Case Information
- Court: Court of Justice of the European Union (CJEU), Grand Chamber
- Case No: C-465/20 P
- Applicant: European Commission
- Defendant: Ireland, Apple Sales International Ltd, Apple Operations International Ltd, Apple Operations Europe Ltd
- Judgment Date: 10 September 2024
Some Historical Context – The Cases Leading Up to the CJEU Decision
Background of Apple’s Tax Structure:
European Commission Decision (2016)
General Court Ruling (2020)
- Insufficient evidence: The court found that the Commission did not provide enough evidence to substantiate its claim that Apple’s tax arrangements violated the arm’s length principle.
- Application of Irish tax law: The General Court stated that Ireland’s tax laws, particularly Section 25 of the Irish Taxes Consolidation Act (TCA) 1997, were applied correctly, and Apple’s allocation of profits to its Irish branches was consistent with the law as written.
- Economic substance: The court accepted that Apple’s head offices, although minimal in terms of employees and physical presence, did exercise control over the IP rights and had a legitimate basis for the allocation of profits.
Court of Justice of the European Union (CJEU) Appeal (2024)
Key Points of the Judgment:
Background
Core Dispute
Court Findings
Outcome
Transfer Pricing Method Used
Major Issues and Areas of Contention
- Selective Tax Advantages: The core argument was whether the tax rulings gave Apple selective advantages unavailable to other companies, thus violating EU competition laws.
- Arm’s Length Principle: A key contention was whether Apple’s transfer pricing complied with the arm’s length principle, which governs how profits should be allocated within a multinational group.
- Territorial Taxation: Apple and Ireland argued that the profits attributed to ASI and AOI were consistent with Irish law. However, the European Commission argued that the Irish branches were allocated an artificially low level of profit, leading to tax avoidance.