Political row brewing if Ireland loses its appeal on Apple

Cliff Taylor: Key question is will the State contest the decision again?

The European Commission's 2016 decision to find that Ireland had given Apple a special deal on tax was a big political move, clearly designed to lay down a marker. On Wednesday we will find out if its reasoning stands up to legal scrutiny.

The decision is generally framed as a straight win or lose. But it is worth remembering that a messy middle ground is possible too, where the court agrees with some of the commission’s ruling but not all of it .

Given the complexity of the issues, this is quite possible. Anything but a straight rejection of the commission’s case will immediately raise one thorny political issue – will Ireland appeal to the European Court of Justice?


From the start this has all been intensely political and it will be interesting to see how the EU’s general court deals with this in its judgment.


Remember that the European Commission decision happened three years after Apple chief executive Tim Cook appeared before a US Senate committee where details of the company's tax planning were examined in the kind of detail never seen before. Cook said that Apple's actions were at all times legal,

Over the next couple of years how multinationals pay their tax became big news and the first phase of a reform plan was negotiated at the OECD.

At the same time, the European Commission’s competition arm started a study into tax rulings which a number of member states had given to multinationals, to see whether they gave the companies what is called “selective tax advantage” – in other words they illegally favoured some companies over others. There included two rulings by the Irish Revenue in relation to Apple.

The Apple decision, published in August 2016, was by far the biggest, saying that the company owed Ireland a whopping €13 billion in back tax. The commission looked at the way Apple had set up its business in Europe and specifically at how profits earned all over Europe were allocated to the “head offices” of two companies which were established in Ireland, but did not pay tax here.

The commission, with competition commissioner Margrethe Vestager in the vanguard, went “all in” and concluded that pretty much all of the profit allocated to these head offices should, in fact, have been allocated to the Irish branches of these companies and taxed here.


It does not seem logical to say all the tax on these profits is owed in Ireland – and this was a key point of the Apple appeal.

Let’s look at the possible outcomes of the court case. The first is that Apple and Ireland succeed and that the EU’s general court throws out the commission’s ruling.

You would expect that if this happens, the European Commission would appeal to the European Court of Justice. Ireland would lose any hope of getting the money – unless the initial ruling is overturned. However this scenario is probably the easiest to cope with politically as it avoids the big question – does Ireland appeal again ?

The second possible outcome is that the court rules that the commission was entirely correct and that Apple does owe Ireland €13 billion, or something in that ballpark. In this case Apple would almost certainly appeal. Would Ireland join it in this appeal? We will come back to that in a minute.

The third outcome is some kind of messy middle ground. The decision was based on two linked pillars – one that Ireland gave Apple selective advantage and the second that the way Apple allocated its profits to the head office operations was artificial.

What if the commission finds that the commission was correct in some respects, but not in others? Perhaps it finds that Apple should pay some tax to Ireland, but not the full €13 billion, now sitting in an escrow account.

Given the complexity of the issues, this middle ground outcome is at least as likely as either of the other two.

Either the second or third outcome provides political questions for Ireland. Does the Cabinet back an appeal?

If Apple appeals, then the Government will be under pressure to follow, fearful of the message not doing so would send about its dealings with multinationals and about how the Revenue operated here. If there is some kind of half-way house judgment, then the decision for the Irish government could be even more difficult.


The immediate reaction of all parties is likely to be that they will need some time to read the judgment. The Greens will have a key role.

In 2016, Eamon Ryan argued against an appeal and the party said that doing so would be "immoral."

Backbench Green TD Neasa Hourigan has said that the Government needs to consider the usefulness of an appeal this time around, if Ireland does lose the case. And since the original appeal, the temperature of the debate about corporate tax has increased significantly.

Ireland now accepts that more change is coming – and the Irish tax regime has changed in the meantime. There are still questions about how multinationals pay tax. But they are different questions to the ones back in 2016. An appeal by Ireland if we lose should not be taken for granted. And making a decision on whether to do so could well set the political sparks flying .