EU court to rule on the Apple state aid case
Cantillon: Whoever loses is expected to appeal to the EU’s highest court
The European Commission decided in August 2016 that the US tech giant owed Ireland €13 billion in back taxes. Photograph: Reuters
It’s the court case no one in Ireland really wanted any part of, but they will all gather in Luxembourg next week as the European Union’s second-highest court hands down its ruling on the Apple state aid case.
Almost four years ago, the European Commission decided in August 2016 that the US tech giant owed Ireland €13 billion in back taxes.
It said two Revenue tax opinions – in 1991 and in 2007, the year Apple unveiled the iPhone – gave the US technology giant an unfair and select advantage over other corporate taxpayers.
Interest brought the bill to about €14.3 billion. That money – the largest sum ever enforced by the Commission – was reluctantly collected by the Government in 2018 and put into an escrow account while the inevitable appeal process wends its way through the courts.
Both the Government and Apple were always going to appeal the Commission decision, and oral hearings were heard in the European General Court in Luxembourg last September.
The case centres on whether Revenue allowed Apple to channel most of its European sales through employee-less “head office” elements of two Cork-based business units – known as ASI and AOE – which were non-resident for tax purposes even though the Irish “branches” within the same units were subject to tax in Ireland.
ASI is responsible for the sales and distribution of iPhones and other products outside the United States; AOE is a manufacturing and assembly operation.
The ruling was based on the premise that the valuable intellectual property (IP) behind Apple products lay outside the Irish branches and was controlled in group headquarters in California.
Whatever the outcome next week, it is unlikely the saga will end there. Whoever loses is expected to appeal to the Court of Justice of the European Union, the EU’s highest court. The only certainty appears to be that it will be some time yet before either Ireland Inc or Apple get their hands on that €14.3 billion.