Sunday

26th Mar 2017

Ireland vows to fight EU's Apple tax order

  • Ireland accuses the EU commission of overstepping its powers when looking at Irish tax policies towards foreign investors like Apple. (Photo: Reuters)

Ireland has pledged to lodge an appeal against an EU order to collect €13 billion in back taxes from US technology firm Apple.

The Irish department of finance accuses EU regulators of unfairness, exceeding their competence, and attempting to breach Ireland's sovereignty in national tax affairs in its legal analysis published on Monday (19 December).

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It says the EU commission "misunderstood the relevant facts and Irish law".

The European Commission ruled in August that Apple's tax deal with the Irish government was illegal, and is handed out the record penalty to Apple.

The American company reports its profits through Ireland, which charges only for the sales on its own territory, which is Europe's lowest rate.

Back in August, EU competition commissioner Margrethe Vestager called on Apple to pay Irelandthe €13 billion for gross underpayment of tax on profits across Europe from 2003 to 2014.

Vestager's investigation concluded that Apple used two shell companies incorporated in Ireland to split its profits for tax purposes that permit it to report its Europe-wide profits at rates under 1 percent.

Ireland argues that Vestager overstepped her powers when she went against Dublin tax policy and did not only focused on illegal state aid, where the state gives unfair advantage to a company.

"The state aid rules by their nature cannot remedy mismatches between tax systems on a global level," Ireland argues in its legal opinion.

Ireland has charged a record low corporate tax of 12.5 percent to companies for decades and has tolerated a complex network of shell companies to allow foreign companies to pay less on their sales.

Apple's lawyer Bruce Sewell told Reuters the firm was a "convenient target" for the commission, because it generated lots of headlines.

Amid the commission's efforts to crack down on tax havens, Ireland is not alone in having to recover money from foreign companies under deals they have sealed with those companies.

Last year, EU regulators told the Netherlands to recover €30m from Starbucks, while Luxembourg was ordered to claw back a similar amount from Fiat.

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