State Aid opening decisions FFT and Apple
Today, the European Commission published its opening decisions of 11 June 2014 in the formal State Aid investigations into advance pricing agreements concluded by Apple (Ireland) and FFT (Luxembourg), shedding light on the reasons to initiate these in-depth investigations.
Even though the documents do not contain definite findings, it is the European Commission’s preliminary view that the tax arrangements concluded with Apple and FFT constitute state aid. The documents provide valuable insight into the European Commission’s reasoning.
According to Article 107(1) of the Treaty on the Functioning of the European Union, state aid which affects trade between Member States and distorts or threatens to distort competition by favouring certain undertakings is incompatible with the EU Single Market. The European Commission considers that advance pricing
agreements should not have the effect of granting taxpayers lower taxation than other taxpayers in a similar legal and factual situation.
The opening decisions show that the European Commission is determined to challenge potential state aid elements embedded in advance pricing agreements,
examining in a very detailed manner the transfer pricing methods agreed to by tax authorities. The European Commission’s reasoning is sufficiently clear to justify a fresh look at existing advance pricing agreements. Particular attention should be paid to older agreements that have an undefined term as well as to agreements for which no substantial or suitable transfer pricing report has been previously submitted.
Interested parties are invited to submit comments within one month of the date of publication. We would be pleased to advise you whether submitting such comments is something to consider.
Should you have any questions or if you would like to receive additional information, please contact your trusted advisor at Loyens & Loeff.