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No Sweetheart Deal, Ireland To Tell Commission

by Jason Gorringe, Tax-News.com, London

17 June 2014


The Irish Government has responded to the launch of an in-depth investigation by the European Commission to examine whether advance tax rulings provided by certain member states, including Ireland, have resulted in the provision of unlawful state aid.

According to Joaquín Almunia, the Commission's Vice President in charge of competition policy, the Commission is concerned that, in specific cases, national tax authorities may have provided rulings to multinationals to allow them to lower their taxable profits by excluding certain, otherwise taxable items from the taxable base. The Commission said it has reviewed the calculations used to set the taxable basis in the three investigations it is undertaking, and said, based on a preliminary analysis, it has concerns that these rulings could allow profits to be underestimated, which would thereby grant an advantage to the respective companies by allowing them to pay less tax.

The Commission has confirmed that it is investigating the individual rulings issued by the Irish tax authorities on the calculation of the taxable profit allocated to the Irish branches of Apple Sales International and of Apple Operations Europe. The other investigations concern rulings provided by the Netherlands and Luxembourg.

Responding to the announcement, a spokesperson for Ireland's Finance Department said: "Our understanding of the particulars of this case is that the Commission is focusing on advance opinions provided to a company a number of years ago which addressed the calculation of the taxable base of profits on this company. Ireland is confident that there is no state aid breach in this case, and we will defend all aspects vigorously. However, we understand that the European Commission has a responsibility to investigate potential breaches of state aid rules, so we will continue to do everything we can to ensure that they have the full information they require."

The Department stressed in its response that "the company in question did not receive selective treatment, and there was no special tax rate deal. Indeed, the company has publicly clarified that there was no special deal." The Government said it would prepare "a detailed, technical legal rebuttal of the Commission's position, and if necessary will defend [Ireland's] position in the European Courts."

Ireland does not offer binding tax rulings. In certain circumstances, the Revenue Commissioners operate a system of non-binding advance opinions whereby companies can seek advice on the correct application of the law in transfer pricing matters.

TAGS: compliance | Finance | tax | business | European Commission | tax compliance | Ireland | Netherlands | tax avoidance | tax incentives | revenue guidance | law | Luxembourg | tax planning | transfer pricing | tax rates | tax breaks | revenue statistics | tax reform | regulation | Europe | Tax

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