Vestager's Apple tax appeal 'may damage Ireland and EU'

European competition commissioner Margrethe Vestager believes the GCEU 'made a number of errors' in reaching its decision
Vestager's Apple tax appeal 'may damage Ireland and EU'

European Union Competition Commissioner Margrethe Vestager, said she is appealing the July Apple tax ruling.

There are fresh concerns for Ireland’s international reputation and attractiveness to multinational investors in light of European competition commissioner Margrethe Vestager’s surprise eleventh-hour decision to appeal July’s Apple tax ruling. 

That ruling decided the tech giant didn’t owe Ireland €14bn in back taxes and didn’t avail of illegal state aid or preferential tax treatment.

Ms Vestager said she is appealing the July ruling, made by the General Court of the European Union (GCEU), to the European Court of Justice on the opinion that the GCEU “made a number of errors” in reaching its decision.

“Making sure that all companies, big and small, pay their fair share of tax remains a top priority for the Commission...We have to continue to use all tools at our disposal to ensure companies pay their fair share of tax,” Ms Vestager said.

Critics said the move was wrong, and potentially damaging to both Ireland and the EU as a whole.

Brian Keegan of Chartered Accountants Ireland said the Commission has made the wrong decision in appealing and said the move will serve “little purpose”.

"Commission resources should now be devoted to securing Europe's place as an international trading bloc and not fighting internecine tax wars with member states. The tax point at issue in the Apple case is no longer an issue, resolved neither by Irish legislation nor by European Commission activity but by changes in US tax law," he said.

If the European Commission hadn’t appealed, Ireland would have returned the money to Apple. Instead, it will remain in escrow until the new appeal runs its course.

That could now take up to two years. 

And, according to Grant Thornton Ireland’s tax partner Peter Vale, it could damage Ireland’s reputation — regardless of the ultimate outcome; which some expect to still eventually go in Ireland and Apple’s favour.

“Had the Commission decided not to appeal, closure would have been brought to the case, which would have been a positive development for Ireland and, indeed, ironically for investment into the EU as a whole,” said Mr Vale.

The decision to appeal, he said, creates more uncertainty for investors looking at Ireland or the wider EU, in respect of the tax landscape. 

“There is nothing that scares investors more than uncertainty and with the global tax landscape already in a state of flux, [the decision to appeal] does nothing to change that narrative,” he said.

Mr Vale said Ireland and the EU will both suffer long-term reputational damage should Ms Vestager’s appeal prove successful and Ireland ends up keeping the €14bn.

“The adverse implications for Ireland in such a scenario could quickly dwarf the short-term cash windfall," he said.

The IDA recently said the long-running Apple tax case has damaged Ireland’s reputation, making its job of attracting inward investment more difficult.

Finance Minister Paschal Donohoe said Ireland has always been clear that the correct amount of tax was paid and that no state aid was provided.

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