The European Court of Justice is set to issue a ruling on the long-running €13bn tax case between Ireland and the European Commission on September 10.
Finance Minister Jack Chambers will update Cabinet on Ireland’s next steps following the expected ruling.
The Commission is seeking to set aside an earlier ruling that overturned its decision that Apple had underpaid taxes to the value of €13.1bn which was due to the Irish authorities between 2003 and 2014.
In November, the advocate general of the European Court of Justice came out in favour of the EU Commission’s tax order to Apple, adding that judges should back the ruling issued by EU competition regulators to the tech giant in 2016.
In its decision from eight years ago, the European Commission said the €13.1bn related to Irish back taxes which the iPhone maker should pay along with €1.3bn in interest. A lower tribunal had upheld Apple’s challenge.
The Advocate General’s opinion is massively influential and provides a clear indication of how Europe’s highest court will rule in the almost decade-long case. The opinion of Advocate General Giovanni Pitruzzella served as a major blow to the Irish Government and to Apple, which has consistently reiterated its confidence in winning the case.
While the opinion of Mr Pitruzzella is non-binding, the court’s ruling will be.
If the opinion is confirmed by the court, then the case will go back to the General Court for reconsideration. This would represent another significant blow to Ireland and Apple’s defence that the company did not receive special treatment from the Irish state, in breach of EU rules.
However, whatever the General Court decides is ultimately likely to be appealed, meaning the long-running saga could drag on for several more years.
The case is also likely to reignite the debate over Ireland’s tax treatment of multinationals, with Donald Trump just last week reiterating calls for US multinationals who have moved to Ireland in search of lower taxes to return home.
This follows long-standing accusations from US politicians that Ireland is a tax haven, accusations which ultimately led the European Commission to investigate Apple’s tax affairs in Ireland in 2014.
Ireland has long been labelled a haven due to its attractively low corporation tax rate, company incentives and special-purpose vehicles to help multinationals reduce the amount they owe.
In 2016, the European Commission found that Apple received illegal state aid from Ireland over a more than ten-year period between 2003 and 2014, with it being declared that the iPhone maker owed the Irish exchequer more than €13bn in unpaid taxes.
The findings of the investigation focused on two tax rulings from Revenue in 1991 and 2007 – the year the first iPhone was launched.
The investigation also found that Ireland’s tax rules gave Apple an “unfair and select advantage” over other companies in Ireland, allowing the US tech giant to funnel almost all of its European sales through several tax-exempt subsidiaries in its Irish operations.
The commission also declared that Apple held valuable intellectual property (IP) beyond the reach of Ireland’s Revenue Commissioners, with it also finding that these subsidiaries should not have been tax-exempt.
However, both Apple and successive Irish governments have continually argued that the tax was not due, with both parties appealing the decisions to the EU General Court, which overturned the Commission’s finding in a July 2020 ruling.
The EU’s General Court ruled that the European Commission “did not succeed in showing to the requisite legal standard” and that Apple had received tax advantages from Ireland, ruling in favour of the tech giant.
The decision was subsequently appealed to the European Court of Justice by the Commission, which is the highest court in Europe, with the first hearing taking place in May this year.
During the latest appeal case, Apple representatives confirmed that it paid almost €580m in corporate tax to the Irish exchequer between 2003 and 2014, which it claims represented 12.5% of the profits the company generated here.
The tech giant has said the debate over its taxes was never about how much they owe, but where they owe it.