The Attorney General for the Court of Justice of the European Union, Giovanni Pitruzzella, this Thursday urged the court to overturn the ruling that favored Apple in the European Commission’s historic decision compelling the tech giant to return 13 billion euros plus interest for benefiting from illegal tax assistance in Ireland.
In a formal statement issued by the court, Pitruzzella indicated in his conclusions that the CJEU should nullify the decision and remand the case to the General Court so it can reassess the merits of the matter again.
The dispute traces back to 2016, when the European Commission’s Directorate-General for Competition, led by Margrethe Vestager, determined that two Apple subsidiaries, Apple Sales International (ASI) and Apple Operations Europe (AOE), benefited from Ireland’s selective tax regime between 1991 and 2014, despite not being taxpayers in Ireland. This arrangement was seen as the most favorable tax treatment for the company’s branches and resulted in significantly lower tax payments, prompting Dublin to reclaim the lost revenue.
Specifically, the authorities ruled that excluding profits from the tax base through the use of intellectual property licenses by ASI and AOE amounted to illegal state aid and violated internal market rules. Consequently, the European Commission demanded that Ireland claw back 13 billion euros in benefits plus the related interest.
First decision of 2020
Apple and Ireland challenged the decision before the European Court of Justice. The court’s 2020 interim ruling found that Brussels had not proven the existence of a selective tax advantage for Apple Sales International or Apple Operations Europe. That verdict represented a major victory for Apple and a setback for the Commission’s competition services at the time.
The Commission appealed that ruling, and today’s conclusions come from Pitruzzella, who proposes that the case be annulled and reexamined on the merits.
The attorney argues that a series of errors occurred in the 2020 decision, asserting that the Commission did not sufficiently establish that the intellectual property licenses held by ASI and AOE, and the profits attributed to the sale of Apple products abroad, were effectively conducted by the Irish branches for tax purposes in the United States.
Furthermore, Pitruzzella contends that the decision did not adequately address the existence and consequences of certain sanctions. He points to methodological missteps that, in his view, impacted the assessment of advance tax rulings that accompanied the case.
Procedure
For these reasons, the Attorney General asserts that the Luxembourg-based Court should grant a new evaluation of the subject. While the opinions of the CJEU chief prosecutors are not binding regarding penalties that may follow, they are typically influential in shaping the Court’s direction. The chief prosecutor’s duty is to offer an independent legal solution to the issue before the Court, which then engages in negotiations among the judges of the Court of Justice. A final decision will be announced later. [Citation: CJEU proceedings]