Business Irish

Monday 19 August 2019

Apple's 2014 Revenue payout is revealed in EU tax ruling

Fresh concern as EU claims ‘no consistency’ in aspects of how firms are taxed here

Apple chief executive Tim Cook. Photo: Niall Carson/PA Wire
Apple chief executive Tim Cook. Photo: Niall Carson/PA Wire

Donal O'Donovan and Sarah Collins

An Irish unit of Apple made a Revenue settlement two years ago - including paying tax, interest and penalties to authorities here.

The European Commission has revealed the 2014 tax settlement was made by Apple Distribution International (ADI).

Apple has been operating in Cork since 1980. Photo: Michael Mac Sweeney/Provision
Apple has been operating in Cork since 1980. Photo: Michael Mac Sweeney/Provision

This is one of two Apple subsidiaries at the heart of the Brussels case against Ireland and the US technology giant.

That was a year after the EU launched its probe into the US giant's Irish taxes which resulted in the massive demand for €13bn back taxes.

The 2014 Revenue settlement emerged as the EU published details of the legal arguments behind its ruling last August that Ireland granted illegal tax breaks to Apple.

And, worryingly, yesterday's document also pointed to discrepancies in other Irish cases, although it refused to speculate on whether it would be taking this any further.

Criteria

The document claims Revenue here applied "no consistent criteria" in assessing some elements of how tax is collected from large multinationals.

But the commission said Apple received an advantage even when it was compared to similar corporate groups looked at by Brussels.

The 130-page decision by European Competition Commissioner Margrethe Vestager said Apple was granted "selective" advantages over other companies in Ireland.

Lucia Caudet, a spokeswoman for the European Commission, said the decision was "very solid and based on facts, and we will of course now defend our decision in court".

Read more: Europe 'has exceeded its powers' with Apple ruling - Government

"Ireland granted illegal tax benefits to Apple which allowed it to pay substantially less tax than other businesses, over many years," said Ms Caudet.

Apple yesterday formally launched a legal appeal against the ruling.

The tech giant has said it was not properly consulted during the investigation and that expert advice it submitted to the commission on the issue was ignored.

The Government, which stands accused of providing illegal aid to the company, has already launched its appeal at the EU General Court. The Government has long argued that the company never benefited from a sweetheart tax deal.

According to the Commission, Apple operated two branches in Ireland but allocated much of its European profits to an offshore head office.

The commission says this did not reflect "economic reality", and so amounted to illegal state aid. The value of intellectual property rights has emerged as a crucial element in the commission's legal argument, which questions why they did not rest with Apple's branches in Ireland, where sales were booked.

The ruling may be used by other EU countries and the US to check if they can claim any share of the back taxes claimed from Apple.

But the 2014 settlement is the first evidence that authorities here had ever hit Apple for unpaid taxes.

It is separate to the €13bn bill for back taxes and it is unclear how, or even if, the settlement fits in with the claim that Ireland gave sweetheart tax deals not available to other companies.

Read more: John Mulligan: 'Political crap' or not, EU pursuit of Apple has huge implications

Details of the settlement agreement between the Irish Revenue Commissioners and Apple's ADI unit show that the unit declared no corporation tax liability for the years 2009, 2010 and 2011, the Commission said.

That was despite making profits, which in 2011 were in the region of €100m to €200m.

That was because ADI had originally calculated it didn't owe any corporation tax here, based on its understanding of a tax formula from 2007 that Irish authorities subsequently ruled did not apply.

In 2014, ADI accepted the Irish Revenue's position and a settlement was reached, the Commission said.

It is clear from the EU filing that taxes, penalties and interest were paid by the Apple unit, but the amounts involved have been withheld.

Irish Independent

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