Past Event

State Aid and Tax Rulings

When do national tax rulings violate EU state aid rules? Does the European Commission's approach raise concerns about Member State Sovereignity and what is the impact on corporate investments in Europe?

Date: February 1, 2017, 12:30 pm Topic: Innovation & Competition Policy


Multinational companies pay taxes in different jurisdictions which have different tax rates. Hence, to maximize their after-tax profits, they may have the incentive to allocate a high share of profit to low tax jurisdictions and a low share of profit to high tax jurisdictions. National tax authorities may give companies specific rulings relevant to their business models to clarify how their corporate tax will be calculated. While such tax rulings are legal in general, they may violate state aid rules if they use methodologies to establish transfer prices with no economic justification and which unduly shift profit to reduce the taxes they pay.

On August 30th 2016, the European Commission concluded that Ireland granted undue tax benefits of up to €13 billion to Apple. Clemens Fuest kicked off the seminar by reviewing available information on the geographical distribution of Apple’s economic activities and its tax payments, highlighting an increasing divergence between the two. According to Fuest, Apple is a good example of multinational tax planning made possible by the existing system, acknowledging that is a borderline case for state aid control. In fact, the Apple case should be considered and analysed as a conflict between countries for taxing rights, and only to a lesser extent as a “traditional” friction multinational company vs. governments. He argued that an international reform of multinational companies taxation is necessary, but he also warned that a thorny issue remain the distribution of taxing rights among countries. There is, indeed, a deep controversy between those that corporate profits should be taxed in the country where the value is created (in the case of large multinational companies operating in the digital sector would be the country of IP production) or in the country of final consumption.

Gert-Jan Koopman presented the position of the Commission on the Apple case and more generally on tax rulings. After reviewing the ownership and transactions structure of Apple in the EU, he summarized the main legal arguments according to which the selective tax treatment of Apple in Ireland has been considered illegal according to the investigation of the Commission. In particular, he discussed why the artificial internal allocation of profits within Apple Sales International and Apple Operations Europe had no factual or economic justification under EU state aid rules. In this regards, the so-called ‘cost-sharing agreement’ of the IP expenditures between Apple Inc. and the two controlled companies played a crucial role and, according to Koopman, made the case a relatively straightforward one, at least from a legal perspective. Being asked whether this enforcement action may affect the business climate in the EU, he dismissed major concerns that the Apple ruling would affect US investment in Europe. However, he concluded that, while some uncertainty is inevitable, it is the necessary price to pay to a situation in which out of control.

Damien Neven complemented the debate with several observations on the cost-sharing agreement under the US tax law. In economic terms, the ultimate consequence of the ruling combined with specific features of US tax system determined a “great unbundling”: taxes were paid only on a notional profit on the plastics and the electronic component acquired by the Irish branch, while the value brought by the brand name (intangible) and the IP was untaxed outside the US. Hence, according to Neven, the Commission used a “clumsy” instrument to address a problem eventually created by US tax law (and Irish tolerance). In terms of consequences for international taxation, the Commission decision seems to ensure that taxes are paid where the value is created and strangely not following a territoriality principle. He concluded that all of this is a poor substitute for a proper coordinated reform of taxes on multinationals. But it may be the best option available

 Nicole Robins firstly outlined how the increasing number and scope of investigations on tax rulings by the Commission increased awareness about the importance of tax state aid compliance among private companies. She then reviewed the different methodologies under the OECD guidelines on transfer pricing to estimate the (potential) economic advantage related to tax ruling. With a pre-emptive perspective, she pointed out that state aid risk can be significantly mitigated through a transfer pricing report, prior to the start of the ruling, based on robust financial and economic analysis.

 Guntram Wolff concluded the discussion highlighting that the issue of corporate income taxation in Europe will become even more relevant when the foreseen tax reform by the new US administration will be implemented. In this regards, he noted that the requirement of unanimity in the EU decision-making process on taxation issues will certainly affect the ability of the EU to counteract any change coming from the US.

Event notes by Filippo Biondi, Research Assistant.

Video and audio recording

Event materials

Clemens Fuest – Presentation

Damien Neven – Presentation

Nicole Robins – Presentation


Feb 1, 2017


Check-in and lunch



Clemens Fuest, President and Director, CESifo Group Munich



Gert-Jan Koopman, Deputy Director General, European Commission, DG COMP

Damien Neven, Professor of International Economics at the Graduate Institute of Geneva

Nicole Robins, Principal Consultant, Oxera


Discussion and Q&A

Chair: Guntram B. Wolff, Director




Clemens Fuest

President and Director, CESifo Group Munich

Damien Neven

Professor of International Economics at the Graduate Institute of Geneva

Gert-Jan Koopman

Deputy Director General, European Commission, DG COMP

Nicole Robins

Principal Consultant, Oxera

Guntram B. Wolff


Location & Contact

Bruegel, Rue de la Charité 33, 1210 Brussels

Matilda Sevon

Read about event More on this topic

Upcoming Event


Mergers and innovation

At this closed-door, off-the-record event we will discuss the impact that mergers have on innovation.

Speakers: Justus Haucap, Carles Esteva Mosso, Jorge Padilla and Reinhilde Veugelers Topic: Innovation & Competition Policy Location: Bruegel, Rue de la Charité 33, 1210 Brussels
Read about event More on this topic

Upcoming Event


Antitrust Concerns in Digital Markets

Following our past events on the topic of antitrust concerns in zero price markets and on big data, digital platforms and market competition, this November we are hosting an event on antitrust concerns in the digital markets.

