Jack Chambers (Dublin West, Fianna Fail) | Oireachtas source

Last week, the Court of Justice of the European Union delivered its judgment, the final milestone in what has been a long-running legal process, beginning in 2013 when the Commission began their investigation into a number of tax arrangements across the EU. I want to take this opportunity to outline the history of the case and reiterate the importance of taking this case, notwithstanding that the final judgment last week was not in Ireland’s favour. I will discuss the recovered state aid and the significant changes in the framework for international taxation, in which Ireland is an involved participant. Before I begin, I wish to emphasise the importance of taxpayer confidentiality. This case related specifically to a decision by the Commission that more tax should have been paid in a particular circumstance, and the recovery of the state aid necessitated a calculation by Revenue of the estimated total amount of additional taxation due, as well as EU interest. These figures are in the public domain: €13.1 billion in taxation with €1.2 billion in EU interest. However, this does not mean that any and all of the details of specific tax assessments or tax payments are up for discussion. It remains the case that taxpayer information must be protected, as required by law, and we need to continue to bear this important underlying principle in mind as we discuss the case and its implications.

The legal case began eight years ago, but engagement with the Commission goes back more than a decade.

After initial engagements in 2013, the Commission issued an opening decision in this case in 2014. Both during the initial engagements ahead of the opening decision, and continuing as the Commission undertook its formal investigation, the Irish authorities co-operated fully and ensured the Commission had access to the wide range of information it requested.

The Commission released its decision on 30 August 2016, finding that Ireland had provided state aid to Apple. The Commission decision of 2016 concerned two opinions issued by Revenue in 1991 and 2007 in favour of Apple Sales International, ASI, and Apple Operations Europe, AOE. These opinions endorsed methods of ASI and AOE, which were non-resident companies, to allocate profits to their respective Irish branches, which allowed them to determine their annual corporate tax liability.

The EU Commission challenged the tax treatment of these two companies using state aid powers. In essence, the Commission considered all the activities of ASI and AOE, including profits arising from intellectual property developed by Apple in the US, should be subject to tax in Ireland. Ireland, however, considered that only the activities that occurred in Ireland, in the Irish branches of ASI and AOE, should be subject to Irish tax. The Commission presented three lines of argument for why the amount of tax paid by the Irish branches was too low.

Following the announcement of the decision, Apple and Ireland separately sought an annulment of the Commission's decision in the European courts. These cases were combined and considered together. There were detailed written pleadings from all parties followed by a two-day hearing of the case at the General Court of the European Union, the GCEU, with in-depth questions and detailed discussions. Following its deliberations, the GCEU delivered its judgment in the case in July 2020. The judgment annulled the Commission's state aid decision of August 2016. The General Court of the European Union rejected all three lines of reasoning put forward by the Commission.

The Commission opted to appeal the General Court of the European Union's judgment. Written procedures in the appeal began in 2020 and continued into 2021. In 2023, the court held an oral hearing of the case over one day. The Advocate General issued his non-binding opinion in November 2023. The Advocate General considered the General Court committed a series of errors in the judgment. He therefore proposed that the Court of Justice of the European Union, CJEU, set aside the judgment and refer the case back to the General Court of the European Union to carry out further analysis. This leads us to last week's judgment.

The Court of Justice of the European Union did not opt to follow the opinion of the Advocate General to remit the case back to the General Court for further consideration. Instead, it found the General Court had erred in its judgment and therefore considered its judgment should be set aside. It also found it had the necessary information to make a final finding on the matter, confirming the Commission's 2016 decision that Ireland granted Apple unlawful aid, which Ireland is required to recover. This is the final stage of this case and there are no further avenues for appeal or reconsideration.

While I am disappointed the judgment did not find in Ireland's favour, Ireland will respect and implement the Court of Justice of the European Union's judgment.

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