Cantillon: don’t forget about that Apple tax decision

Commission could oblige Ireland to collect a sum running into billions in back tax from Apple

Commissioner for competition Margrethe Vestager: she has written to the US treasury secretary Jack Lew

Commissioner for competition Margrethe Vestager: she has written to the US treasury secretary Jack Lew

 

One tricky issue may hove into view for the new government – or the old one as the talking continues – the European Commission judgment on whether illegal State aid was offered to Apple over a period of years. The decision had been expected late last year, but a request from the commission for more information from Ireland last December delayed the evil day.

Cynics might say this was to hold off the announcement until after the election. After all, the commission delayed publication of its latest economic report on Ireland until the polls closed last Friday at 10pm and is notoriously cautious of getting caught up in local politics.

The US has been ramping up the pressure on Europe,claiming that the commission is unfairly targeting US companies, with treasury secretary Jack Lew leading the charge.

The Financial Times reports today that EU competition commissioner Margrethe Vestager (pictured) has written to Lew, saying the investigations into Apple – and other US companies such as McDonalds – “aim at a proper, non-discriminative, application of tax laws in Europe” and are “based on firm legal ground”. This was a rejection of Lew’s assertion that the action against US firms was “disproportionate”.

Does this mean Vestager is sticking to her guns? Part of this may depend on the support she has across the commission table. Time will tell.

The commission will surely rule against Ireland, but what it will require Ireland to do will tell a lot, and in particular the extent of retrospection.

The stakes are large. It is possible that the commission could oblige Ireland to collect a sum running into billions in back tax from Apple. What then would a caretaker administration decide, or a shaky minority government?

The Coalition had clearly indicated it would appeal any decision that it would seek back tax from Apple to the European courts, potentially delaying the whole thing for years.

This may still happen. But either way, there will be a big call to make for whoever is in charge.

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