Analysing the European Commission's final decisions on Apple, Starbucks, Amazon and Fiat Finance & Trade

Abstract

This article addresses the issues which stem from the State aid investigations opened by the European Commission ("EC") against Luxembourg, Ireland and the Netherlands, concerning aid granted in the form of tax base reduction to certain undertakings, namely Apple Inc., Amazon, Starbucks and Fiat Finance and Trade ("FFT"). Furthermore, this article analysis the EC's main line of argument in the aforementioned State aid investigations that is, acceptance by the Netherlands, Ireland and Luxembourg, of the proposed calculation of the taxable base of these MNEs which do not reflect normal market conditions, may result in State aid, in that it will offer a more favourable treatment to the MNE compared to the treatment other undertakings would normally receive under the Member States' 'normal' tax system. In arriving at what would constitute normal market conditions, the EC uses two benchmarks namely, the internationally accepted standard, the Arm's Length Principle ("ALP") and the Prudent Independent Market Operator ("PIMO"), which makes its first appearance in these investigations. This article demonstrates the relationship between the two and whether both can be used as a benchmark for the purposes of the State aid rules as laid down under Art. 107(1) of the Treaty on the Functioning of the European Union ("TFEU").