Vestager says Ireland owed almost all the €13 billion of Apple back-taxes

European competition commissioner Margrethe Vestager has said she believes Apple owes Ireland virtually all of the €13 billion of back-taxes the EU has ruled the Government must collect from the iPhone maker, even if other European countries may lay claim to some of the amount.

Ms Vestager had said previously that other European countries may seek a slice of the EU's largest ever state-aid ruling, issued in August. But during almost two hours of questiong yesterday, she told members of the Oireachtas Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach that tax authorities elsewhere must be able to prove Apple generated taxable profit in their countries to be in a position to put in a claim.

The core of the commission’s decision in August is that the Revenue Commissioners afforded Apple an unfair advantage in two “rulings”, in 1991 and 2007, by allowing the group channel most of the profits from European sales through “head office” divisions of two Apple subsidiaries in Ireland, which were non-resident for tax purposes.

The commission claims that, had Revenue properly looked into these head offices, it would have found they had no physical presence or staff during the period under investigation, between 2003 and 2014, and that minutes of their board meetings do not show that directors performed active or critical roles in managing and controlling Apple intellectual property licences.

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Asked for comment Tuesday, Apple pointed to a statement it released on December 19th, which said “because our products and services are created, designed and engineered in the US, that’s where we pay most of our tax”.

Sufficient progress

The Government appealed the commission’s ruling in November, while Apple filed an appeal in December. The

Department of Finance

has agreed to collect the amount owed and hold it in an escrow account pending the outcome of the court appeals in Europe, a process that could take up to six years. An initial deadline set for almost a month ago to collect the money was missed.

However, Ms Vestager said she is satisfied that Irish authorities are making sufficient progress, as the Revenue Commissioners must align the EU’s formula with Irish tax law in calculating how much is owed, plus interest.

The EU’s competition chief told reporters at a briefing before her Oireachtas committee appearance that she believes the €13 billion tax bill the EU has estimated still stands “in round figures”. Apple’s interest cost on the amount is estimated in some quarters to amount to a further €1.5 billion.

Ms Vestager insisted that the EU is not on a "witch hunt" against US companies, after it also ruled last year that Starbucks had received up to €30 million of illegal tax benefits in the Netherlands. Separate but similar state-aid examinations of of McDonalds' and Amazon's tax affairs in Luxembourg are continuing.

The commissioner also rejected a suggestion that she should be concerned that the commission risks damaging the propsects for overseas investment into Europe with its approach to US companies, including a warning yesterday that it will take action if Facebook and other social media companies do not adopt a stronger stance against fake news.

“No, I’m not,” she said. “Europe is a wonderful place to do business. It’s probably the biggest, richest market in the world, with amazing infrastructure.”

The commission compared the Apple tax “rulings”, which the Revenue Commissioners calls “advanced opinions”, with 19 other Irish instances involving 14 multinational companies in Ireland. It was unable to identify any consistent set of standards in how it approached the rulings.

Ms Vestager said the commission continues to ask questions of Ireland and other European countries on tax rulings, but that there it has no open investigations beyond those in the public domain.

A spokesman for the Department of Finance said: “There is no indication that the other opinions provided to the commission will be the subject of any future State-aid investigations in Ireland.”

Meanwhile, Ms Vestager told the Oireachtas committee she personally doesn’t think that the EU will ever evolve into a “tax union”, even as the commission advances a proposal for members to set up a Consolidated Common Corporate Tax Base (CCCTB).