Daly & Mason: The Apple State Aid Case

Stephen Daly (King's College London) & Ruth Mason (Virginia), State Aid: The General Court Decision in Apple, 168 Tax Notes Fed. 1791 (Sept. 7, 2020):

In this article, the authors analyze the Apple state aid case, concentrating on its implications for state aid analysis and use of the arm’s-length standard, and they consider the drawbacks of using state aid to prevent corporate tax abuse as well as the broader implications of the case.

Conclusion
Even if the commission doesn’t appeal Apple, it would be wrong to conclude that the case was a total loss for the commission. Rather, it is important to recognize the effect of the commission’s investigations. First, Ireland reformed its corporate residency rules in 2015 to ensure that Irish-incorporated companies could no longer find themselves “stateless” because they are managed and controlled outside Ireland. Second, it isn’t a far stretch to suggest that the increase in the information now exchanged between tax authorities — encompassing tax rulings for instance — was motivated in part by the commission’s investigations. Finally, the notion that “if we don’t tax, Europe will” may have helped motivate the 2017 U.S. corporate tax reform, which introduced GILTI as a fiscal fail-safe. Regardless of the outcome in this case, or frankly any of the other ongoing cases, the commission is now firmly established as an important, if unpredictable, actor in the international tax sphere. Perhaps it is premature to think about this in Hamiltonian terms, but it’s hard to deny the growth in the EU’s tax powers.