General Court annuls European Commission state aid decision in Apple tax case

General Court annuls European Commission state aid decision in Apple tax case

The General Court has annulled a decision of the European Commission on the Irish tax authorities’ rulings in favour of Apple.  The Commission did not succeed in showing to the requisite legal standard that there was an advantage for the purposes of Article 107(1) TFEU.

The Commission’s decision concerned two tax rulings issued by the Irish tax authorities in favour of Apple Sales International (ASI) and Apple Operations Europe (AOE), both companies incorporated in Ireland but not tax resident there.

The General Court considered that the Commission should have shown that income that was taxed represented the value of the activities actually carried out by the Irish branches themselves, in view of the functions actually performed by the Irish branches of ASI and AOE and the decisions taken and implemented outside those limbs of the business.

Further, the Commission did not prove that the contested tax rulings were the result of discretion exercised by the Irish tax authorities.

The Commission is expected to appeal.

Joined Cases T-778/16 Ireland v Commission and T-892/16 Apple Sales International and Apple Operations Europe v Commission, ECLI:EU:T:2020:338