State hires top UK tax barrister to fight EU case on Apple

The Government has hired one of the most senior tax barristers in Britain to spearhead its defence in relation to the European Commission's ongoing state aid investigation into the corporate tax arrangements in this country of Apple.

The Department of Finance confirmed yesterday it had hired Philip Baker QC, who specialises in taking corporation tax cases to the European Court of Justice (ECJ).

The Government is preparing to take the commission to the ECJ if it finds Apple’s Irish tax arrangements constituted illegal state aid.

Margrethe Vestager, the EU's competition commissioner, is expected to present rulings by May on corporate tax investigations into Apple and Ireland, Starbucks and the Netherlands and the tax affairs of Fiat and Amazon in Luxembourg.

Unfair advantage The Apple investigation is examining whether its Revenue-sanctioned corporate tax arrangements, which saw it avoid €850 million in Irish tax between 2004 and 2008 alone, gave it an unfair advantage over other companies.

“Ireland has already submitted a detailed response to the commission and we are confident that we have a very strong case that no illegal state aid has been granted,” the Government said.

Mr Baker recently advised the UK government at the ECJ in a case related to a proposed financial transaction tax.

He also gave an interview last month to a tax journal in which he suggested Ireland may have to water down plans for a “knowledge box” corporate tax avoidance scheme, also known as a patent box.

Tax breaks

The Minister for Finance, Michael Noonan, announced in October's budget the planned introduction of the knowledge box, which would give multinationals tax breaks on profits from technology researched and developed in Ireland.

Mr Baker told the Journal of International Taxation that the OECD moves to prevent multinationals shifting profits between countries would affect the patent box regimes, and proposed regimes, of four countries including Ireland.

“[The UK, Ireland, Switzerland and Luxembourg] will have to change their patent box regimes so that there is a clear nexus between the tax reduction and the research and development carried out by the company. This will require a substantial reduction in the scope of patent box regimes,” he was quoted as saying.