The European Commission is taking Ireland to the European Court of Justice for its failure to recover up to €13 billion of tax due from Apple.
That decision is bound to involve legal costs to be borne by the Irish taxpayer and one that the Government and the commission could easily have avoided.
The decision to go to the ECJ is on foot of a ruling last year that Ireland granted Apple illegal state aid through deals that reduced the company’s effective corporate tax rate.
Taoiseach Leo Varadkar has described the commission’s decision as “wholly unnecessary and unwarranted at this time”, while the Department of Finance said it was “disappointing” and “extremely regrettable”.
Yet it can hardly have come as a surprise. It is now more than a year since the commission ordered the US tech giant to pay the taxes and in May of this year the Government was told to speed up efforts to recoup the money or end up in court. The €13bn was to be paid into an escrow account being set up by the National Treasury Management Agency.
So, why the delay?
The Department of Finance has described the process as complex but there is nothing particularly complex about escrow accounts, regardless of the amount put into them. They are commonly used in sales of property. The NTMA was supposed to drip-feed the €13bn into the account but, according to the commission, that process hasn’t even started, making court action highly likely, if not inevitable.
It may well be that the commission’s decision to go to the ECJ was, in part, politically motivated and an attempt
to attack our corporate tax rate by the back door, in which case it must be challenged on all fronts.
Government politicians know only too well the willingness of the commission to take member states to court, especially smaller EU states like Ireland. Yesterday it concluded that Luxembourg granted undue tax benefits to Amazon. The prospect of being taken to the ECJ was one of the main arguments used in favour of water charges.
So, if the reason for the delay cannot reasonably be
attributed to complexity, the likelihood is that it is an example of kicking the can down the road or an attempt to avoid spooking major US investors by blaming Brussels for the original tax decision.
The Government has maintained from the outset that the tax ruling was wrong. Finance Minister Paschal Donohoe said in an interview in August with Germany’s Frankfurter Allgemeine Zeitung that the Irish tax system from which Apple benefited had been available to all and was not
tailored for it.
That decision may, indeed, be wrong but ignoring it is not the answer. The process of putting the money in escrow must begin immediately while, at the same time, preparations must be made to appeal the commission’s original decision.
The Department of Finance yesterday stated that “Ireland fully respects the rule of law in the European Union.”
We must now prove it.
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