EU Law Update: Two states ordered to recover unpaid corporation tax

The European Commission has ordered Luxembourg and the Netherlands to recover unpaid tax from Fiat and Starbucks in the region of €20 million to €30 million each. On October 21st, competition commissioner Margrethe Vestager condemned tax rulings ordered by Luxembourg and the Netherlands in favour of Fiat and Starbucks respectively as illegal and contrary to the EU state aid rules.

A decision by the commission in respect of tax rulings by the Irish Revenue in relation to the corporate taxation of Apple is expected to follow. A finding of illegality could see the Irish Government ordered to recover unpaid tax from Apple of sums well in excess of €30 million.

Data protection

In a significant development in the field of privacy and data protection, the Court of Justice of the European Union has ruled invalid the “safe harbour” arrangement between the EU and the US, a mechanism used to facilitate the export of personal data from the EU to the US.

The Schrems v Data Protection Commissioner judgment of October 6th found that the safe harbour arrangement violates fundamental rights to privacy and data protection.

The arrangement was based on a decision by the commission in July 2000 that the US ensured an adequate level of protection for personal data transferred from the EU to the US. As a directly related consequence of the Schrems judgment, the Irish Data Protection Commissioner will now have to examine a complaint made against Facebook by Max Schrems to decide whether the transfer of personal data of Facebook’s European users to the US is compatible with EU data protection laws.

State aid

In another state aid case involving Ireland, the commission opened a formal investigation in September into alleged unlawful State aid provided to Aer LingusAer Arann and Dublin Airport Authority.

The commission had previously dismissed a complaint by Ryanair that the exclusion by Ireland of transfer and transit passengers from Irish air travel tax amounted to State aid, which Ryanair argued unfairly favoured Aer Lingus and Aer Arann to its detriment.

Ryanair challenged that decision and the general court agreed in November 2014 that the commission should have initiated a formal investigation to examine appropriately the issues. The commission will now formally investigate the matter and third parties will be given the opportunity to comment.

According to a joint report announced late last month by the European Commission and the European Environment Agency, the EU is on schedule to meet and exceed its 2020 target to reduce its greenhouse emissions by 20 per cent.

The latest projections submitted by member states show that the EU is heading towards a 24 per cent reduction by 2020. This could increase to 25 per cent due to additional measures planned in member states.

This article by Maureen O’Neill and Áine Connor, members of the Irish Society for European Law, was published in The Irish Times on Friday 13 November 2015