This tweet was not good news for tax justice campaigners:
#EUGeneralCourt annuls the decision taken by the @EU_Commission regarding the Irish #TaxRulings in favour of @Apple #Apple #EUCommission #StateAid pic.twitter.com/KoF6r1n82S
— EU Court of Justice (@EUCourtPress) July 15, 2020
Ireland has won the right not to tax Apple.
The EU's attempt to beat tax abuse using competition law has failed, at least for now (an appeal is possible, I think).
But the EU has not given up. As the FT noted a few days ago, it is now planning to use a Treaty route (article 116 for the geeks) to overcome the objections of small member states (like Ireland) to the imposition of tax reforms necessary to create a level playing field in the internal market. The critical point is that this does not require unanimous support: qualified majorities will be enough.
I am not pretending this morning is good news. But if a better solution is found maybe that's no bad thing.
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Well, as much as I’d love an Apple Mac, I won’t be buying one until they start to behave themselves.
This is the way the rule of law works: an independent court adjudicates between the parties.
The decision of the General Court cuts to the core of any state aid case – can the Commission prove that Apple was granted a tax advantage by the Irish government on a selective basis that was not available to others? If not, there is no state aid to counteract.
A level playing field could be achieved if the rates of CT across the EU were harmonised with that of the Republic.
And how would you deal with the resulting tax avoidance as all the healthy incorporate to save tax, and the resulting rise in inequality?
Surely the Court has confirmed that Apple HAS behaved themselves and operated entirely legally, despite what others have tried to claim!
I’m not sure they’ll miss your theoretical purchase.
Actually the decision was largely based on the fact that Ireland did not have effective transfer pricing laws at the time
And was therefore entirely legal.
A claim that could only be made by someone who really does not understand law
Of course you’re an expert on law as well as everything else, aren’t you Richard?!
Please explain which part of what Apple did was illegal and which rules were broken. The Court would appear to disagree with you.
It’s not the final opinion, necessarily
And just in case you weren’t aware of it, the law was not clear or the matter would not have been disputed
That you do not get that proves my point
Perhaps Apple should be squeezed until the pips squeak?
Err Richard, the case went in favour of Apple. You might not like it but they clearly acted within the boundaries of the law or it would have gone against them!!!
Another person who clearly does not understand how law works (it’s fluid, if you’re not aware of it)
And I have no doubt that the Law will be changed as a result of this
So a hollow victory, at best
This back-and-forth argument is a bit of a red herring. The case was never about whether or not Apple did something illegal. It is all about whether the EU Commission could demonstrate that the Irish government gave state aid to Apple in a preferential manner that breaches the Irish government’s obligations under the EU Treaty.
It is a long court ruling, 590 paragraphs, but it seems to me the primary point in the court’s decision (paras 249, 310, 312) was that the Commission attributed all the licensing income of the relevant companies to their Irish branches, on the basis that they could not be attributed anywhere else, but the General Court agreed with Apple that no adequate analysis was made by the Commission of whether the underlying assets were actually controlled by the branches in Ireland, or of the value added outside Ireland by the decisions and actions of the boards of those companies and of the wider Apple group. Sounds to me like the functional analysis was inadequate, and probably started from the wrong place (somewhat ironically, perhaps).
A secondary point (para 413) is that the Commission failed to show that “cost plus” was not an appropriate measure of profits for the Irish branch, or that choosing that method led to a selective advantage and so impermissible state aid.
There are some crumbs of comfort for the Commission – the General Court (para 111, 224-225) agreed that the Commission was entitled to check whether a tax regime produced a “normal” result by reference to international standards, including the arm’s length standard, whether or not that was expressly provided in the local law, to check if the law was granting selective state aid.
Given the values involved, the Commission may well appeal to the full Court of Justice of the EU.
I think an appeal likely
Typo – 509 paragraph (but it is so turgid it feels like 590).
Richard, you think the court’s decision was based on Ireland not having effective transfer pricing laws at the time? Are you sure? That’s not what other reports I’ve read suggest.
Of course it was not that alone
But it seems to have been a factor
More important is that this precipitates change
And that is what I am now interested in – this route is closed, and another haas to open
“I am not pretending this morning is good news. But if a better solution is found maybe that’s no bad thing.”
Agreed – it does show EU is prepared to keep going with these things and may result in a better outcome longer term?