Luxembourg to support Irish appeal over Apple tax ruling
Other states subjected to EU investigation may join case over alleged illegal state aid
Apple and the Government argue that because the iPhone and iPad maker’s products and services are created, designed and engineered in the US, the bulk of the profits of the units are due on the other side of the Atlantic. Photograph: Lucy Nicholson
A number of European Union countries are understood to be considering joining forces with Ireland as it prepares to fight the European Commission’s finding last year that the State gave Apple €13 billion in illegal tax aid.
Luxembourg, whose tax treatment of multinationals including McDonalds and Amazon has also been targeted by EU competition authorities in recent times, plans to make a so-called intervention in support of the Government in its case against the commission, a spokesman for the Grand Duchy’s finance ministry has told The Irish Times.
He declined to say what aspects of Ireland’s appeal to Europe’s General Court that Luxembourg will be weighing in on. Observers expect other countries to become involved in the biggest-ever EU state aid case, including member states that have been subject to investigation into alleged sweetheart deals with major corporations.
However, a spokesman for the finance ministry in the Netherlands, where the commission ruled in 2016 that Starbucks had received up to €30 million of illegal tax benefits, said his country does not plan to make a representation in Ireland’s Apple appeal. Representatives from the finance ministry in France, which has also been in the commission’s sights in recent years, didn’t respond to a request for comment.
Interest in outcome
EU law “allows an EU member state, an EU institution or any person who can prove an interest in the outcome of a case to apply to intervene in a proceedings before the General Court”, said Marco Hickey, head of the EU competition and regulated markets team at law firm LK Shields in Dublin. “The intervener submits a statement in intervention, supporting or opposing the claims of one of the parties, to which the parties may then respond.”
The Government and Apple filed separate appeals last year against the commission’s decision that the Revenue Commissioners afforded Apple an unfair advantage in two “rulings”, in 1991 and 2007, by allowing the group channel most of the income from European sales through “head office” divisions of two Apple subsidiaries in Ireland, which were non-resident for tax purposes.
However, Apple and the Government argue that because the iPhone and iPad maker’s products and services are created, designed and engineered in the US, the bulk of the profits of the units are due on the other side of the Atlantic.
It will take upwards of two years for the appeals before the General Court in Luxembourg are completed. The outcome will almost certainly be appealed before Europe’s top court, the EU Court of Justice.
Mr Hickey said while the State and Apple have filed separate appeals, the General Court may decide to join both cases “for the purposes of the written or oral procedure or of the final judgment”.
A spokesman for the Department of Finance said: “All member states have legal standing to intervene in proceedings that go before the European courts. It is our intention that the best possible case for Ireland is presented to the court on all matters relating to the Apple state aid decision.”
Meanwhile, although an initial deadline was set for the start of the year for Ireland to collect the back taxes, plus interest, from Apple, the spokesman said that “the commission have confirmed that they are satisfied with Ireland’s progress on the issue to date” and that it is “not uncommon for member states to require more time for recovery”.
The department will hold the money in an escrow account pending the outcome of all appeals. The collection process has been complicated by the fact that Revenue must align the EU’s formula with Irish tax law in calculating exactly how much is owed, while agreement is also needed on how the money is managed while it is held in escrow.