State Aid Updates


The European Commission announced on the 18th of December 2017 that they are opening an in depth investigation as to whether two tax rulings agreed with the Dutch tax authorities in 2006 and 2011 constituted an illegal State aid.

This is yet another example of the Commission seeking to revisit the transfer pricing agreed by a taxpayer with a national tax authority. In the 2006 ruling the expense landed in a Luxembourg company, which benefited from a tax exemption which was later found to be an illegal State aid. Because Luxembourg had had that regime on its statutes on accession to the EU, it was allowed to phase out the regime until 31 December 2010. Ikea restructured its group in 2011 resulting in the Dutch company acquiring the IP it had previously used under licence, and funded the acquisition with borrowings from a Lichtenstein entity.

The eagle eyed among you will spot the similarities with Apple, who also benefited from a pre-accession aid in Ireland until the end of 1990 and restructured on the foot of a letter of comfort from Revenue the following year, to attempt to preserve most of the tax benefits of the original structure.

Regardless of the outcome of the cases, both taxpayers should have been alert to the risks of a State aid challenge to their tax structures, given their history.


On the 15th of December 2017 Luxembourg announced that it was appealing the decision of the Commission that it had granted an illegal State aid to Amazon in respect of the transfer pricing agreed with the Luxembourg authorities in 2003 and 2011. What will be of keen interest to all taxpayers and their advisers is the fact that in the Amazon case, the Commission appears to be seeking to apply post BEPS transfer pricing of intangibles to pre BEPS periods.


While the Commission has stayed its enforcement proceedings against Ireland for failing to recover the State aid which the Commission determined was granted to Apple, Ireland has still not succeeded in recovering that aid. Recovery is expected in the early part of 2018.


  • Mark Gorman
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  • Aisling Donohue
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