SO, THAT’S FINALLY that.
After eight years, seemingly endless political wrangling and lots of big paydays for lawyers, Ireland’s Apple tax saga has finally come to an end.
Fickle creatures that we are, attention has already turned to what happens next.
Like most things to do with this case, details have been somewhat confusing.
So here’s some of the most important stuff in one place.
Appeals
For full details on the case, there’s plenty of background available.
The short of it is that the European Commission has been vindicated in its assessment that between 2004 and 2014, Apple should have paid extra Irish tax amounting to €13 billion (plus interest).
The finding, first made in 2016, has finally been backed up by the higher court of the European Court of Justice.
Initially after yesterday’s announcement, there was confusion as to whether Apple could appeal the decision again – seemingly endless legal battles have become somewhat of a trademark of this case.
But no – the government has confirmed this is the end of the line.
“[The] judgement is final and there is no possibility for Ireland or Apple to appeal,” the Department of Finance told The Journal in a statement.
Pretty clear cut.
Escrow fund
So now the key issue – what happens to the giant pot of money?
Shortly after the case first went to court, Apple paid the disputed tax into an ‘escrow fund’.
The disputed money was far too much to put into a bank account. So it was decided that the best thing would be to put it into a fund. The focus would be on preserving the money with low risk investments rather than trying to grow it.
About €14.3 billion initially went into the fund in 2018 – the disputed €13 billion, plus interest.
The fund then steadily dropped in value, falling to €13.4 billion as of the end of 2022.
Some of that was because the low risk assets it was invested in paid relatively poorly at the time.
There were also several payments made to other countries which claimed they were entitled to the tax paid by Apple.
Some €209 million was transferred from the fund to an unnamed country in 2019, followed by a €246 million transaction in 2021.
The government has said no more transfers are expected, so what’s currently in the fund (about €14.1 billion as of last week) is what the Irish State should get.
As the money is a tax payment, it will first go to the Revenue Commissioners.
Then, it will go to the Exchequer, where the government can use it.
This process is expected to take about six months.
Where can the money can go?
There had previously been suggestions that if the Apple tax money went to Ireland, it would have to be spent paying down the national debt.
That was disputed by Finance Minister Jack Chambers, but he also refused to give further detail on what the funds could be spent on.
As the money is a complete one off, it’s unlikely it will be used to fund recurring spending. Such as higher health staff who would have to be paid every year indefinitely.
A more probable home for the money is something like the recently established sovereign wealth fund, which could be used to help pay for things such as infrastructure projects.
But this has still yet to be confirmed, or likely even decided, officially.
Apple’s financial hit
The tech giant released a statement to investors following the judgement to say it would pencil in a €9.1 billion tax charge.
Why it is less than the €14 billion or so initially put into the fund was not answered in Apple’s statement.
Although if Apple has been telling the truth all along, its financial hit is likely even far greater. The company has claimed it already paid $20 billion in tax on the profits routed through Ireland which are under dispute.
If true, the final bill for the US multinational would be significantly larger than previously thought.
Political wrangling
Finally, let’s quickly look at the significance of the final decision for everyone’s favourite aspect – the politics.
In the short term, it’s a win for the European Commission and a blow for the Irish government.
The Commission has been aggressively pursuing multinationals which it claims are dodging taxes and this latest win is arguably the biggest scalp it has claimed.
But it is not clear how much help the ruling will be in other tax cases.
The Commission won here because of a very specific set of circumstances.
It didn’t argue that Apple was in the wrong because it was shifting its profits around. It argued – and won – because it showed that Ireland gave Apple a good deal on tax payments that wasn’t available to other companies.
It’s hard to imagine this will translate to many other of the tax cases the Commission is pursuing.
The Irish government has also changed its tune to emphasise the above point.
In 2016, it talked about the importance of appealing the Apple case to prevent an “intrusion into Irish sovereignty”. This point now appears largely irrelevant. State aid rules are a real thing. Generally, countries can’t cut a deal to give one company a blatant advantage over a rival.
That’s why the government has started talking about how the whole fiasco was a “historical” arrangement which would never happen now.
Ireland’s reputation will likely take a short-term hit among multinationals, who could see the whole affair as having shown up problems in Ireland’s tax code.
But the government is hoping that companies will have confidence when it says this is a historical issue which has now been dealt with.
If they do, Ireland can move forward, with an extra €14 billion burning a hole in its pocket.
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