Legitimate Expectation of Consistent Interpretation of EU State Aid Law: Recovery in State Aid Cases Involving Advanced Pricing Agreements on Tax

Abstract

The EU State aid rules are under the world's spotlight with the European Commission's (the ‘Commission’) recent decision that Ireland has to recover up to €13bn plus interest from Apple. The Commission alleges that ‘Apple only paid an effective corporate tax rate that declined from 1 per cent in 2003 to 0.005 per cent in 2014 on the profits of Apple Sales International.’1 What matters is what Apple ultimately pays in tax on a global basis, including US repatriation taxes, rather than what its international subsidiaries pay in one or another jurisdiction. However, the Commission appears to be less interested in the rules governing taxation of global multinational companies, and rather more interested in gaining some political capital. Prior to the Apple decision, the Commission has issued decisions against Starbucks2 and Fiat3 ordering Luxembourg and the Netherlands to recover illegal aid (the ‘tax cases’). Other companies such as Amazon, McDonald's, and GDF Suez's tax arrangements are currently being scrutinised.4

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