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Brussels takes legal action against Ireland over Apple taxes

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Brussels takes legal action against Ireland over Apple taxes

Margrethe Vestager - Photo © European Union 2017

(BRUSSELS) - The EU Commission has decided to refer Ireland to the European Court of Justice for failing to recover from Apple illegal State aid worth up to EUR 13 billion, as required by an earlier Commission decision.

The Commission decision of 30 August 2016 concluded that Ireland's tax benefits to American tech giant Apple were illegal under EU State aid rules, because it allowed Apple to pay substantially less tax than other businesses. As a matter of principle, EU State aid rules require that illegal State aid is recovered in order to remove the distortion of competition created by the aid.

Ireland has to recover up to 13 billion euros in illegal State aid from Apple, said Competition Commissioner Margrethe Vestager: "However, more than one year after the Commission adopted this decision, Ireland has still not recovered the money, also not in part."

While she understood that recovery could be more complex in certain cases than in others, she added that EU Member States needed to make "sufficient progress to restore competition."

The deadline for Ireland to implement the Commission's decision on Apple's tax treatment was 3 January 2017, i.e. four months from the official notification of the Commission decision. Until the illegal aid is recovered, the Commission says Apple continues to benefit from an illegal advantage, which is why it says recovery needs to happen as quickly as possible.

Today, more than one year after the Commission's decision, Ireland has still not recovered any of the illegal aid. The Commission acknowledges some progress made by Ireland on calculation of the exact amount of illegal aid granted to Apple, but says that it is only planning to conclude this work by March 2018 at the earliest.

The Commission is now referring Ireland to the Court of Justice for failure to implement the Commission decision, in accordance with Article 108(2) of the Treaty on the Functioning of the European Union (TFEU).

Ireland has appealed the Commission's August 2016 decision to the Court of Justice. Such actions for annulment brought against Commission decisions do not suspend a Member State's obligation to recover illegal aid (Article 278 TFEU) but it can, for example, place the recovered amount in an escrow account, pending the outcome of the EU court procedures.

The Commission maintains that EU Member States still have to recover illegal State aid within the deadline of four months.

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