruled that the commission had not proved sufficiently that the intellectual-property licences held by the Apple subsidiaries ASI and AOE and related profits, generated by sales of Apple products outside the US, should have been allocated, for tax purposes, to the Irish branches.
“In particular, the General Court erred when it ruled that the commission’s primary line of reasoning was based on erroneous assessments of normal taxation under the Irish tax law applicable in the case, and when it upheld the complaints raised by Ireland and by ASI and AOE regarding the commission’s factual assessments of the activities of the Irish branches of ASI and AOE and of activities outside those branches,” the court stated.
The CJEU said that it believed that it should give a final judgment on the matter, within the limits of the issues before it.
The judgment today is broadly in line with the opinion of an advocate general of the court late last year – although the court advisor had proposed referring the case back to the General Court for a new decision.
‘Historical relevance only’
In its statement, the Government said that it would consider the judgment carefully when it was circulated, but added that the Irish position had always been that it did not give preferential tax treatment to any companies or taxpayers.
“The Apple case involved an issue that is now of historical relevance only; the Revenue opinions date back to 1991 and 2007 and are no longer in force; and Ireland has already introduced changes to the law regarding corporate-residence rules and the attribution of profits to branches of non-resident companies operating in the State,” the statement added.
“Ireland is an active participant in international tax discussions and has also made necessary changes to its taxation regime as international tax rules have developed over time,” the Government concluded.
‘Win for tax justice’
EU competition commissioner Margrethe Vestager described the outcome, as well as a separate decision on Google, as “a big win for European citizens and for tax justice”.
She defended the European Commission’s tax investigations in general, saying that they had contributed to “a mind shift, a change of attitudes among member states”, who had introduced regulatory and legislative reforms in response.
“Today, the Apple case could no longer occur. Ireland changed its corporate tax residence rules to prevent Irish incorporated companies from being stateless for tax purposes,” Vestager stated.