Ireland’s parliament recalled to debate Apple tax ruling

7 Sep 2016

The European Commission €13bn tax ruling against Apple and the Irish Government decision to appeal is expected to arouse a furious 10-hour debate in Ireland's parliament, Dáil Eireann

Ahead of a debate today (7 September), members of Ireland’s parliament, Dáil Éireann, have been given a 16-page document outlining the European Commission’s decision to demand €13bn in back tax from Apple.

The document from the Department of Finance outlines why the Government has decided to appeal the European Commission’s decision that alleges Ireland provided unlawful State aid to Apple.

The document acknowledges that a head-on clash will take place in the European courts.

After a three-year investigation, European Competition Commissioner Margrethe Vestager alleged that “selective treatment” allowed Apple to pay a tax rate of less than 1pc on European profits between 2003 and 2014.

Who is right in Apple tax debate?

Ireland’s Government argues that Apple was fully compliant with Irish tax law, which required the Revenue Commissioners to only tax profits attributable to Apple’s Irish operations.

At the heart of the issue is the sovereignty of Irish tax law and the right of the European Commission to tax companies retroactively even if they were compliant with a country’s tax laws.

The document for TDs outlines Apple’s activities and structures and the Revenue Commissioner’s tax treatment of Apple in 1991 and 2007.

The document states that tax agreements including “comfort letters” to provide clarity on tax arrangement are perfectly legal.

However, it also outlines how the European Commission came to its conclusion that the tax rulings were an “artificial arrangement” that allowed the multinational to flow profits from Europe through Ireland without being taxed.

The €13bn is to be held in an escrow account until the appeal by Apple and Ireland works its way through the European courts, a process that could take several years.

In the briefing document, which was issued to 158 TDs, the Government said that if it lost its appeal it would collect the €13bn sum, which would be “paid to the Irish State.”

However, the reality is that thanks to the contradictory wording of Vestager’s press statement last week, that €13bn will not belong to Ireland, and other states, including EU states and the US, may have a claim to that money.

The €13bn had been erroneously presented almost as a windfall for the country, which is not the case and, if anything, Ireland could be entitled to only a tiny sliver of the cash pile if the appeal is lost.

Ireland’s Dáil has been recalled three weeks early for today’s special sitting, which could last up to 10 hours.

Because of the €13bn carrot so mischievously dangled in front of the population, expect a furious debate to ensue.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years