Business Irish

Thursday 22 March 2018

Europe 'has exceeded its powers' with Apple ruling - Government

EU commissioner Margrethe Vestager hit Apple with a huge tax bill. Photo: REUTERS/Eric Vidal
EU commissioner Margrethe Vestager hit Apple with a huge tax bill. Photo: REUTERS/Eric Vidal
John Mulligan

John Mulligan

Brussels has interfered with Ireland's tax sovereignty and exceeded its powers in ordering Apple to pay €13bn in taxes to the Exchequer, according to the Government.

In a stinging rebuke to the European Commission, the Finance Department slammed the decision by competition commissioner Margrethe Vestager to hit Apple with the huge tax bill.

"The commission has exceeded its powers and interfered with national tax sovereignty," the Government told the commission in legal arguments made public today.

"Ireland did not give favourable tax treatment to Apple," it said. "The full amount of tax was paid in this case and no State aid was provided. Ireland does not do deals with taxpayers."

The Government said that the commission has attempted to "re-write the Irish corporation tax rules" in making its decision.

Both the Government and Apple are appealing the commission's decision to levy the tax on the iPhone maker.

A resolution of the case will probably take years. But Apple will still have to hand over the €13bn, which will be held in a secure account until there is a definitive ruling.

Finance Minister Michael Noonan has already insisted that the California tech giant got no sweetheart tax deals when it opened its base in Cork in 1980.

Apple has also denied any such arrangements are in place now or existed in the past.

In its legal arguments published by the Finance Department today, the Government has told the commission that two Apple units based in Ireland "did not pay any less tax than was properly due" under relevant legislation.

The European Commission formally started its Apple probe in 2014.

In August this year, Brussels said that the company, whose chief executive is Tim Cook, had benefited from illegal State aid in Ireland because the Government "allowed Apple to pay substantially less tax than other businesses".

"The tax treatment in Ireland enabled Apple to avoid taxation on almost all profits generated by sales of Apple products in the entire EU Single Market," the EC said.

But the Government has hit back strongly at the commission.

"The commission has no competence, under state aid rules, unilaterally to substitute its own view of the geographic scope and extent of the member state's tax jurisdiction for those of the member state itself," it said in its legal arguments published this morning. Those arguments were submitted to the EU's General Court last month.

The Government added: "The purpose of the state aid rules is to tackle state interventions which confer a selective advantage. The state aid rules by their nature cannot remedy mismatches between tax systems on a global level."

The Government has also accused the commission of "failing to act impartially and in accordance with its duty of care" by never clearly explaining its state aid theory during the Apple investigation. The decision also contains factual findings on which Ireland never had the chance to comment, the Government has said.

It said that the commission relied "simultaneously on grossly divergent factual scenarios, in contradicting itself as to the source of the rule that Ireland is said to have breached, and in suggesting that Ireland granted aid in relation to profits taxable in other jurisdictions".

From the moment the EU Commission revealed its legal ruling last August, Mr Noonan has said that demanding €13bn in back taxes from Apple would be "destroying the future for a short-term advantage".

Mr Noonan and the Government said immediately that they "profoundly disagreed with the EU Commission".

Mr Noonan also said that the European Commission's decision to order Ireland to demand back taxes from Apple could be detrimental to the country's economic future and appealing the decision was the best course of action.

"It's my absolute judgment after examining all the factors that this is the best course of action. To do anything else would be like eating the seed potatoes and destroying the future for people for short-term advantage now," he said.

Mr Noonan said Ireland would respect the EU treaties.

Irish Independent

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