Jurisdiction(s):
United Kingdom and Ireland

ECJ overturns General Court in Apple, bolstering EU State aid tax enforcement; OECD arm's-length principle central; implications for Ireland's rulings, Nike/Ikea cases and double Irish structures

Published on: 18 September 2024

Published by a Law360 reporter

Legal News

Article summary

By overturning the General Court and concluding that the US technology giant owed Ireland over US$14.5bn in back taxes, the ECJ, noted by experts at a London conference of the International Fiscal Association, effectively departed from the reasoning in its 2022 decision involving the carmaker Fiat. In that case, it limited itself to interpreting Luxembourg’s transfer pricing law as it applied to Fiat and other companies. In Apple, by contrast, tax specialists criticised the ECJ for turning to the Organisation for Economic Co-operation and Development (OECD) arm’s-length principle, which was not in Irish law for the years at issue. The court accepted the European Commission’s premise that the Irish government had ‘misapplied’ Irish tax law in 1991 and 2007 rulings that granted Apple significant tax advantages. The arm’s-length standard has been the guiding principle in the OECD’s transfer pricing guidelines for many years. However, numerous countries, including Luxembourg and Ireland, did not apply it in national law until recently—a key point in the ECJ’s ruling in favour of Fiat in its State aid case. ‘The court found that the OECD transfer pricing guidelines did not form part of national law and therefore were not part of the reference system used...

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