Developments of EU State Aid: An Update
On 4 October 2017, the EU Commission announced its decision that a 2003 advance pricing agreement enabled Amazon to pay around EUR 250 million less tax than other taxpayers in a similar situation. In parallel, the EU Commission announced legal proceedings against Ireland for non-compliance to recover over EUR 13 billion from Apple.
EU State Aid: The Amazon case
Although the decision is yet to be made public, the EU Commission's press announcement (accessible here) indicates that the EU Commission considers that an internal royalty payment within Amazon was not at arm's length, i.e. not reflecting economic reality. The Luxembourg Minister of Finance issued a press release (accessible here) stating that he disagrees with the EU Commission's conclusion and will analyse the decision whether to appeal it.
EU State Aid: The Apple case
State Aid procedural rules provide that unlawful aid shall in principle be recovered within four months of the official notification of the EU Commission decision. Apple and Ireland have asked for an extension period, based on the unprecedented recovery amount of EUR 13 billion. More than a year after having issued the recovery order, the EU Commission now wants to see significant progress.
EU State Aid: McDonald's and ENGIE cases
Two other formal EU State Aid investigations into individual tax rulings that are still ongoing involve McDonald's (Luxembourg) and ENGIE (Luxembourg). More formal EU State Aid investigations into tax rulings can be expected to follow as the EU Commission continues to review tax rulings provided by all Member States. The EU Commission's decisions confirm its commitment to use EU State Aid as a tool to further a broader tax reform agenda (including corporate tax harmonization) for taxing profits where they are realised.
BeatBaumgartnerAttorney at law, tax adviser Partner
Beat Baumgartner is a partner of our office in Zurich. He is the head of the Swiss tax practice and specialises in Swiss and international taxation, in particular tax-efficient group and investment structures, M&A, financing and capital market transactions, private equity, venture capital and structured financial instruments.T: +41 43 434 67 10 M: +41 79 930 63 52 E: email@example.com