Reuters reports that the Irish government has today agreed to join Apple in appealing the European Commission ruling that the country must recover €13B ($15B) in underpaid tax. While Apple quickly announced its own appeal, it was not certain that Ireland would do the same.
Finance Minister Michael Noonan has insisted Dublin would fight any adverse ruling ever since the European Union began investigating the U.S. tech giant’s Irish tax affairs in 2014, arguing that it had to protect a tax regime that has attracted large numbers of multinational employers. But at an earlier cabinet meeting on Wednesday he failed to persuade a group of independent lawmakers, whose support is vital for the minority government.
The cabinet agreed to meet again today to continue the debate, and will now be asking parliament to authorize the legal challenge …
There had been much debate in Ireland about the decision, many arguing that its generous tax regime is the reason that Apple and other tech companies base themselves in the country. It was felt that agreeing to collect the tax could ultimately lead to a loss of employment as tech companies had less reason to base themselves there.
However, others took the view that the money would make a huge difference to Ireland’s public finances, and that its standard corporation tax of 12.5% was already a strong draw.
At one point it was even possible that the split could bring down the Irish government, but this possibility now seems unlikely.
Ireland’s main opposition party, Fianna Fail, also favours challenging Brussels. The government should therefore easily win parliamentary support.
Apple had piled on the pressure, Tim Cook stating that he hoped the Irish government would ‘do the right thing,’ and stating that failure to appeal would send the wrong message to companies based in Ireland.
At present, both sides – the European Commission and Apple – differ wildly in their accounts of how much tax Apple has paid. Trying to make sense of the competing claims isn’t helped by the fact that one side quotes a percentage, the other a dollar amount. The EC claims that in 2014 Apple paid just 0.005% of its European profits in tax, while Apple says that it paid $400M in tax in the same year. Both claims cannot be true.
It will likely be weeks or months before we see the report on which the EC’s claim is based: in line with normal practice, Apple will have the opportunity to check the report for commercially sensitive information, and to request redactions.
Public perceptions of the battle appear to differ significantly between the U.S. and Europe. As for the appeal itself, a final ruling may yet be years away, assuming the two sides don’t reach a settlement in the meantime.
Image: Reuters/Dado Ruvic