On October 4, 2017, the European Commission (EC) continued its ongoing challenges to Member States’ transfer pricing tax regimes by advancing two high profile cases to the next stages. In the Apple case, the EC referred Ireland to the Court of Justice of the European Union (CJEU) for failing to enforce an August 2016 State aid recovery decision, estimated in the amount of up to EUR 13 billion. In the Amazon case, the EC announced its conclusion that Luxembourg’s tax treatment of Amazon gave rise to unlawful State aid in the amount of up to EUR 250 million.
In the Apple case, Ireland lodged its appeal to the European courts against the decision on November 9, 2016, and Apple appealed on December 19, 2016. However, an appeal does not automatically suspend recovery proceedings and the EC’s action signals its unwillingness to allow Ireland more time to complete the collection process despite acknowledged difficulties. Ireland’s Department of Finance responded with a brief statement, calling the Commission’s action “extremely disappointing” and that it has worked intensively to ensure
that it complies with its recovery obligations as soon as possible.
In the Amazon case, the Luxembourg Finance Ministry issued its own press release in response to the EC announcement. It highlighted that the investigation refers to a period back to
2006, and notes that international and legal frameworks have evolved substantially since that time. The Luxembourg Finance Ministry said that “Amazon has been taxed in accordance with the tax rules applicable at the relevant time” and accordingly “has not been granted incompatible State aid.”
We refer to a PwC EUDTG newsletter in this respect, which you can read here.
For more insights and to understand the implications for your organisation, please contact Pieter Deré.