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GOVERNMENT OFFICIALS HAVE set out how they will take on the European Commission over August’s bombshell ruling ordering the State to collect billions of euros of unpaid taxes from tech giant Apple.
The formal appeal was lodged last month. This morning, the Department of Finance has published an outline of the main arguments it will make in the case on its website.
The appeal
The State’s action is a response to the Commission’s ruling that Apple must pay €13 billion in back-taxes, and its finding that Ireland broke EU state aid rules.
The EU’s competition commissioner, Margrethe Vestager, has argued that the deal Ireland offered Apple allowed the tech firm to pay a corporate tax rate of 1 percent on its European profits in 2003 – down to 0.005 percent in 2014.
Immediately after the Commission ruling the government said it would appeal the decision, on the basis that Apple had paid its taxes to the Irish state in full.
Ministers also cited the potential impact retrospective penalties could have on the country’s future ability to attract foreign direct investment.
Eight arguments
A strongly worded statement released by the Department of Finance sets out eight ways the State will fight the decision.
The Department will argue that the Commission has misapplied State Aid law, that it “misunderstands Irish law”, that it failed to follow required procedures, that it has exceeded its powers “and interfered with national tax sovereignty”, and that it has failed to provide proper reasons for its decision.
The opening paragraph of the Department’s statement asserts that the Commission has “misunderstood the relevant facts and Irish law”:
The Commission Decision of 30 August 2016 (the Decision) wrongly asserts that two Opinions given in 1991 and 2007 by the Irish Revenue Commissioners “renounced” tax revenue that Ireland would have otherwise been entitled to collect from the Irish branches of Apple Sales International (ASI) and Apple Operations Europe (AOE).
The Opinions involved no departure from Irish law. The ordinary tax rules applicable to branches in Ireland of non-resident companies are in Section 25 of the Taxes Consolidation Act 1997. The Opinions simply applied Section 25, which in accordance with the territoriality principle, taxes only the profits attributable to the branch, not the non-Irish profits of the company.
Strong statements
Point five in the Department statement asserts that 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.”
Point seven argues that:
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 Department’s final point contends that the Commission “has manifestly breached its duty to provide a clear and unequivocal statement of reasons in its Decision, in relying simultaneously on grossly divergent factual scenarios, in contradicting itself as to the source of the rule that Ireland is said to have breached, and in suggesting that Ireland granted aid in relation to profits taxable in other jurisdictions”.
Full details of the Department’s statement will be available on its website today.
Speaking on the day the State’s appeal against the Apple ruling was lodged in the General Court of the EU, Finance Minister Michael Noonan reiterated that Ireland’s reputation had been damaged unfairly by the commission’s stance.
“We don’t believe that Apple owed this money in Ireland at all,” Noonan said.
We share the OECD view that whatever they owe they owe to the United States and they paid everything that was due to be paid in Ireland.
Noonan added that Apple is the biggest corporate taxpayer in Ireland on profits generated in the country, where it employs 6,000 people in its Cork campus.
- With reporting from AFP
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Yet they ognore the fact that the ECB ‘exceeded its power’ in blackmailing us into having private banking debt put on our shoulders, and thanks to FG/Labour, the shoulders of our kids and grandkids.
Is it fake news no sir this is real.
@For Connolly: They’ve really come out swinging on this one. Proof if ever it was needed that FF, FG and Labour have nothing but contempt for the Irish people. They throw the plebs a bone just before elections but the other 95% of the time they’re out for themselves and their friends.
The EU do not have power over our tax rate. This must be jealously guarded from interference by the French. The untaxed profits were not generated by Irish resident companies. We’ve no legal or ethical right to the money. Its a bribe. Vestaeger over reached badly and will lose.
As pointed out to you many times, the ruling has nothing to do with our tax rate brinster.
@Awkward Seal: They are looking after the national interest, collect some money now and scare foreign company’s away or do without a small amount and remain a top FDI beneficiary. FDI is worth a lot more than some chump change from Apple. Europe wants its cut and its forcing us to collect for them, throwing us under a bus at the same time, no long term plan for us they just want whats theirs.
