Ireland in court over Apple's back taxes

October 5, 2017 // 11:50 a.m.

Tags: #apple #european-commission #european-union #financial #ireland #margrethe-vestager #tax #tax-avoidance #taxes #tax-evasion

The European Commission has confirmed it is to take Ireland to court for failing to collect €13 billion in back-taxes it found had not been paid to the nation by technology giant Apple.

An investigation by the European Commission concluded last year that Apple owed €13 billion in unpaid taxes following what it claimed were illegal-granted tax benefits. The two-year investigation focused on changes made to Irish tax law in 1991 and 2007 which, it found, existed for no other reason than to grant Apple tax breaks equivalent to paying just 1 percent corporation tax in 2003 and dropping to 0.005 percent in 2014.

The Irish government however, disagreed with the EC's findings, and made it clear it had no desire to collect the €13 billion - likely out of concern that if it weren't for the tax breaks, granted illegally or otherwise, Apple would simply take its European headquarters elsewhere and pay absolutely nothing to Ireland's coffers going forward. An appeal was filed for an annulment on the ruling, but the EC argues that a pending appeal is no excuse for failing to collect the money: 'Such actions for annulment brought against Commission decisions do not suspend a Member State's obligation to recover illegal aid,' the Commission explains in a statement on the matter, 'but it can, for example, place the recovered amount in an escrow account, pending the outcome of the EU court procedures.'

'Ireland has to recover up to €13 billion 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,' Commissioner Margrethe Vestager explains. '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 original deadline for Ireland to begin the process of collecting the taxes owed was January 3rd 2017, a date now long passed. While the Commission has indicated that the Irish government is making progress on figuring out exactly how much tax Apple has dodged, it wants to see cash changing hands - and warns that penalty payments, allowable under Article 260 of the Treaty on the Functioning of the European Union (TFEU), may apply if Ireland doesn't get a wriggle on.


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