Today marks one of the biggest financial rulings in Ireland’s tax history. It’s Ireland and Apple versus Europe. A verdict will be delivered in the long-running case from the General Court in Luxembourg. Here’s a reminder of what it’s all about, the sums involved, and what might happen next.
What’s this all about?
The European Commission says Apple and Ireland did a deal that let Apple pay too little tax over many years – as low as 0.005pc. It says this really amounted to state aid from Ireland to Apple.
EU countries generally aren’t allowed to give state aid to private companies, so in 2016 the commission ruled that Apple needed to pay Ireland €13bn in back taxes.
That’s great, isn’t it?
Apple obviously didn’t think so and said the figures were all wrong. The Irish Government agreed. So both parties appealed the ruling.
Why on earth would Ireland appeal this?
The Government and the Revenue Commissioners say that there are matters of principle involved. They believe that the European Commission can’t tell us how to conduct our tax affairs beyond agreed international standards. And they appear to strongly believe that the European Commission got some basic facts wrong. Many also believe it’s linked to a political antipathy in the EU to US tech firms and low-tax territories within the EU.
Yes, but isn’t €13bn an incentive to spare our principles in this case? Wouldn’t that kind of cash really come in useful now?
Undeniably. But Government figures have also argued that taking the money isn’t without a huge potential cost. Rightly or wrongly, the defence of Ireland’s tax position in this case is seen as a defence of the lucrative tech industry here. Taking the cash in this instance might result in the industry concluding that Ireland isn’t as business-friendly as it said it was. Even worse, Apple could still appeal themselves and win, resulting in a lose-lose scenario for Irish industrial policy.
So we’re OK with companies paying little or nothing in tax as a trade-off for some tech jobs?
Both Apple and the Irish Government dispute the Commission’s claim that Apple paid as little as 0.005pc in tax. In its submission, Apple claimed it actually paid €21bn in tax on the profits that the Commission claims went untaxed. It also argued that its overall tax rate has been around 26pc, albeit paid to US authorities because that was where the products were designed.
Has Apple suggested that its 6,000 jobs in Cork are linked to the tax ruling?
No. Chief executive Tim Cook told this newspaper a number of times that the outcome of the case won’t affect Apple’s campus in Hollyhill, Cork.
Does anyone here think we shouldn’t be arguing against the EU ruling?
Yes. Most of the left-wing political parties have argued the Government should take the money and let Apple appeal itself. The Green Party held this view when in opposition.
Suppose we lose the case: who gets that €13bn?
As it stands, the Irish Exchequer gets all of it. But many senior figures believe that other European countries may come looking for a share, based on Ireland having reaped a windfall from products that should have been taxed in their countries. Indeed, European Commissioner Margrethe Vestager has suggested that this might be a reasonable position for other EU states to take.
Where is that €13bn now?
In an escrow account – Apple has paid over the cash into an account that none of the parties are drawing from until the appeals are over. It’s grown to over €14bn including interest.
Will it all be over after today’s court ruling?
Almost certainly not. Each side in the case is almost guaranteed to appeal the verdict if it goes against them. But there’s really only one final court of appeal, the European Court Of Justice. Then it’s absolutely final.
How long will that take?
Up to two or three years.