@For Connolly:
“the ruling has nothing to do with our tax rate brinster”
That is the most naive thing you have ever posted.
Look at who was targeted. Luxembourg, Holland, Ireland. All countries that successfully encouraged FDI.
The ruling has everything to do with our tax rate.
It must be a governmemt record. 4mths to publish a plan. So what we should take from this is “when the government actually give a f@$k, they can speedily move along”. Amazing stuff.
@For Connolly:They wouldn’t fight as hard for less crowded hospitals or fewer homeless. Patsy politics.
Irexit: but not before we get FG out of government.
Is the new Shinner policy that we want our tax rate dictated by a foreign power?
Seems slightly at odds with your campaign over the decades. Must have spent too much time enjoying Westminster’s patronage.
Another populist sound bite from Jammimg. Factually incorrect of course if he bothered to check the legal implications of the bank guarantee.
EU says apple owe €13 billion plus in tax , government says we will fight the EU on apple behalf, so they don’t pay.
EU says you have to charge for water , government says we will do as the EU says.
Our governments will never be found wanting when the billionaire class needs protecting. Keep the recovery going for the Apple tax dodgers. The homeless can fend for themselves in this brave little “republic” of ours.
This Irish Times article sums up the Apple tax dodging fraud:
The Double Irish scam which the likes of Google use to funnel their profits offshore to avoid tax is technically legal but of course deeply immoral. The double Irish is a 2 company structure where one company pays Intellectual Property royalties to a second company which is registered in ireland but tax resident in some tax haven the Cayman Islands or Bermuda etc.
Apple in contrast used a single company (Single Irish) structure and the IP royalties were moved from one branch of the company to another offshore/HQ branch which was tax resident nowhere. This is the selective benefit that Commission has picked up on and has ordered Apple to pay the €13 billion in back taxes.
Both the double and single Irish are disgusting financial 3 card trickery to allow the corporates to dodge their taxes but only the single Irish is in breach of E.U. law. It looks like our Revenue Commissioners didn’t advise Apple well enough on how to legally avoid their taxes.
Santander case . Ruling will be made on Wednesday. One to watch.
@Paul. You’ve missed my point. Either way I think this case is somewhat win-win. I’m saying they should have fought as hard before for Irish sovereignty.
Kildare street struggles to keep ahold of the reins of power,
Background to the Santander case which my have a huge influence on the Apple case http://www.rte.ie/news/2016/0902/813591-santander-apple/
@LITTLEONE: Well said littleone, let brinster and the rest of the blueshirts explain that one.
@Bobby Phelan: how much does it cost these days to defend the indefensible ?
It’s great they can come together with 8 ways to fight it so fast, pity the homeless didn’t have this level of engagement.
The man who hounded a woman to her death. Thank you Limerick for electing this absolute, total piece of ….
Imagine if he had fought so hard the odious debt he and his party campaigned on so fiercely in 2011..how much better off would our country be?..
Government will fight EU to not receive €13 billion in tax. That’s the way. Things are done now.
We will receive €8 billion this year in Corporate Tax. The majority comes from the top 8 corporate payers. The reason they are here is because we have a low rate and clear rules which we apply to all companies without exception. We need to resist the EU trying to destroy FDI in Ireland.
@Brinster: if trump drops American corporate tax rate all will be lost we will have got nothing from them only a measly 1%.You can bet the Yankee corporations will leave this island in their droves if he does what would you say to that brinster.
@Brinster: 8 billion will be swallowed up by our countrys enormous debt http://www.nationaldebtclocks.org/debtclock/ireland
@Bobby Phelan: Disagree Bobby. Trump’s focus will be on the trillion dollars that US companies have already earned that they are refusing to repatriate. He’ll offer them a sweetheart rate of 15 or 20%. That will be the major change. That won’t affect us. Far more to fear from the EU than the US.
Wouldn’t 13 billion be swallowed just as quickly Bobby? But what about next year’s 8 billion? And the year after that? And the decade after that?
