EU: Ireland’s tax deals with Apple represent state aid and ‘selective advantage’

EU: Ireland’s tax deals with Apple represent state aid and ‘selective advantage’

The European Commission is investigating whether Irish authorities have given Apple preferential treatment regarding its tax affairs. In its initial findings, the antitrust regulator accused Ireland of granting the company “state aid” and an unfair advantage.

The opening of the case was announced back in June, but today the Commission published a preliminary report about its concerns and the information that it’s requested so far from Ireland.

It focuses on two rulings, one in 1991 and another in 2007, between Apple Operations Europe (AOE) and the Irish Revenue, which outlined how net profit for Apple’s Irish branch would be calculated. The Commission wants to know if these decisions have given Apple a “selective advantage” by effectively lowering the amount of tax it has to pay in the country.

In its preliminary report, it’s clear what side the Commission falls on:

“Through those rulings the Irish authorities confer an advantage on Apple. That advantage is obtained every year and on-going, when the annual tax liability is agreed upon by the tax authorities in view of that ruling.”

The Commission believes the advantage is indeed “selective” for Apple and appears to constitute state aid. Furthermore, it’s not aid that it can dismiss as being of wider benefit to the European Union:

“The aid in question does not appear to be intended to promote the execution of an important project of common European interest nor to remedy to a serious disturbance in the economy of Ireland, nor is it intended to promote culture or heritage conservation.”

Here’s the final decision:

“In the light of the foregoing considerations, the Commission’s preliminary view is that the tax ruling of 1990 (effectively agreed in 1991) and of 2007 in favour of the Apple group constitute state aid according to Article 107(1) TFEU.”

In a few weeks, the Commission will publish this report in its Official Journal. Third parties will then have one month to submit comments; the Commission will then take these into consideration as part of its investigation.

Today’s comments follow an icy report from a US Senate committee last May, which said the company was transferring money to avoid paying US taxes.

Top image credit: Justin Sullivan/Getty Images

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