Today's ruling by the European Court of Justice annulled an obligation in a European Commission decision in the summer of 2016 that Apple would have to repay some € 13 billion in tax subsidies and interest to Ireland. Although Apple repaid the amount to Ireland in 2018, an EU Member State, along with Apple, challenged the Commission's decision four years ago to prevent multis, which consider the country as a tax haven, from moving to other Member States with similarly favorable tax conditions in due time.
In the case of the Apple decision, the European Commission, following a multi – year investigation, concluded that the individual tax assessment used by the company constituted unauthorized State aid and ordered the local authority to recover it. There was therefore no fine in this sense, only the Commission ordered the recovery of the illegal aid.
The case was scrutinized by two specific tax authority decisions by an EU authority headed by Margrethe Vestager, which allowed Apple to virtually transfer Irish corporate tax to a non-EU subsidiary without paying it.
Commission Communication according to the concrete decisions, it allowed Apple Sales International to reduce its 1 per cent effective tax rate paid in 2003 to 0.005 per cent by 2014 – much lower than what any Irish company pays. Following today's judgment of the Court of Justice, the Commission has not been able to demonstrate that ominous decisions are contrary to Article 107 (1) of the EU State Aid Act, which states that
Incompatible with the internal market by Member States or through State resources in any form aid which distorts or threatens to distort competition by favoring certain undertakings or the production of certain goods, in so far as it affects trade between Member States.
The Commission also complains that the EU, as a single market, means that Apple was not only able to evade taxation after operating in Ireland, but was also able to save its profits across the EU outside the EU. However, the EU has no say in this, the Member States' own tax rules allow (or prohibit) this. However, the Commission added that if Member States so wished, they could claim money from the Irish, which could reduce the amount that would end up in the Irish budget.
Today's ruling by the European Court of Justice is not very good for Vestager, whose office includes Ikea and Nike are investigating their Dutch tax practices on essentially the same basis as Apple and Ireland. The judgment has just been appealed to the Curia, which means that the case is not yet fully closed.
The Hungarian aspect of the case is that at the end of last year the EU launched an investigation into the legality of the HUF 108 million state aid for Samsung's SDI investment in Göd.
Gellert is Technology Editor at Counting News Media and contributor at other major tech publications. Her interests includes testing new gadgets and reading.