Ireland faces European rebuke over Apple

The Department of Finance said it “would be extremely disappointing and unnecessary” if the European Commission was to rebuke the Government over the failure to collect a year-old tax bill of as much as €15bn from Apple.

It comes after it was reported the commission was preparing to issue a so-called non-compliance action as soon as this week. The EU has pushed Ireland to collect the money, which was initially due by January 3.

A spokesman for the department said: “The Government is fully committed to ensuring that recovery takes place without delay and have committed significant resources to this matter.

Irish officials are continuing the intensive work to ensure that the State complies with all our recovery obligations as soon as possible, and remain in regular contact with the commission and Apple.”

In an order that reverberated across the Atlantic, the commission last year slapped Apple with a multibillion-euro bill, saying Ireland granted unfair deals that reduced the company’s effective corporate tax rate.

The commission’s competition supremo Margrethe Vestager ruled in August 2016 to the effect the Revenue Commissioners had cut sweetheart deals with Apple, in 1991 and in 2007.

The outcome was that by 2014 Apple was paying as little as 0.005% on its European profits, according to the commission’s ruling.

The finding that Ireland had given preferential state aid to Apple rested on two tax rulings for Apple entities incorporated here, Apple Sales International, and Apple Operations Europe.

Apple and Ireland are appealing the decision.

Once it is collected, Irish authorities will place the money in an escrow account pending an appeal. If the appeal — which could take five years — is successful, the money will be returned to Apple. The Government is seeking managers to invest the money while the appeal is going on.

If the commission considers an EU state has failed to implement a recovery order in a state aid case, regulators can sue at the bloc’s courts in Luxembourg. Judges would then rule on the alleged non-compliance and can issue a fine.

In the Apple case, part of the delay may stem from negotiations over the terms of the escrow account, as Ireland sought an indemnity to make sure it is not liable for any drop in the value of the fund while the case winds its way through the EU courts.

In the end, it was agreed that Ireland and Apple will jointly choose investment managers, a decision which could sidestep the need for a formal indemnity.

The EU is targeting what it views as unfair tax practices that give a selective advantage to some companies to attract their business and the jobs attached. The same team is poised to rule on one of the cases against Amazon and McDonald’s shortly, according to reports.

Competition watchdogs are also weighing a more general crackdown on special tax deals that EU countries offer big corporations.

The commission “is maybe reaching the end of the beginning of the process, but certainly not the beginning of the end”, Gert-Jan Koopman, the authority’s deputy director-general for state aid, said last month.

He called the crackdown a “long-term, crucial priority”.

Irish Examiner and
Bloomberg


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