Ireland: Judgment of General Court regarding tax rulings issued to multinational group must be set aside

The Advocate General of the Court of Justice of the European Union (CJEU) today issued an opinion proposing that a judgment of the General Court regarding tax rulings issued by Ireland to a multinational entity (MNE) group be set aside.

The case is: Commission v. Ireland and Others (C-465/20 P)

As explained in a release [PDF 108 KB] from the CJEU:

• In 1991 and 2007, Ireland issued two tax rulings in relation to two companies of an MNE group incorporated under Irish law but not tax resident in Ireland. The rulings approved the method by which the companies proposed to determine their chargeable profits in Ireland deriving from the activity of their Irish branches.
• In 2016, the European Commission (EC) considered that the tax rulings, by excluding from the tax base the profits deriving from the use of intellectual property (IP) licenses held by the companies, granted those companies, between 1991 and 2014, State aid that was unlawful and incompatible with the internal market, and ordered Ireland to recover that aid.
• In 2020, on the application of Ireland and the companies, the General Court of the EU annulled the EC’s decision, finding that the EC had not shown that there was an advantage deriving from the adoption of the tax rulings. The EC has lodged an appeal with the CJEU, asking it to set aside the judgment of the General Court.

The Advocate General today issued an opinion concluding that the General Court committed a series of errors in law when it ruled that the EC had not shown to the requisite legal standard that the IP licenses held by the companies and related profits, generated by the sales of products outside the United States, had to be attributed for tax purposes to the Irish branches. The Advocate General is also of the view that the General Court failed to correctly assess the substance and consequences of certain methodological errors that, according to the EC decision, vitiated the tax rulings. In the Advocate General’s opinion, it is therefore necessary for the General Court to carry out a new assessment.

The Advocate General’s opinion is not binding on the CJEU. The role of the Advocates General is to propose to the court, a legal solution to the cases for which they are responsible. The CJEU judges will now begin their deliberations in this case with a judgment to be given at a later date.

Read a November 2023 report prepared by the KPMG EU Tax Centre