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Netherlands: EU General Court annuls EC action in APA case

Netherlands: EU General Court annuls EC action APA case

The General Court today issued a judgment annulling the European Commission’s decision on the aid measure implemented by the Netherlands in the form of advance pricing arrangement (APA) with a multinational enterprise.


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According to today’s release [PDF 172 KB] from the General Court:

  • In 2008, the Netherlands tax authorities concluded an APA with the taxpayer, the Dutch member of the multinational group. The objective of that arrangement was to determine the taxpayer’s remuneration for its production and distribution activities within the group. The taxpayer’s remuneration served to determine annually its taxable profit on the basis of Netherlands corporate income tax.
  • In addition, the APA endorsed the amount of the royalty paid by the taxpayer to another entity of the same group, for the use of certain intellectual property. The APA provided that the amount of the royalty to be paid corresponded to the taxpayer’s residual profit. The amount was determined by deducting the taxpayer’s remuneration— calculated in accordance with the APA—from its operating profit.
  • In 2015, the EC found that the APA constituted aid that was incompatible with the internal market and ordered the recovery of that aid.
  • The Netherlands and the taxpayer group brought an action before the General Court for annulment of the EC’s decision. They principally dispute the finding that the APA conferred a selective advantage on the taxpayer.

In today’s judgment, the General Court annulled the EC’s decision. The General Court found the EC was unable to demonstrate the existence of an advantage in favor of the taxpayer.

Read a September 2019 report prepared by KPMG’s EU Tax Centre

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