Apple tax windfall won’t impact Budget, Jack Chambers says as €13bn transfer will take ‘months’

The money will have no impact on Budget 2025 as the parameters for that have been already set, however, a number of other countries may first make claims on the amount.

Meanwhile, it has emerged Ireland has spent €10m so far fighting the case at EU level.

Ireland is required to recover more than €13bn in back taxes from Apple, following a decision of Europe’s top court.

The €13bn has been sitting in an escrow account for the past six years.

The €13bn Apple tax money was set aside after the European Commission had concluded in 2016, following an investigation, that Apple had enjoyed “selective” advantages over other Irish-based companies for decades – in other words, a sweetheart tax deal.

The money is the commission’s estimate of back taxes Apple should previously have paid.

The National Treasury Management Agency (NTMA) and Revenue will now review the escrow fund.

“It’ll be a number of months away, so the NTMA have to carry out an assessment with Revenue and it has to be finalised to what the amount will be,” said Minister Chambers.

He said the Government will set out shortly how many months it will take but declined to say if it would be before Christmas.

Minister Chambers said the Government will then decide what to do with the funds but said the money is a “once-off”.

Public Expenditure Minister Paschal Donohoe insisted Ireland is not a tax haven.

“I remain confident that we have always used tax policy in a way that is fair and implemented by the Revenue Commissioner that is impartial to all taxpayers,” he said.

“I believe and am confident that is the case.”

He said other multinational companies are “very large” employers in Ireland, who “already pay” a large share of Irish tax receipts.

Both ministers insisted there is no “preferential” treatment by the Irish Government of any multinational company.

Minister Donohoe said for Ireland not to have taken legal action to EU level over the windfall several years ago would have shown that “we don’t have confidence in our tax system”.

Minister Chambers said he met with Apple several months ago and said the company was “very committed” to Ireland.

Speaking at the launch of Culture Night 2024 in Dublin Castle, Arts and Culture Minister Catherine Martin said the Government needed to take time to decide what the windfall should be used for.

“The Government absolutely accepts the judgement. I think we need to take the time to study the detail of it,” Minister Martin said.

“When it comes to the money itself, my understanding is that it won’t be handed over for several months yet.

“I think what we have to do in that time is to take time to study that judgement and more importantly take time to consider how best to invest that money,” she added.

Asked if she welcomed the judgement, the minister said it was welcome that “it has finally come to a conclusion”.

“That’s important. In this day and age in 2024, we’re in a very different tax regime here in Ireland and that’s to be welcomed too. But the main thing is that we accept it and the focus now is on how best to invest that money,” she said.

Earlier the Government said that it will “respect the findings” of Europe’s top court, but added: “The Irish position has always been that Ireland does not give preferential tax treatment to any companies or taxpayers.”

An Apple representative said the company was “disappointed” with the decision.

The ruling by the European Court of Justice (ECJ), the EU’s top court, threw out an earlier ruling by a lower court.

The original case was taken by commission competition chief Margrethe Vestager, and was part of a wider drive against profit-shifting by large (mainly US tech) multinationals, using the bloc’s state aid rules.

The Apple crux of the case is the commission’s finding that so-called tax rulings issued by the Irish Revenue Commissioners between 1991 and 2007 allowed the tech giant pay a tax at rates that were as low as 0.005pc in one year. Apple has always said it paid its taxes in full but that they weren’t necessarily owed where the EU thought.

The Irish Government view is that tax rulings are a normal part of business, giving corporations clarity around the tax due on often complex structures, but don’t change what is owed.

Ireland and Apple contested the decision and in 2020 the EU’s General Court ruled in their favour.

The Commission appealed to the higher ECJ, which delivered Tuesday’s ruling.

The ECJ said today that the General Court had erred when it ruled that the Commission had not proved sufficiently that the intellectual property licences held by two companies in the Apple Group, Apple Sales International (ASI) and Apple Operations Europe (AOE) and related profits, generated by sales of Apple products outside the United States, should have been allocated, for tax purposes, to the Irish branches.

