EU opens new front for Ireland as court overrules Apple's €13bn tax ruling

Finance Minister Paschal Donohoe said a ruling the Government need not retrieve €13bn in back taxes from Apple has vindicated the Government but warned Ireland faces tougher battles as the European Commission appears to have opened up a new front over taxing digital companies. 

The EU General Court upheld appeals from Ireland and Apple saying the Commission had failed to show that Ireland had abused state-aid rules when the Revenue handed down tax directions for Apple companies in Ireland that were involved in managing the phone giant’s global tax affairs.

The ruling overturns a 2016 decision announced by European competition commissioner Margrethe Vestager and means the Government will not after all be forced to collect €13bn plus interest payments from Apple. The Government has long maintained that the Revenue’s rulings breached no European rules even as Ireland's dealings with multinationals had attracted hostile worldwide commentary.                    

The commission will reflect on possible next steps, Ms Vestager said, that keeps open a potential appeal to the EU Court of Justice. Minister Donohoe said the ruling showed Ireland had not favoured Apple and that it had acted above board.

But he told reporters that the global tax debate across the world about the best way to tax multinationals has rapidly moved on. Ireland would continue to press for global agreement in taxing digital giants under the Organisation for Economic Cooperation and Development as the best way of serving Ireland’s interests, the minister said.

However, a new front opened in Ireland's battle over corporate taxation as the commission unexpectedly proposed to dilute national countries’ vetoes over the ways that multinationals are taxed in the EU. Changes could require only a majority of EU countries to approve the proposals.

Minister Donohoe said Ireland had long set out its concerns over changing unanimous voting and he would talk to commissioners in the coming weeks about the proposals.

On taxing digital companies, he said Ireland favoured finding new international structures to tax digital companies and that “in time” digital companies will be required to pay more.

Countries going it alone raised the danger of sparking retaliation through trade disputes, he said.

Ireland had acted over recent years to close loopholes facilitating stateless companies and was an active participant in the OECD’s so-called Base Erosion and Profit Sharing, or Beps, initiative, while Ireland’s tax regime had remained competitive, he said.