Ireland to accuse European Commission of exceeding powers in Apple tax dispute

Dublin says EU's competition watchdog interfered with its sovereignty in penalising tech giant

Michael McHugh
Monday 19 December 2016 08:35
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Ireland is appealing against the order to recoup 13 billion euros and will argue that the Commission is attempting to rewrite Irish tax laws
Ireland is appealing against the order to recoup 13 billion euros and will argue that the Commission is attempting to rewrite Irish tax laws

Ireland's legal challenge to a European Commission ruling that Apple return billions in unpaid taxes will accuse Brussels of exceeding its powers.

The Dublin administration said the EU's competition watchdog had interfered with its sovereignty in finding that the tech giant enjoyed a special deal allowing it to pay 0.0005% tax in 2014 - 50 euro for every one million of profit.

Ireland is appealing against the order to recoup 13 billion euros and will argue that the Commission is attempting to rewrite Irish tax laws and that Apple's Irish subsidiaries paid all tax which was properly due.

A Department of Finance submission said: “The Commission has exceeded its powers and interfered with national tax sovereignty.

“The Commission has no competence, under State aid rules, unilaterally to substitute its own view of the geographic scope and extent of the member state's tax jurisdiction for those of the member state itself.

“The purpose of the State aid rules is to tackle State interventions which confer a selective advantage. The State aid rules by their nature cannot remedy mismatches between tax systems on a global level.”

The Commission's inquiry found that Ireland's treatment of Apple allowed the global brand to avoid taxation on almost all profits generated by sales in the entire European single market.

EU orders Apple to pay up to 13 billion euros tax to Ireland

It said this was because Apple recorded all its sales in Ireland rather than in the countries where the products were sold. Ireland argues the important decisions within the Irish branch offices were made in the US so profits deriving from those decisions could not be attributed to Ireland.

Apple has had a base in Ireland since 1980 and employs 6,000 people.

Ireland has decided to appeal against the order that the iPhone maker pay back taxes. The country has structured its economy around attracting multinationals with its low corporate tax rate but left-wing critics have argued accepting the windfall could bring dramatic changes to national coffers during recovery from a recession.

The Department of Finance in Dublin published its legal arguments on Monday.

It said: “The Commission never clearly explained its State aid theory during the investigation, and the decision contains factual findings on which Ireland never had the chance to comment.

“The Commission breached the duty of good administration by failing to act impartially and in accordance with its duty of care.”

It also said:

  • The Commission had misapplied State Aid law and Apple's Irish subsidiaries did not pay any less tax than was properly due.
  • Europe's reasoning misunderstood Irish law.
  • The Commission failed to act impartially and in accordance with its duty of care.
  • It invoked alleged rules of EU law never previously identified and failed to provide proper reasons for its decision.

PA

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