State loses appeal over saga of Aughinish tax breaks

Ireland has lost a state aid appeal at the EU’s top court over a tax break provided to the huge Aughinish Alumina facility in Co Limerick.

The Irish State failed after a lengthy series of actions to stop the European Commission forcing the Government here to recover €10m Brussels said amounted to illegal state aid provided to the now Russian-owed Aughinish Alumina facility in Co Limerick.

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The funds had already been collected from the company by authorities here amid a series of cases and appeals.

Yesterday Ireland, along with Italy, lost a second appeal at the European Court of Justice over the cases that have been running for 14 years and featured five appeals.

The European Court of Justice agreed with the Commission that Ireland and Italy provided illegal state aid from 2002 to 2004 through a tax exemption from excise duty for heavy mineral oil used to produce aluminium. Countries must apply for any exemption from excise taxes. Ireland and Italy had done that in relation to aluminium until 2001, but then stopped.

A spokesman for the Department of Finance said the latest judgment is being examined.

The Limerick plant was owned by Swiss commodities giant Glencore between 2002 and 2004 when it availed of disputed tax breaks. Glencore later merged its alumina assets with Russia’s Rusal.

In 2005, the European Commission ruled Aughinish Alumina had received €10m of illegal tax breaks during the earlier period under review. It ordered the Government to recoup the money from Aughinish Alumina.

The Government appealed the Commission’s finding to the European General Court, which in 2007 overturned the Commission’s order.

The Commission also said at the time it would not seek to have all state aid to Aughinish Alumina between 1983 and 2005 repaid. That could have been as much as €100m.

The European Commission then appealed the General Court’s 2007 finding to the higher court, the European Court of Justice. It overturned the General Court’s decision and sent the case back to be reheard by the General Court.

In 2012, the General Court again annulled the Commission decision, arguing the EU Council of Ministers had previously made decisions permitting exemptions from excise duty, and that those decisions could not be ignored by the Commission.

But in 2013, the European Court of Justice again found the General Court had erred in its judgment and sent the case back to examine a number of remaining arguments.

That hearing took place last year and has now been decided.

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