Rotten To The Core: The EU's Court Of Justice Decision In Apple

Ruth Mason (Virginia; Google Scholar) & Stephen Daly (King's College London; Google Scholar), Rotten to the Core: The EU's Court of Justice Decision in Apple, 116 Tax Notes Int’l 987 (Nov. 11, 2024):

This article takes an in-depth look at the deeply flawed EU Court of Justice decision in the Apple state aid case. We discuss whether any legitimate legal theory could have supported the Commission's retroactive application of the 2010 Authorized OECD Approach (AOA) to Ireland's tax ruling for Apple, and if so, whether a proper interpretation of the AOA would have required Ireland to allocate most of Apple's global income to Ireland, despite ample evidence of Apple's substantial US activities. We also consider the General Court's decision and whether the Court of Justice's failure to apply relevant precedents, including Fiat, Amazon, and Engie, reasonably can be attributed to the sometimes-categorization of the Court of Justice as a civil law court. 

We also consider implications of the Court of Justice decision for similar Irish tax structures, and we review three alternative theories of the case, under which the Commission and EU courts could have enforced the state aid rules within the bounds of precedent and due process. We also explain the role that Irish and U.S. tax law combined to play in facilitating Apple’s tax planning. Finally, we speculate as to the implications of the Apple decision for international tax relations, especially between the United States and the European Union.

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