EU debunks claims about how Ireland can use €13bn Apple tax windfall

31 Aug 2016

The Irish Government had claimed that the money could not be used for capital spending except to furnish national debt

Claims that Ireland must use the €13bn in Apple back taxes from the European Commission’s ruling to reduce the national debt have been debunked by EU officials, according to reports.

The landmark Apple tax ruling by the European Commission’s Competition Commissioner Margrethe Vestager is likely to be appealed by both the Irish Government and Apple.

The news of the ruling sparked a divisive debate in the Irish political sphere about how the windfall should be used, with many elements calling for it to go into vital public interest projects like housing, health and transport. The row threatens to destabilise an Irish Government that is already on fragile ground.

According to The Irish Times, Government ministers had insisted that complex EU rules relating to ‘windfall’ gains meant Ireland must use the €13bn to reduce the country’s national debt.

However, the newspaper today reported that a high-ranking source in the European Commission said that there is no legal obligation for countries to use recovered state aid to pay down national debt.

Infographic: Apple's Foreign Tax Payments Since 2003 | StatistaGovernment officials and ministers had previously warned that any windfall must be used to furnish the national debt.

Apple tax ruling leads to Government turmoil

In an interview on RTÉ’s News at One yesterday (30 August), Finance Minister Michael Noonan TD said budgetary rules would require such sums to be taken off the national debt, rather than spent on day-to-day expenditure.

However, a European Commission spokesperson said: “The amounts that are recovered by a member state in a state aid investigation simply go back to the member state’s budget and they can then, of course, use it for their own decisions.”

But, the European Commission, in its most recent recommendation to Ireland, did state that any any ‘windfall’ be used to reduce the country’s national debt, rather than using the cash for current or capital spending.

However, according to the sources who spoke to The Irish Times, this recommendation is just that, and is not a “legally binding requirement”.

Either way, the revelation is likely to fan the flames of dissent even further and weaken efforts by the Minister Noonan to secure consensus from the Cabinet in order to appeal the ruling in the European Court.

Apple money image via Shutterstock

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