In a press release issued by the Court of Justice of the European Union (the CJEU)on November 9, 2023 with respect to the opinion to be delivered by Advocate General Pitruzzella in Case C-465/20 P, Commission v Ireland and Others, announced that Advocate General proposes that the Court sets aside the judgment of the General Court of the European Union and it refers the case back to the General Court for a new decision on the merits. A little success much needed by the European Commission. Unfortunately at the time of writing this article the text of the opinion itself was not yet published on the website of the CJEU.

‘Tax rulings’ make it possible for undertakings to apply to the tax authority for an advance decision concerning the tax treatment to which they will be subject. In 1991 and 2007, Ireland issued two tax rulings in relation to two companies of the Apple Group (Apple Sales International – ASI and Apple Operations Europe – AOE), incorporated under Irish law but not tax resident in Ireland. The rulings approved the method by which ASI and AOE proposed to determine their chargeable profits in Ireland deriving from the activity of their Irish branches. In 2016, the European Commission considered that the tax rulings, by excluding from the tax base the profits deriving from the use of intellectual property licences held by ASI and AOE, granted those companies, between 1991 and 2014, State aid that was unlawful and incompatible with the internal market and from which the Apple Group as a whole had benefitted, and ordered Ireland to recover that aid. In 2020, on the application of Ireland and ASI and AOE, the General Court of the European Union annulled the Commission’s decision, finding that the Commission had not shown that there was an advantage deriving from the adoption of the tax rulings. The Commission has lodged an appeal with the Court of Justice, asking it to set aside the judgment of the General Court.

In his Opinion, Advocate General Giovanni Pitruzzella proposes that the Court set aside the judgment and refer the case back to the General Court for a new decision on the merits.

According to the Advocate General, the General Court committed a series of errors in law when it ruled that the Commission had not shown to the requisite legal standard that the intellectual property licences held by ASI and AOE and related profits, generated by the sales of Apple products outside the USA, had to be attributed for tax purposes to the Irish branches. The Advocate General is also of the view that the General Court failed to assess correctly the substance and consequences of certain methodological errors that, according to the Commission decision, vitiated the tax rulings. In the Advocate General’s opinion, it is therefore necessary for the General Court to carry out a new assessment.

Background

• In 2016, the European Commission issued a Decision finding that Ireland had provided State aid to Apple. Ireland challenged this finding to the General Court of the European Union (GCEU).
• In 2020, the GCEU issued its judgment which annulled the Commission’s State aid decision of 2016.
• The Commission appealed the GCEU judgment to the Court of Justice of the European Union (CJEU) and, on 23 May 2023, the CJEU heard the appeal. The Commission, Ireland, Luxembourg, Apple and the EFTA Surveillance Authority made interventions before the Court.
• Following the oral hearing, the Advocate General’s Opinion was published on 09 November 2023.
• The Advocate General analyses the legal aspects of the case in detail and, separately from the deliberations of the Court, provides an Opinion regarding the issue being heard. This Opinion does not form part of the CJEU’s judgment but is considered by the Court when arriving at its final judgment.
• Following the Advocate General’s Opinion, the Court’s judgment will be pronounced in open Court. The timing of the judgment is entirely at the discretion of the Court.

Reaction of the Irish Minister of Finance

The Minister for Finance, Michael McGrath TD, today (Thursday, 9 November) notes the Opinion of the Advocate General Pitruzella that the judgment of the EU General Court on ‘tax rulings’ adopted by Ireland be set aside in the Apple State aid case and the case be referred back to the General Court for a new decision on the merits.

Minister McGrath commented:

‘I note the Opinion of the Advocate General. It is important to bear in mind that this Opinion does not form part of the Court of Justice of the European Union judgment but is considered by the Court when arriving at its final ruling.

My department and the State’s legal team will consider the full Opinion of the Advocate General in detail.

It has always been, and remains, Ireland’s position that that the correct amount of Irish tax was paid and that Ireland provided no State aid to Apple. We now await the judgment of the Court of Justice of the European Union on this matter.’

By now the text of the opinion has also been published. The text of the opinion can be found here.

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