Speakers: Svend Albaek, Cristina Caffarra, Justus Haucap, Jorge Padilla and Georgios Petropoulos Topic: Innovation & Competition Policy Location: Bruegel, Rue de la Charité 33, 1210 Brussels
Read article More on this topic More by this author

Blog Post

The capital tax cut debate

How much do workers gain from a capital gains tax cut? CEA chairman Hasset claims the tax cut will cause average household labour income to increase by between $4000 and $9000. Several commentators note this implies that more than 100% of the incidence of the tax is on labour. This question has triggered a heated discussion in the economic blogosphere, which we review here.

By: Silvia Merler Topic: Global Economics & Governance Date: October 30, 2017
Read about event More on this topic

Past Event

Past Event

Crowd Employment

This event aims to discuss the various nuances and diversity that characterize crowd employment.

Speakers: Cristiano Codagnone, Valerio Michele De Stefano, Irene Mandl, Georgios Petropoulos and Amit Singh Topic: Innovation & Competition Policy Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: October 5, 2017
Read about event

Past Event

Past Event

Bruegel Annual Meetings 2017

The Annual Meetings are Bruegel’s flagship event. They offer a mixture of large public debates and small private sessions about key issues in European and global economics. In a series of high-level discussions, Bruegel’s scholars, members and stakeholders will address the economic policy challenges facing Europe.

Speakers: Carlos Sallé Alonso, José Antonio Álvarez Álvarez, Agnès Bénassy-Quéré, Pervenche Béres, Matthias Buck, Grégory Claeys, Zsolt Darvas, Jean Luc Demarty, Maria Demertzis, Anna Ekström, Lowri Evans, Ferdinando Giugliano, Sandro Gozi, Peter Grünenfelder, Reiner Hoffmann, Levin Holle, Kate Kalutkiewicz, Steffen Kampeter, Peter Kažimír, Emmanuel Lagarrigue, Matti Maasikas, Steven Maijoor, Reza Moghadam, Nathalie Moll, James Murray, Johan Van Overtveldt, Julia Reinaud, André Sapir, Dirk Schoenmaker, Mateusz Szczurek, Marianne Thyssen, Jean-Claude Trichet, Reinhilde Veugelers, Nicolas Véron, Ida Wolden Bache, Liviu Voinea, Guntram B. Wolff and Georg Zachmann Topic: Energy & Climate, European Macroeconomics & Governance, Finance & Financial Regulation, Global Economics & Governance, Innovation & Competition Policy Location: Square - Brussels Meeting Centre Date: September 7, 2017
Read article More on this topic More by this author

Blog Post

EU posted workers: separating fact and fiction

After President Macron’s recent tour of Central and Eastern European countries, EU posted workers are getting a lot of attention. However, a major reform of the system is already underway and we should not confuse posted workers with long-term labour migrants. Posted workers are a small part of the labour force, and their labour market impact is likely to be minor.

By: Uuriintuya Batsaikhan Topic: European Macroeconomics & Governance Date: August 31, 2017
Read article Download PDF More by this author

Parliamentary Testimony

European Parliament

Could revising the posted workers directive improve social conditions?

This presentation was delivered in Brussels on 31 January 2017 at a hearing of think-tanks, to advise the European Parliament on the revision of the Posting of Workers Directive.

By: Zsolt Darvas Topic: European Macroeconomics & Governance, European Parliament, Testimonies Date: August 29, 2017
Read about event

Past Event

Past Event

Is there a way out of non-performing loans in Europe?

At this event we looked at the issue of non-performing loans in Europe. The event also saw the launch of the latest issue of "European Economy – Banks, Regulation and the Real Sector."

Speakers: Emilios Avgouleas, Giorgio Barba Navaretti, Giacomo Calzolari, Maria Demertzis, Martin Hellwig, Helen Louri and Laura von Daniels Topic: European Macroeconomics & Governance, Finance & Financial Regulation Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: July 6, 2017
Read about event

Past Event

Past Event

Fintech and the digital transformation of banking

FinTech is changing the financial sector. What are the challenges associated with this and what policies should we adopt in response?

Speakers: Xavier Corman, Cora van Nieuwenhuizen, Georgios Petropoulos, Ezequiel Szafir and Pēteris Zilgalvis Topic: Finance & Financial Regulation, Innovation & Competition Policy Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: June 20, 2017
Read about event More on this topic

Past Event

Past Event

Lessons for the future governance of financial assistance in the EU

On 14th June, Randall Henning will present his latest book on the Euro crisis and we will discuss how financial assistance should be governed in the euro area in the future.

Speakers: Servaas Deroose, C. Randall Henning, Rolf Strauch and Guntram B. Wolff Topic: European Macroeconomics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: June 14, 2017
Read about event More on this topic

Past Event

Past Event

Substance requirements for financial firms moving out from the UK

In the run-up to Brexit, UK-based financial firms are considering how to organize their operations across the future divide between the UK and EU27. This event will discuss the regulatory requirements on how self-sustaining the operations in the EU should be, and implications for the single market and third countries.

Speakers: Gerry Cross, Simon Gleeson and Nicolas Véron Topic: Finance & Financial Regulation Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: June 2, 2017
Read about event

Past Event

Past Event

Inclusive growth: global and European lessons for Spain

Can manufacturing still be a driver for inclusive growth around the world? What European and national policies can foster inclusive growth in Europe? What is the situation in Spain and what can Spain learn from the global and European experiences?

Speakers: Cristina Cabrera, Zsolt Darvas, Maria Demertzis, Alejandra Kindelán, Robert Lawrence and Federico Steinberg Topic: European Macroeconomics & Governance, Global Economics & Governance Location: Calle Los Madrazo 36-38 Madrid Date: May 31, 2017
Load more posts