Wednesday 31 August 2016

EU orders Ireland to collect €13bn tax from Apple

The EU Commission have ruled that Apple's tax arrangements in Ireland amount to illegal state aid and have ordered the Irish government to collect €13bn in retrospective taxes.

Apple employs 5,500 people in Ireland with a further 38,000 iOS developers registered in the country. They have invested €140m over the last 4 years into their campus in Cork with plans to create another 1,000 jobs. Their Irish operation is used to channel European sales to their head office, taking advantage of a corporation tax regime that allows them to pay very little tax.

The EU Commission has decided that the tax laws that Apple takes advantage of are unfair to other companies who don't have structure or turnover that would let them take advantage of them and has decided that Apple should pay €13bn in back tax. The EU's unelected Competition Commissioner, Margrethe Vestanger, says that the €13bn is unpaid taxes not a fine but it is a tiny amount of Apple's profit that she has ruled is illegal which undermines that statement.

As EU Competition Commissioner, Vestanger has mainly been focusing her attention on foreign-owned companies but she does list amongst her achievements bankrupting Cyprus Airways when she ruled that a rescue loan and capital injection given to the company by the Cypriot government which owned a majority stake int he company was illegal state aid.

The ruling against Apple - which follows similar rulings against Starbucks and Google - risks jobs and investment that Ireland desperately needs. Unsurprisingly, both Apple and the Irish government are appealing the decision through the EU courts but it is unlikely that the EU courts will rule that the EU has infringed on Irish sovereignty by undermining tax laws dating back to before Ireland even joined the EEA.