Wednesday, October 30, 2019
Ruth Mason (Virginia), Implications for Apple in the Lower Court Rulings in Starbucks and Fiat, 165 Tax Notes 93 (Oct. 7, 2019):
Yesterday’s EU General Court decisions in Starbucks and Fiat represent major victories for the Commission and its theory of state aid, notwithstanding that it lost Starbucks. The cases have significant implications for the pending Apple case. This short article discusses five major themes emerging from the decisions:
- the treatment of the arm’s-length standard;
- the implications of the decisions for Apple;
- the impact of the decisions on the non-arm’s length allocation rules in the proposed common consolidated corporate tax base and in the ongoing negotiations in the second phase of the OECD’s base erosion and profit-shifting project (BEPS 2.0);
- the possibility that the decisions mean that the OECD transfer pricing guidelines have been incorporated into EU law via the state aid rules; and
- the implications of the General Court’s conceptualization of arm’s-length income allocation as analogous to the “market economic operator” test.