@Bobby, US multinationals have invested huge amount of money and employ thousands of people in this country. Assuming Trump can drop the corporate tax rate to entice companies back ( which is a big assumption ) they wont just leave at the drop of a hat. In any case, id expect it would be years before you would see any companies packing up shop ( if at all ).
@Brinster: thats a 19 billion euro gamble you have made their.What happens when he focuses on the billion dollar us companies Americas debt is around 21 trillion every bit will help.He wants to make America great again!i think this country should take what it can get or chances we could lose everything.I reckon the eu is going to fail anyways.We should go all go back to the eec.Just trading.Maybe learn more about the Nordic countrys they seem to be coping quite well.
@Bobby Phelan: I’d be in favour of returning EU to EEC for sure.
@Brinster: well then fix the hse and housing problems this country cant expect people to live in poverty while others live so well maybe its time you start calling for a wealth tax because we cant carry on like this pretending the country is doing well when its not.Were an extremely wealthy state we need equal wealth distribution.Its eight years now time wages were brought up.enough of this austerity.Go back to the eu tell them we need our debt restructured we cant afford 10 billion interest.Or take the 19 billion ye cant have it all your own way make up your mind.If we are to stay in the eu well then the debt will have to be restructured or we get out.
@Bobby Phelan:
FDI is worth more than 13 billion Bobby. When you take into account payroll taxes, VAT, PAYE etc as well as CT, not to mention capital investment, FDI is worth far far far more than this one off bribe.
@Brinster: apple are not fighting it brinster they said they have no problem paying it.Its our government thats fighting it.We have to tax these companies our dependence is way over board on them at this stage why not tax them 5 or 6 %
@LITTLEONE: I have these magic beans (13 billion) and i want your FDI – Europe.
@Brinster:
Not the total tax argument it’s lame. The employees pay tax on their earnings which are part of the operating costs and therefore profit to the company. Vat is paid by the end consumer. I personally would take the risk of applying the rules fairly to all without exception which does not seem to be what’s happening with apple. Or are they too big for you Brinster?
.
Brinster and how much will they receive in tax from the people? Billions also but they are not fighting the EU to make sure the people don’t pay more when it comes to water. They are in agreement with the EU on that.
Clear rules my ass. We have a corporate tax rate of 12.5%, unless of course you’re a foreign multinational corporation which deliberately isn’t registered anywhere in order to legally avoid taxation. The EU has ruled that Apple was given illegal state aid, in other words the people who work for them effectively subsidised their own jobs and Apple got away with paying a rate of 0.05% on profits. If Apple, and no doubt every other multinational paid the 12.5% we’d at least look like a country which has clear tax policies.
Important article.
An incredulous position to adopt on the face of it although there is an argument that by government adopting this position revenue will accrue more in the long term than is foregone if the argument is successful. But that argument can not be put forth with any great degree of certainty in light of political devlopements on the other side of the Atlantic.
Loyalty to any state is not a core value of global corporate policy so perhaps the government would be better served showing loyalty to the citizens of the republic whom they represent rather than bending our laws to accommodate tax avoidance on a grand scale which ultimately only serves to benefit the shareholders of the particular corporation involved and brings the reputation of our Republic into disrepute.
@Alex Falcone: corporations only loyalty is to their shareholders and their own pockets thats how it works our government is banking on them being loyal to us and staying here on this island.If trump drops corporate tax rate were screwed end of.Thats my opinion
@Bobby Phelan:
Agreed.
Fg do not give a damn about the Irish people,if anyone needs more proof,shame on you.
Yes Michael. We believe you. Not
@Mary Murphy: will this article be shown tomorrow.19 billion including interest while the country rots ff fg yet again selling us out.You would have to be a madman to vote right wing politics!!!!
@Bobby Phelan: and liebour
@Bobby Phelan: I dont think you understand the problem and position we are in, take the money and we could damage our economy in the long term, sure an extra few bob will be great but next year we be in recession. Our country does very well from FDI, rock that boat and another generation could be lost.
@Paul Doyle:
Don’t live your life in fear Paul, apply the rules and apply them fairly.
