Apple has filed an appeal against the European Union ruling that says it has to pay up to €13 billion in back taxes to the Republic of Ireland, and across the globe.
The ruling centres on an adjudication by the EU in August that stated categorically that Apple’s tax arrangements in Ireland were illegal, and consequently demanded the record penalty.
For its part, Apple claims that it was singled out by the EU as a “convenient target.’ The government of Ireland is also contesting the decision, claiming that EU regulators are interfering with national sovereignty and the right of nation states to apply for their own tax rules.
In a strongly-worded statement, Ireland’s finance ministry Ireland’s finance ministry said that the European Commission had “misunderstood the relevant facts and Irish law.” It also said that “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,” and also that the Irish government does not do back-door sweetheart deals with companies.
And the Irish government is rightly concerned. If the EU ruling is upheld, it may affect investment by some of the world’s biggest companies.
It currently has the lowest corporation tax within the EU at 12.5%. According to the EU however, many of the big companies that have based their corporate headquarters in Ireland use a variety of legal and accounting loopholes to ensure that the real rate they pay is far less. Irish tax law as applied to major international firms have become the lifeblood of Ireland’s economy over the past 30 years or so. It has also ensured that Ireland has become a ‘home from home’ for some of the world’s largest corporations such as Microsoft and PayPal over the years.
While Ireland’s low tax rate for companies has annoyed other larger EU countries such as Germany and France over the years, inward investment has flowed into the emerald isle and the country is seen as the go-to place for multinationals looking for ‘loopholes’ that allow them to move their taxable profits off to tax havens in the Caribbean and elsewhere. At its heart, this is what really annoys Ireland’s EU partners.
Apple’s appeal while complicated and lengthy is expected to have a similar approach as the Irish government. Essentially, both parties claim that no rules have been broken, and the ruling is real terms politically motivated. They also both take issue with the retrospective figure of 13 billion Euro, claiming that they have played within these rules for years, and that no-one raised any real objections before.