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Ireland faces EU court showdown over failure to recoup £11.5 billion in state aid from Apple

The European Commission said Ireland had not recouped any of the money despite a year passing since it ruled that the iPad and iPhone maker had gained an illegal advantage.


Picture of an iPhone

Picture of an iPhone

Picture of an iPhone

Ireland faces legal action for failing to recover 13 billion euros (£11.5 billion) in tax from US tech giant Apple after European competition authorities blasted the country over a sweetheart deal.

The European Commission said Ireland had not recouped any of the money despite a year passing since it ruled that the iPad and iPhone maker had gained an illegal advantage over other businesses by paying significantly less tax.

While the competition watchdog slapped the country with a deadline of January 3 this year, Ireland is no closer to raking in the funds and is only expected to have pinpointed the exact amount of aid it dished out to Apple by March 2018.

It comes as the Commission took a double swipe at US tech industry by landing Amazon with a bill of around 250 million euros (£221 million) in back taxes after stating that the firm’s sweetheart tax deal with Luxembourg broke state aid rules.

Margrethe Vestager, Europe’s competition commissioner, said: “Ireland has to recover up to 13 billion euros in illegal state aid from Apple.

“However, more than one year after the commission adopted this decision, Ireland has still not recovered the money, also not in part.

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“We of course understand that recovery in certain cases may be more complex than in others, and we are always ready to assist.

“But member states need to make sufficient progress to restore competition. That is why we have today decided to refer Ireland to the EU Court for failing to implement our decision.”

The landmark ruling followed a three-year investigation in which the Commission discovered that Apple had paid just 1% tax on its European profits in 2003 and 0.005% in 2014.

The Brussels competition referee found the arrangements dating back to the early 1990s were illegal under state aid rules and gave Apple favourable treatment over other businesses.

It revealed that Apple was paying 50 euro in tax on every one million euro of profit it made in 2014.

The Irish Government reacted angrily to the decision on Wednesday, saying it was disappointed with the European Commission’s action.

It described it as “wholly unnecessary” and said it has never accepted the Commission’s analysis of Apple’s tax arrangements.

“We have always been clear that the Government is fully committed to ensuring that recovery of the alleged Apple state aid takes place without delay and has committed significant resources to ensuring this is achieved,” the Department of Finance in Dublin said.

“Ireland fully respects the rule of law in the European Union.”

In a statement the department said government officials have been working intensively to abide by recovery obligations as soon as possible.

“It is extremely regrettable that the Commission has taken this action, especially in relation to a case with such a large scale recovery amount,” the department said.

“Ireland has made significant progress on this complex issue and is close to the establishment of an escrow fund, in compliance with all relevant Irish constitutional and European Union law.”

In response to the announcement, Apple re-issued a statement from July, saying: “The European Commission’s case against Ireland has never been about how much Apple pays in taxes, it’s about which government gets the money.

“The United States government, the Irish government and Apple all agree we’ve paid our taxes according to the law.

“Since virtually all of our research and development takes place in the United States, according to the law, we pay the majority of our taxes in the US.

“The Commission’s ruling is contrary to the tax principles countries around the world have adhered to for decades.”