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Fears of a 'lose-lose' verdict in €13bn Apple tax case

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'The EU's Court of Justice are seeking to overturn an EU Commission decision in 2016 that Apple got preferential treatment from Ireland and owed €13bn in back taxes.' Stock photo: Philip Toscano/PA

'The EU's Court of Justice are seeking to overturn an EU Commission decision in 2016 that Apple got preferential treatment from Ireland and owed €13bn in back taxes.' Stock photo: Philip Toscano/PA

PA Archive/PA Images

'The EU's Court of Justice are seeking to overturn an EU Commission decision in 2016 that Apple got preferential treatment from Ireland and owed €13bn in back taxes.' Stock photo: Philip Toscano/PA

The Government is bracing itself for a potential "lose-lose" outcome to the €13bn Apple tax case ruling due on Wednesday.

The EU's Court of Justice will give its verdict on an appeal launched by the tech giant and Ireland. 

They are seeking to overturn an EU Commission decision in 2016 that Apple got preferential treatment from Ireland and owed €13bn in back taxes.

If the judges of the EU's general court rule in favour of the European Commission, Ireland could be in for a significant tax windfall.

However, other EU countries may well line up for a share of the €13bn arguing that it relates to economic activity by Apple inside their jurisdiction.

But Government ministers fear this could be a short-term gain and jeopardise the future of lucrative multinational investment and job-creation in Ireland. 

If the EU judges rule for Ireland and Apple, there will still be controversy with the issue again in the headlines at a crucial time in talks on Brexit, budget and coronavirus aid.

All these issues are due for discussion at a special EU leaders' summit in Brussels on Friday. Raising Ireland's low company taxes in the media again at this time is not going to help these discussions.

"The issue of corporate tax is a recurring one and poses big challenges for Ireland which will not go away," one well-placed source told the Irish Independent.

Issues

The case turns on two key issues: whether guarantees given by the Government to Apple on taxation amounted to preferential treatment for the tech giant and whether so-called "transfer pricing" and the extent to which various Apple entities were able to shift transactions from one entity to another.

In its 2016 decision, the EU Commission conceded that not all of the €13bn in back taxes was necessarily revenue due in total to Ireland.

The money has been put on ice in a special so-called escrow account pending a court ruling. The European Commission under its competition law has widespread direct powers to make costly decisions affecting business. But these decisions can be appealed to the EU courts.

Whatever the verdict at the Luxembourg court, officials expect an appeal to the higher EU Court of Justice will follow.

Irish Independent