European Commission full ruling: Claims Ireland gave Apple illegal State aid

19 Dec 20169 Shares

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Apple Store in New York. Image: Drozdin Vladimir/Shutterstock

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The European Commission’s full ruling on Apple’s tax affairs in Ireland, which resulted in a €13.8bn tax demand in August, argues that Ireland’s actions were tantamount to State aid to Apple.

In August, EU competition commissioner Margrethe Vestager levelled a €13.8bn finding against Apple, suggesting that the tech giant benefited from a 1pc corporate tax rate.

Both Apple and the Irish Government denied this and pledged to fight the matter in the European courts.

‘The Commission took unilateral action and retroactively changed the rules, disregarding decades of Irish tax law, US tax law, as well as global consensus on tax policy, that everyone has relied on’
– APPLE

The Government this morning launched a pre-emptive strike against the European Commission (EC) by formally objecting to the ruling.

“Ireland did not give favourable tax treatment to Apple – the full amount of tax was paid in this case and no State aid was provided. Ireland does not do deals with taxpayers,” the Government said.

Apple is expected to reveal its legal response to the ruling.

EC publishes its full ruling

This morning, the EC published its full decision on Apple’s tax affairs in Ireland, painting a picture of wrongful collusion between Irish authorities and the California tech company over the activities of two of its subsidiaries: Apple Sales International (ASI) and Apple Operations Europe (AOE).

“An examination of the profit allocation ruling practice of Irish Revenue demonstrates that no consistent criteria are applied to determine the allocation of profits to Irish branches of non-resident companies for the purposes of applying Section 25 TCA 97. That examination also confirms that the contested tax rulings were issued on the basis of Irish Revenue’s discretion in the absence of objective criteria related to the tax system and that, therefore, those rulings should be considered to confer a selective.”

It added: “The Commission concludes that the contested tax rulings issued by Irish Revenue in favour of ASI and AOE confer a selective advantage on those companies that is imputable to Ireland and financed through State resources, which distorts or threatens to distort competition, and which is liable to affect trade between member states.”

The full ruling, heavy in legal jargon, paints a toxic picture of Ireland’s relationship with Apple, which the company and the Government are sure to contest.

For its part, Apple has reiterated its intention to fight the ruling and accused the EC of having a pre-determined outcome in mind before its investigations even began.

“The Commission took unilateral action and retroactively changed the rules, disregarding decades of Irish tax law, US tax law, as well as global consensus on tax policy, that everyone has relied on.

“If their opinion is allowed to stand, Apple would pay 40pc of all the corporate income tax collected in Ireland, which is unprecedented and, far from levelling the playing field, selectively targets Apple.

“This has no basis in fact or law and we’re confident the ruling will be overturned,” Apple said.

Apple Store in New York. Image: Drozdin Vladimir/Shutterstock

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Editor John Kennedy is an award-winning technology journalist.

editorial@siliconrepublic.com