Analysis: Apple condemned by the CJEU for benefiting from illegal tax aid granted by Ireland.

After several years of waiting, the Court of Justice of the European Union (CJEU) ruled on September 10 that the American group Apple had benefited from illegal tax aid granted by Ireland.

The quality of the beneficiary of the aid, the stakes involved and the sensitive nature of the state aid will make this decision particularly important for EU-based multinationals and national governments alike.

The penalty is substantial: Apple has been ordered to pay back 13 billion euros to the Cloverleaf country. A windfall compared to Irish budget revenues (around 13%).

In the end, Ireland, which was contesting the Commission’s decision alongside Apple, finds itself well endowed. The aid in question, based on a series of tax rescripts issued by Ireland, represented a loss of revenue for the State, and it is only logical that the sums should be returned to it.

However, one cannot help but feel that the recovery mechanism in these cases does not quite serve its purpose…

The state aid regime, designed to ensure undistorted competition between EU companies, only punishes one of the aid recipients, Apple, while the authority behind the illegal act, the Irish state, gets off scot-free. While Ireland may be concerned about the negative fallout this case could have on its future attractiveness to multinational players, its signature could remain solid.

The Celtic tiger has proved sufficiently attractive over the past 20 years to lure a substantial number of American firms, who have found Cork and Dublin a favorable climate for the deployment of their European activities. The Irish government’s effective policy of supporting foreign investment has created a virtuous economic circle and a premium on location over other EU countries.

For the future, the aggressive tax policies of individual countries should now be contained by the entry into force of the Pillar 2 Directive in December 2022, which aims to ensure a minimum level of taxation for large groups within the EU.

Find also the analysis of Benoît Gréteau, partner :

• for Challenges, “Tax breaks: Apple’s €13 billion embarrassment for Ireland“
• for RFI – Radio France Internationale, “European Union: double victory for the Commission in its battle against Google and Apple“