The European Commission concluded that Ireland granted undue tax benefits of up to €13 billion to Apple. The Commission held that this was illegal under EU state aid rules. Ireland must now recover the illegal aid. Both Apple and the Republic of Ireland announced that they will challenge the Commission’s decision before the General Court of the EU.
The ruling was expected despite last weeks very strong intervention of the U.S. Department of the Treasury because it is in line with previous Commission decisions concerning tax arrangements of Starbucks and Fiat Chrysler and public Commission policy statements. However, it raises several highly controversial issues that will be for the EU courts to decide. This litigation will take several years to resolve.
Further, the Commission’s ruling that the collection of higher taxes on Apple's profits at issue by the U.S. may reduce the amount of aid to be recovered from Ireland will not satisfy the U.S. Department of the Treasury. Indeed, the decision will likely contribute to the impression that Brussels is disproportionately targeting U.S. companies. However, as regards state aid, this is not true as the Commission repeatedly ordered Member States to recover large amounts of alleged illegal aid from European companies, including national champions.