George Peretz QC and Tarlochan Lall – Tax Journal – Apple: the Commission fails to overcome its evidential burden
The General Court’s decision in the Apple case (Cases T-778/16 and T-892/16) shows the difficulties the European Commission faces in proving selective tax advantages that may constitute unlawful state aid. As was established in Portugal v Commission, ‘the very existence of an advantage may be established only when compared with “normal” taxation.’ In Apple, the crux of the dispute concerned the application of Irish rules on the profits properly attributable to and taxable on the Irish branches. The Commission’s decision, that a selective advantage had been granted, was not based on the actual activities of the branches. The Commission wrongly adopted the ‘exclusion approach’, attributing to the branches what it considered was not attributable to the US head office.