More than a year after the European Commission decided to order a tax adjustment of €13 billion against Apple in Ireland and the recovery of this amount by the Irish authorities, Dublin has still not executed this decision. For this reason, the institution decided on Wednesday 4 October to refer Ireland to the Court of Justice of the EU.
Readers may recall that in August 2016, the Commission found that Apple had benefited from illegal state aid, through two Irish tax rulings granted in 1999 and 2007 (see EUROPE 11612).
Two Irish subsidiaries of the American giant, Apple Sales International and Apple Operations Europe, saw practically all of their sales profits allocated internally to head offices that existed only on paper. Consequently, the profits of both companies were taxed nowhere, allowing Apple Sales International, for instance, to see its effective taxation rate as low as 1% in 2003 and 0.005% in 2014. The Commission therefore ordered Ireland to recover the tax due on its territory between 2003 and 2014.
As the Commissioner for Competition, Margrethe Vestager, reiterated on Wednesday, at the time the Commission's decision was made, the states had four months to recover illegal State aid. This meant that Ireland had until January of this year (see EUROPE 11715).
The Commission lays down the general principles and it is ultimately the responsibility of the country under investigation over state aid matters to calculate the exact amount to be recovered. According to the Commission, Dublin will not finish this work until March 2018. As the decision concerns two companies and 12 years of profits, Ireland will have to calculate the tax adjustment for 24 years in all. According to our information, it has concluded its work for only 13 of these years.
By way of comparison, we have also been informed that Belgium has recovered around 75% of the undue tax benefits granted to some 30 companies which used its excess profit ruling (see EUROPE 11725). The Commission found that the regime was illegal with regard to state aid rules in April 2016 and ordered the recovery of an amount finally laid down at €943 million. As Belgium is making progress and is close to recovering the full amount, the Commission sees no reason to bring it before the Court, even though, in this case as well, the deadline has long passed. (Original in French by Élodie Lamer)