ECJ in blow to Apple tax fight

Apple and Anheuser-Busch InBev may face a tough battle in disputes over EU demands for back taxes after the bloc’s top court partly backed regulators’ attempt to force Spanish firms to repay millions of euro in tax breaks.

In a ruling that could ultimately add impetus to the EU’s clampdown on special tax treatment for selected companies, judges at the EU Court of Justice in Luxembourg said a lower tribunal should re-examine a Spanish system that gave tax breaks to companies, including Banco Santander, for the acquisition of stakes in foreign firms.

Those tax advantages must now be repaid, the EU said.

The EU General Court was wrong to rule the commission failed to show that a group of companies was singled out by the programme, which granted deductions for shareholdings in foreign firms, the top judges said yesterday.

Regulators don’t always have to show that only certain companies benefit from the aid, the court said.

“This is a landmark decision because it clarifies the rules of the game. That will also have its effect on a number of ongoing cases,” said Raymond HC Luja, a professor of tax law at Maastricht University.

EU Competition Commissioner Margrethe Vestager ordered Apple to pay €13bn in back taxes because of arrangements with the Government here that she says weren’t open to others. Belgium was also told to claw back some €700m in tax advantages granted to companies, including AB InBev, the world’s biggest brewer.

“The judgement is important because it confirms that a measure may be selective, if it benefits only those companies that carry out certain transactions,” the commission said. Action has now moved to the courts with Apple filing its legal challenge this week, joining Starbucks, a Fiat unit and more than a dozen Belgian-based companies calling on judges to halt the EU in its tracks.

Amazon.com, McDonald’s and Engie are also being probed by regulators over tax deals with Luxembourg. The ruling “re-establishes the comparability standards, meaning you have to look whether companies in the same legal and factual situation are treated differently, without proper justification,” Mr Luja said.

Apple and others can take solace in a ruling on tax benefits to airlines using Germany’s Lubeck airport.