Sunday 23 September 2018

Blame game erupts in Cabinet after EU warns Ireland on Apple's tax

Margrethe Vestager: ambitious
Margrethe Vestager: ambitious
Niall O'Connor

Niall O'Connor

Senior Government figures have received private assurances from Brussels that Ireland will not be hauled in front of the EU Courts over the €13bn Apple tax deal - as long as the collection process begins before the end of the year.

Despite her strong criticism of Ireland's 'sweetheart' deal with the technology giant this week, EU chief Margrethe Vestager has told colleagues that she is prepared to pull back from issuing infringement proceedings - as long as certain conditions are met.

The news will come as a relief to Taoiseach Leo Varadkar and members of Cabinet, who were taken aback by her intervention on Wednesday.

The Competition Commissioner told a hastily arranged press conference that Ireland had missed a January 3 deadline to recover the money and that she was referring the State to the EU Court of Auditors.

She tweeted: "Know it may be difficult, but more that 1 year after Apple decision, tax benefits not recovered by Ireland. We ask EU court to look into it."

Mr Varadkar later described the decision as "unwarranted", while Tánaiste Frances Fitzgerald said it was "unhelpful".

The Irish Independent can today reveal that a blame game has erupted within Government over the handling of the issue.

Senior sources confirmed that Finance Minister Paschal Donohoe had planned to meet Commissioner Vestager in July in order to hammer out a deal that would avoid the issuing of infringement proceedings.

But it is understood that Mr Donohoe was advised against doing so by Department of Finance officials.

Ireland's representative in Brussels was then only contacted last Thursday about the prospect of an announcement by the Commission - giving little time to prepare a response.

Mr Donohoe's spokeswoman declined to comment when contacted last night.

The record-breaking case surrounding Apple has placed a major spotlight on Ireland's tax regime and led to criticism from the likes of US President Donald Trump.

But any court action - as threatened by Commissioner Vestager - would cause further damage to the country's reputation and prove very costly for Ireland to defend.

One well-placed source told the Irish Independent that "private assurances" had been given to Ireland that the Commissioner will not follow through on legal action so long as the money begins to be collected by the end of the year.

Finance officials have now begun putting in place the measures for an escrow account to be set up, pending the outcome of the appeal by both Ireland and Apple.

In May, Ms Vestager warned that Ireland was taking too long to collect the amount and that court action could follow.

The Commission said then that if European Union nations "fail to meet their obligation, the Commission may decide to refer them to the EU courts for failure to implement a state aid decision".


The watchdog said it was aware that recovery can in some cases "be more complex than in others and thus may require some more time," but added that a nation "must demonstrate progress on recovery".

Ms Vestager has also turned her sights to Luxembourg and the tax deal that the EU member state extended to the internet retail giant Amazon.

Luxembourg has been told that it too faces infringement proceedings after granting undue tax benefits to Amazon totalling around €250m.

Politically, Ms Vestager is seen as harbouring ambitions to succeed Jean Claude Juncker as head of the European Commission.

Irish Independent

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