Sunday 18 August 2019

What's new about the €13bn Apple tax case? All your questions answered

Ireland recently filed its formal appeal against the EU ruling, kicking off a court case that’s likely to go on for some time. Stock photo: AFP/Getty Images
Ireland recently filed its formal appeal against the EU ruling, kicking off a court case that’s likely to go on for some time. Stock photo: AFP/Getty Images

Donal O’Donovan

What is the new development in the Apple tax case?

In a way, there hasn’t really been one. The flurry of activity in the last few days, or more correctly the flurry of spin by all sides, hasn’t really moved things on from where they stood in August.

Remind me, where did they stand back in August?

The European Competition Commission, one of the most powerful EU institutions, concluded a three-year probe by ruling that Ireland had given Apple a ‘sweetheart’ tax deal lasting decades. Apple was ordered to pay €13bn in back taxes plus interest. After a bit of intra-Coalition tension, the Government said it would appeal. Apple’s Tim Cook described the probe as “political crap”.

Ah yes, this is the €13bn Michael Noonan says we don’t want even though Europe says we’re entitled to it.

Indeed, the Government position is that Ireland gets more in the long term from being a top location for foreign investment, and of course insists we’ve never given Apple or anyone else a sweetheart deal.

I thought the EU couldn’t interfere in Irish tax issues.

It can’t. EU treaties say tax affairs, such as who pays and how much, are issues for national governments to decide. However, the State aid ruling trumps that. No country is allowed to misuse its tax regime to give companies an unfair advantage over their national or European rivals.

Ok, so that’s all been the same since August when the ruling came out. What’s new?

The process itself is rolling on. Ireland recently filed its formal appeal against the EU ruling, kicking off a court case that’s likely to go on for some time.

Apple launched its appeal yesterday. The commission is set to fight both.

So where is the €13bn?

We’re legally required to collect the back-taxes off Apple regardless of the appeals. That is set to happen in the next few weeks.

Because the Government doesn’t want the money, at least until after the appeals, the cash is going to be kept in an escrow account, basically minded by lawyers until the case is resolved.

How much of a financial blow is this to Apple?

Apple has around €200bn in cash reserves, so it can easily peel off some of that to meet the bill. Even so, €13bn is a big bite out of anyone’s business. It warned investors of a “material” effect on its finances from the European probe, before it concluded back in August.

So what happens now?

The Government and Apple will push ahead with their appeals, the money will sit in the bank, the lawyers will get rich and the whole thing could take several years.

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