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Ireland 'could win' its appeal against EU on Apple tax deal

By Donal O'Donovan

Published 30/08/2016

A senior EU official has become the first to admit Ireland could win its appeal against an imminent ruling that Apple got a sweetheart tax deal in the Republic
A senior EU official has become the first to admit Ireland could win its appeal against an imminent ruling that Apple got a sweetheart tax deal in the Republic

A senior EU official has become the first to admit Ireland could win its appeal against an imminent ruling that Apple got a sweetheart tax deal in the Republic.

Europe's competition commissioner Margrethe Vestager will hand down her judgment today, including the key finding that the Republic provided illegal state aid to technology giant Apple in a case dating back to 1991.

A finding against it could result in a wind-fall for Irish taxpayers, but if unchallenged would be seized on by critics who regard the Republic as a tax haven for multinationals, inflicting long-term reputational damage.

The case threatens to strain relations between Ireland and Brussels to an extent not seen since the crisis. Officials in the US have also weighed in, with President Obama's treasury secretary Jack Lew threatening to retaliate over alleged targeting of US multinationals by the EU.

Speaking on condition of anonymity, the senior EU official admitted Ireland's plan to appeal against the ruling could succeed - depending on how judges assess the value of so-called "transfer pricing" trades - with no certainty a court will back Brussels.

The decision has already been heavily leaked to the Press - with Brussels set to formally rebuke Ireland and impose a fine on Apple.

The EU case is that Ireland allowed Apple to mark prices up and down in different instances to ensure minimum taxation when goods were traded between Apple subsidiaries, a process called transfer pricing, and also that those decisions were linked to job creation.

Ireland and Apple reject that and the case is now heading for the courts.

"It all hinges on the transfer pricing code. This will end up in front of the court and then we will see," the EU official said.

Transfer pricing refers to the way large companies buy and sell assets internally as they ship them around the globe. It affects what tax is charged, but pinning down the true value of trades is notoriously difficult.

But the Republic's Finance Minister Michael Noonan is adamant that Ireland taxes Apple fairly, and has said he will appeal against the ruling.

Rejecting the EU decision is seen as important in defending the robustness of Ireland's institutions. The decision to appeal means control of the Apple case will be taken away from the European competition commissioner for the first time since the probe was launched more than two years ago.

The commission has been responsible for both investigating Apple's tax affairs here, the initial finds against Ireland, and this week's formal decision.

Economist Seamus Coffey of University College Cork said the case boils down to the EU saying some transfer pricing arrangements historically allowed here were "wrong," without so far saying what's right. The appeal will be to the EU General Court.

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