The Irish government is not happy that Apple has to pay taxes. Rather, they fear that foreign investors will withdraw.
A small section of the Apple logo is probably larger than the percentage of tax the company has ever paid in Ireland. Photo: Michael Cappeller/dpa
Dublin Taz | Ireland would gladly have given up this windfall. The European Court of Justice (ECJ) ruled Tuesday that Apple must pay €13 billion in back taxes, ending an eight-year legal battle. In 2016, the Irish government, along with Apple, opposed the European Commission’s decision to pay back taxes, citing concerns about future U.S. investment.
The government is now trying to control the outcome of the ruling. She argues that the Apple ruling is an old issue that is “only historically important.” Ireland has now joined international tax agreements and introduced changes to the rules, including in the area of data protection.
But the court’s ruling that Ireland had violated the rules and given Apple illegal state aid is, to say the least, disconcerting. Ultimately, it has deprived some of the world’s poorest countries of much-needed revenue. In 2003, Apple gave Ireland just 1%, and in 2014 it was just 0.005%, or €50 per million of profits.
Government officials described the ruling as “a blow to the attractiveness of Ireland for foreign direct investment.” About a thousand American companies, including eBay, Facebook, X, Dropbox, Airbnb, Pfizer, Intel, Paypal, Google and Apple, have their European headquarters in Dublin. They generate almost half of the country’s gross domestic product.
Further criticism of Irish tax practices
The European Court of Justice’s decision could impact future investment decisions by U.S. companies, as Europe competes with other markets and companies will consider the possibility of retroactive rulings when making decisions.
However, Chancellor Jack Chambers dismissed concerns that the EU Commission would pursue the historic case further in Ireland. Ireland, he said, was “consistent with the multilateral system within the EU and the OECD” and had made “constructive contributions” to international corporate tax reform in recent years. Tax experts say the ruling is unlikely to have any impact on Ireland’s existing corporate tax system.
But EU competition commissioner Margrethe Vestager said despite the reforms, “aggressive corporate tax planning remains widespread.” She singled out Ireland, the Netherlands, Belgium and Luxembourg as four EU countries that continue to play a central role in profit-shifting for multinationals.
She added that the pace of investigations into these companies must be accelerated. “Otherwise, we will always be slower because it is quick to break the law but slow to prove that someone broke the law,” she said.
