Ireland may face censure over Apple tax dealings

Finding against State would start legal battle that could last years,

In preliminary findings last year, European antitrust authorities said Apple’s tax arrangements were improperly designed to give the iPhone maker a financial boost in exchange for jobs . Photograph:  Peter Kneffel/AP

In preliminary findings last year, European antitrust authorities said Apple’s tax arrangements were improperly designed to give the iPhone maker a financial boost in exchange for jobs . Photograph: Peter Kneffel/AP

 

Ireland will probably face censure from European authorities within months in relation to its tax dealings with Apple, according to sources.

A finding against Ireland will spark a legal battle that may last years, as the government is ready to fight the decision in the European Union Court of Justice, according to sources.

In preliminary findings last year, European antitrust authorities said Apple’s tax arrangements were improperly designed to give the iPhone maker a financial boost in exchange for jobs .

Apple said in 2013 it had paid an effective tax rate of less than 2 per cent in Ireland over the previous ten years.

The EU inquiry comes amid a global crackdown on corporate tax-affairs, with the European Commission estimating that tax avoidance and evasion in the region cost about €1 trillion euros a year.

In a worst-case scenario, Apple may face a $19 billion bill if the government in Dublin ultimately loses and is forced to recoup tax from the company, according to JPMorgan Chase analyst Rod Hall.

“The commission’s initial findings appear to be quite robust,” said Marco Hickey, head of EU, competition and regulated markets at Irish law firm LK Shields,. “Based on that, it would seem that they’re more minded than not to make a negative final decision against Ireland.”

Apple has said in the past it doesn’t use “tax gimmicks.” An Apple spokeswoman wasn’t able to comment on any possible commission finding.

The European commission declined to comment, while the Department of Finance said no final decision has been taken. “The European Commission has not indicated a time line for a decision,” it said in an e-mailed response to questions. “Our position remains that there was no breach of State aid rules in this case.”

After the commission laid out its preliminary findings in June 2014, it asked the Irish government for comments and more information about its dealings with Apple.

Three months ago, EU antitrust commissioner Margrethe Vestager said she would be seeking to conclude shortly the probes into Apple, as well as the tax dealings of Amazon. com . and Starbucks elsewhere in Europe.

- Bloomberg