The case is a landmark one, both because of the size of the contested tax bill and what it says about where intellectual property-related profits should be booked and taxed.

Last November, the advocate general of the ECJ, Giovanni Pitruzzella, said the 2020 ruling against the EU, won by Apple and Ireland, should be set aside and referred back to the courts “for a new decision on the merits”.

The advocate general is an important official at the ECJ who helps guide complex cases through the court. Their opinions are not binding on judges but they do tend to shape the decisions that get handed down.

However, this time around the ECJ judges opted to effectively throw out the lower court’s reasoning and find in favour of the original case taken by the Commission.

A spokesperson for Apple said it was disappointed at the decision.

“This case has never been about how much tax we pay, but which government we are required to pay it to. We always pay all the taxes we owe wherever we operate and there has never been a special deal,” they said.

“Apple is proud to be an engine of growth and innovation across Europe and around the world, and to consistently be one of the largest taxpayers in the world. The European Commission is trying to retroactively change the rules and ignore that, as required by international tax law, our income was already subject to taxes in the US. We are disappointed with today’s decision as previously the General Court reviewed the facts and categorically annulled this case,” they added.

Ms Vestager described the Court of Justice ruling on the Apple tax case as a “big win for European citizens and tax justice.”

“The Court of Justice confirmed the decision from 2016 by the European Commission,” said Ms Vestager, who is due to step down from her role later this year.

“Ireland granted Apple unlawful aid, which Ireland now has to recover,” she said, adding that the decision made today was final.

“They had artificially lowered taxes paid by Apple in Ireland since 1991. The Commission considered this to be a misapplication of Irish tax rules and ordered Ireland to recover up to €13bn from Apple. These tax rulings attributed the bulk of taxable profits of two Irish subsidiaries of Apple to what was a state-less head office.”

She said the head offices “existed only on paper”.

“As one example, in 2011 one of Apple’s Irish subsidiaries recorded profits of approximately €16bn. Of these, thanks to the tax rulings, only €50m were taxable in Ireland so the subsidiary paid less than €10m of taxes in Ireland in 2011, an effective tax rate of 0.05pc of these overall annual profits,” Ms Vestager said.

She pointed out that the Apple situation could no longer arise today. “Ireland changed corporate tax-resident rules to prevent Irish incorporated companies from being state-less for tax purposes,” she said.

A positive change was that Ireland has become “much more diligent in auditing” tech companies.

“The next thing that will have to happen is that the unpaid taxes that have been in this escrow account will have to be released to the Irish state,” she concluded. “What they will do with it, of course, is completely up to them.”

Labour finance spokesperson Ged Nash said Finance Minister Jack Chambers should next week address the Dáil on the impact the windfall will have on Ireland’s corporation tax system and industrial policy.

Mr Nash said a “legacy” for society and economy should come as a result of the windfall and a State construction company built with the money to avoid future housing shortages.

The Government also should “consider investing substantially in offshore wind to develop the sustainable energy we require”.

“This is a huge opportunity for this country to get things right that we got so badly wrong in the past,” he said.

Health Minister Stephen Donnelly wouldn’t be drawn on how he would spend the €13bn.

Asked on RTÉ’s News At One how he would spend the additional money, Mr Donnelly said it would be a matter for both Government and the Oireachtas to discuss.

“I’d get in an awful lot of trouble if I started making a pitch for that. Let’s remember that this money is one-off funding so it’s not for hiring more doctors or nurses, this is money you could use for capital projects,” he said.

He said any government “could put that kind of money to good use” and options for how it could be used include infrastructure or paying off the national debt.

On whether the legal case was worth fighting, Mr Donnelly said it was important for the country to “send a message” while remaining aligned with the European Union.

“I think Ireland needed to send a very strong message internationally, a strong message to the corporations who are here employing so many people and paying so much tax, and a strong message to those looking to invest in Ireland, that we stand over the decisions made,” he said.

“We are competitive, we need to remain competitive and at the same time we are in line with what the EU is doing in terms of global tax policy.”