Final Decision on Irish State Aid to Apple Released | KPMG | CA
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Final Decision on Irish State Aid to Apple Released

Final Decision on Irish State Aid to Apple Released

The EC published its final decision on a recent state aid investigation.


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The decision concerns transfer pricing rulings granted by Ireland to the Apple group. Although the decision was announced on August 30, 2016, publication was deferred in order to allow any confidentiality issues to be resolved, as is normal in such proceedings. The decision confirms the outcome of the EC's preliminary 2014 decision-that the transfer pricing rulings in question constituted illegal state aid. The state aid-estimated by the EC in its August 2016 announcement at up to €13 billion-must be recovered (with interest) by the Irish authorities from the multinational group.

The final decision includes comments from Apple and Ireland. The comments include challenges to the EC's legal and technical analysis, such as the interpretation of the state aid concepts of "advantage" and "selectivity".

The decision is understood to have been appealed to the general court of the CJEU by the taxpayer and by Ireland. The appeal does not suspend the recovery payment. The appeal, including possible subsequent appeals, could take years.

On August 30, 2016, and following an in-depth state aid investigation that began in June 2014, the EC decided that two tax rulings issued by Ireland "substantially and artificially" lowered the tax paid by Apple's Irish companies in Ireland since 1991. The EC concluded that the rulings endorsed a way to establish the taxable profits for two Irish incorporated companies of the multinational group that "did not correspond to economic reality: almost all sales profits recorded by the two companies were internally attributed to a 'head office'." The EC found that:

  • The "head offices" in Ireland existed only on paper and could not have generated such profits
  • The profits allocated to the "head offices" were not subject to tax in any country under specific provisions of the Irish tax law
  • Given the allocation method under the tax rulings, the company paid an effective corporate tax rate that declined from 1% in 2003 to 0.005% in 2014 on the profits of one of the Irish group members, and finally, that
  • Ireland must now recover the unpaid taxes in Ireland from the multinational entity for the years 2003 to 2014 of up to €13 billion, plus interest.

For more information, contact your KPMG adviser.

Information is current to January 10, 2017. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500

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