Noonan is an ignorant pig
It’s all about Dame Enda making it to March to present the bowl of shamrock at the White House. Biffo’s brother Barry will collapse the coalition Fg/FF government in a greed filled grab for power, Coveney and Varadkar will battle it out as the Dame steps down. Everything else is only a sideshow.
The only major fight left in this Fg/Ff coalition government is the fight among themselves on how to divy up things such as the meagre pittance offered to them by the Ontario Pension Fund\Camelot trading as ‘irish Lotto ‘.
As for the European Commission they look on the Irish government as a joke and rightly so….gombeens…..
Incredible this Government is buried under the Neo Liberal ideology l!!! They can’t see the wood from the trees!! The state is not properly funded whatsoever. Homelessness is rampant, mortgage arrears is off the charts!!! Thousands in Emergency accommodation!! Health service crumbling, Government selling out our massive resources of Fish to to private companies while our own Fisherman’s livelihoods are all but dead let’s fight for our Right2change
@Right2change Midwest: we definitely cant keep going the way we are things are getting worse or at the very most stagnant.Debt needs restructuring or out of the eu we shoud go back to the eec.
We need to kick this lot out and move towards socialism. It is truly the only answer.
@Petr Tarasov: Socialism is a fools charter, it never worked in Russia and only led to state corruption.
It’s a sick joke. Where was the governments sense of “patriotism” when bent over to the EU on banking debt. The government on one hand says it does not have funds for public pay restoration but on the other hand are saying these have to spend 10s of millions fighting against the 13+ billion apple back-taxes.
It makes damn all sense, its like something out of the twilight zone.
Corporate puppy’s !! Showing the Irish people there true colours. We live in a corporate society
Not in my name Noonan.
What a sickening and corrupt government we have.
Why doesn’t the government use such harsh language with the troika? They’ll fight for the richest company in the world, but not the citizens they were elected to represent!
Take what the EU says with a pinch of salt , when it suits .. FG, Liebour , FF mantra …
Ireland will do what they are told and like it, and we always do?
JUST TAKE THE GODDANG MONEY! Bloody eejits
Im sure if you overpaid your property tax they wouldnt be fighting tooth and nail to give it back
The EU ruling by Vestager has nothing to do with the EU wanting to see tax justice for Ireland. The drive behind it was to undermine our FDI And calls into question the way we conduct our tax affairs. Lets call it the prologue to a fixed corporate tax rate across Europe. @Bobby normally I would agree that lower corporate tax rates in the US tax rates would spell the beginning of the decline of American FDI into Ireland however this isnt how Us companies work. Ireland is a strategic EMEA based leg into Europe. They cant conduct business in europe from the US due to time zone differences. What i do see happening is consolidation of the european base. So if Google has its headquarters in dublin and multiple offices across europe the smaller offices will go. US companies are structured around their global locations. So Emea, Apac and Americas are 3 very definite entities of a Google they wont get rid of. Doesnt make business sense. The irony is that Vestager in trying to get a slice of irelands pie is actually shooting herself in the foot. What US companies will do is to repatriate profit from Emea and Apac instead of leaving it hanging in an offshore account. Good news for the US. More ready cash for the fed reserve which is 4 trillion in debt due to QE.
The EU wants Ireland to kill its legitimate golden goose. Those people not smart enough to understand this want to take the money.
@alphanautica: yet you want to stay in the big bad eu while there trying to kill us you make no sense at all answer this. in or out alphanautica
@alphanautica: You can bet that Ireland will be the losers at the end of the day when the EU harmonises tax across the remaining 27 states. why do you think the UK want out now.
How much money per year does apple actually contribute to Ireland?
Like if we kept the 13 billion and they fecked off would it cover 5 or 6 years of their financial input to Ireland?
Fair appeal. For once the government has shown it can actually get stuff done. Get the point on bankers and previous incompetence but it’s never the wrong time to do the right thing.
So much for the Lisbon “tax guarantees”.
“Give all your money to the Millionaires” – Phatt Bollard.
If this was Nigeria you could see the logic in all of this, maybe the governmen needs a friendly bank account (mine perhaps) to lodge the13 bn while they decide what to do with it.
have your say