Taxand USA outlines the background of the Apple case, the potential impact of this case on multinationals, and considerations that in-house tax teams should take into account.

 

On 30 August 2016, the European Commission announced a final decision on one of its key state aid investigations — Apple’s potentially favorable treatment by Ireland. The European Commission issued only a four-page summary for immediate public digestion, with the full ruling to be released at some future time after working through confidentiality requirements with both the company and the Irish government.

 

After considering transfer pricing rulings between Ireland and Apple, Inc., the European Commission ordered the Irish government to recover a record 13 billion euros plus interest from the company, the largest tax bill ever levied by the European Commission. The decision covers the taxes for years 2003-2014. Both the Irish government and Apple confirmed they would appeal the decision before the General Court, and possibly the Court of Justice of the European Union thereafter.

 

However, Apple is not the only corporation being targeted. The European Commission has already ordered the Netherlands and Luxembourg to recover as much as 30 million euros from Starbucks and Fiat Chrysler. Furthermore, Google, Amazon, Facebook and McDonald’s are all similarly under investigation on state aid grounds.

 

Discover more: EU’s bite on Apple triggers US-EU tax battles?

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Taxand's Take

The Apple case brought considerable attention to the investigations by the European Commission into state aid and the fight against potentially harmful tax competition. Though the targets under investigations are large multinationals, small and medium-sized companies should continue to consider European Union developments in assessing existing and future operating and tax planning strategies.

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TP & Business Restructuring | USA

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