Ireland's appeal has strong chance of success: official
Published 30/08/2016 | 02:30
A senior EU official has become the first to admit Ireland could win its appeal against an imminent ruling that Apple got a sweetheart tax deal here.
Europe's Competition Commissioner Margrethe Vestager will hand down her judgment today, including the key finding that Ireland provided illegal state aid to technology giant Apple in a case dating back to 1991.
The case is a political hot potato. A finding against Ireland could result in a windfall for taxpayers, but if unchallenged would be seized on by critics who regard this country as a tax haven for multinationals, inflicting long-term reputational damage.
The case threatens to strain relations between Ireland and Brussels to an extent not seen since the crisis. Officials in the US have also weighed in, with President Barack Obama's Treasury Secretary Jack Lew threatening to retaliate over alleged targeting of US multinationals by the EU.
Speaking on condition of anonymity, the senior EU official admitted Ireland's plan to appeal against the ruling could succeed - depending on how judges assess the value of so- called 'transfer pricing' trades - with no certainty a court would back Brussels.
The decision has already been heavily leaked to the press - with Brussels set to formally rebuke Ireland and impose a fine on Apple. It follows a long-running probe by officials in Brussels into whether Apple was given a tax deal in Ireland so favourable that it amounted to state aid - illegal inside the single market.
The EU case is that Ireland allowed Apple to mark prices up and down in different instances to ensure minimum taxation when goods were traded between Apple subsidiaries, a process called transfer pricing, and also that those decisions were linked to job creation.
Ireland and Apple reject that and the case is now heading for the courts.
"It all hinges on the transfer pricing code. This will end up in front of the court and then we will see," the EU official said.
Transfer pricing refers to the way large companies buy and sell assets internally as they ship them around the globe.
It affects what tax is charged, but pinning down the true value of trades is notoriously difficult.
Finance Minister Michael Noonan is adamant Ireland taxes Apple fairly, and has said he would appeal against such a ruling. Rejecting the EU decision is seen as important in defending the robustness of Ireland's institutions, regardless of the cash on the table.
The decision to appeal means control of the Apple case will be taken away from the European Competition Commissioner for the first time since the probe was launched more than two years ago.
The Commission has been responsible for both investigating Apple's tax affairs here, the initial finds against Ireland, and this week's formal decision.
Economist Seamus Coffey, of University College Cork, said the case boiled down to the EU saying some transfer pricing arrangements historically allowed here were "wrong" without so far saying what's right.
The appeal will be to the EU General Court and will take the form of proceedings aimed at annulling the commission's ruling.