Tax setback for Apple and Amazon

The EU is hauling Ireland before its highest court for failing to recover €13bn in back taxes from Apple, writes Sorcha Ní Coileáin in Brussels.

More than a year on from its finding that the tech giant had illegal and decades-long tax breaks here, EU competition chief Margrethe Vestager said the Government had not acted fast enough to claw back the money.

Ireland and Apple have both appealed the decision, but under EU rules the Government should have recovered the money within four months of the ruling, and put it in trust.

“Illegal aid must be recovered as soon as possible, otherwise the company continues to benefit from an illegal advantage. Ireland has still not recovered any money, not even in part,” Vestager said.

Although getting the money back “in some cases is more complex than in others”, Vestager admitted, she also pointed to the “relatively swift” recovery of funds in similar cases in Belgium, the Netherlands and Luxembourg.

Belgium has managed to recover “most” of a €700m unpaid tax bill from at least 35 multinationals, the Commission confirmed.

And Fiat and Starbucks — which were named in investigations alongside Apple back in 2014 — have handed back all the money they owe to Luxembourg and the Netherlands.

“In general, we have made it a practice to — after a full year, and after back and forth — if there is no progress, not even partial recovery, that we refer the issue to court,” Vestager said.

In a separate decision, the bloc slapped online retail company Amazon with a €250m bill for taxes it said should have been paid in Luxembourg.

The commission said a 2003 deal between Luxembourg and Amazon was illegal under EU rules as it allowed the US multinational to artificially lower its European corporate tax bill, getting an “economic advantage” over smaller companies.

Amazon did that by funnelling royalty payments on intellectual property rights through a Luxembourgish shell company, then back to the US.

The practice, which took place between 2006 and 2014, helped to reduce the taxable profits the company booked in Europe, the EU said. The deal has now expired.

Amazon said in a statement that it may appeal the ruling, that it “did not receive any special treatment” and had paid its taxes in full.

The company says it employs 1,500 people in Luxembourg and more than 50,000 across Europe.

“We will study the commission’s ruling and consider our legal options, including an appeal,” the company said.

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