Apple case has caused Ireland ‘significant’ reputational damage – Donohoe

The State has suffered "significant" reputational damage from the Apple case despite winning its appeal against the EU's tax ruling, the Minister for Finance Paschal Donohoe has said.

He also said that changes to the international corporate tax code were inevitable and that they would have repercussions for Ireland.

Speaking on a PwC Ireland webinar, Mr Donohoe claimed that while the Republic had been vindicated by the recent European court ruling in relation to Apple, the case had created "political challenges" and "great reputational difficulties" for Ireland.

The EU’s General Court ruled earlier this month that Ireland did not give Apple illegal state aid, overturning a decision by the European Commission four years ago that the tech giant owed the Irish exchequer over €14 billion in back taxes.

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The ruling showed Ireland took the right approach in appealing the decision, Mr Donohoe said.

“Of course, the political challenges that the decision created for us, the great reputational difficulties that it created for Ireland in recent years, mean that while there was a lot of solace in seeing our position vindicated, on the other hand ... the effect on our reputation has been very, very significant over the last number of years,” he said.

"You have to be honest in acknowledging that," Mr Donohoe said. Asked if he had any sense whether Brussels would appeal the court's ruling, the Minister said: "That's very much a matter for the commission."

Reform agenda

He said he would, after next month, be meeting EU commissioner Margrethe Vestager, the bloc's competition commissioner, who brought the case against Apple and Ireland.

He said he had “an awful lot of respect for the work that she is doing” and that the tax reform agenda was not going away.

“This agenda is not going away and big changes are coming ... they are going to have repercussions for Ireland.”

Mr Donohoe said: “We have to find ways in which we can continue to make progress on the agenda that is not going away while respecting the rights of small countries to find ways in which they can be competitive.”

US president Donald Trump’s recent decision to pull out of international talks on a new global tax framework for tech companies has again left Ireland in an awkward position.

The US has also threatened to retaliate if EU states push ahead with plans for a new digital tax.

As host to most of these digital giants, Ireland’s default position is to side with the US but it will need EU states on side should the Brexit process prove tricky.

It has been suggested that the State could lose up to €2 billion of its corporation tax revenue under proposed changes to the rules on how companies pay corporation tax. This corresponds to about a fifth of the €10.9 billion in corporation tax receipts generated last year.