Ireland: European Commission’s finding of unlawful State aid upheld, judgment of General Court set aside (CJEU judgment)
A CJEU judgment that set aside an earlier judgment of the General Court and confirmed the decision of the EC that Ireland granted the taxpayer unlawful State aid in the form of two tax rulings.
September 10, 2024
The Court of Justice of the European Union (CJEU) today set aside an earlier judgment of the General Court and confirmed the decision of the European Commission (EC) that Ireland granted the taxpayer unlawful State aid in the form of two tax rulings approving the method the taxpayer used to determine its chargeable profits in Ireland.
The case is: Commission v. Ireland and Others (C-465/20).
Summary
As explained in a release from the CJEU:
- In 1991 and 2007, Ireland issued tax rulings to two companies in the taxpayer’s multinational group that were incorporated in Ireland, but not tax resident in Ireland, approving the methods the companies used to determine their chargeable profits in Ireland in relation to the business activity of their respective Irish branches.
- In 2016, the EC found that the tax rulings had conferred on those companies unlawful State aid worth €13 billion by excluding from their Irish tax bases profits generated by the use of certain intellectual property licenses held by the companies on the ground that the head offices of those companies were located outside Ireland and management of those licenses was performed outside Ireland. The EC therefore ordered Ireland to recover the aid.
- In 2020, in actions brought before it by Ireland and the taxpayer companies, the General Court annulled the EC’s decision, finding that the EC had been unable to show that there was a selective advantage that arose from the tax rulings.
- On appeal by the EC, the CJEU today set aside the judgment of the General Court, holding that the General Court erred when it ruled that the EC’s primary line of reasoning was based on erroneous assessments of normal taxation under the Irish tax law applicable in the case, and when it upheld the complaints raised by Ireland and the taxpayer companies regarding the EC’s factual assessments of the activities of the Irish branches of the taxpayer companies and of activities outside those branches.
Read a September 2024 report prepared by KPMG's EU Tax Centre