Ireland to present ‘very robust’ Apple case defence – Donohoe

Minister has not yet decided whether to introduce carbon tax increase in budget

Paschal Donohoe: said the threat of a disorderly Brexit posed the biggest risk to the Irish and wider European economy. Photograph: Jonathan Brady/PA Wire

Paschal Donohoe: said the threat of a disorderly Brexit posed the biggest risk to the Irish and wider European economy. Photograph: Jonathan Brady/PA Wire

 

Minister for Finance Paschal Donohoe has said the Government will be putting forward a “very robust defence” as it begins a court battle next week against the European Commission’s ruling that iPhone maker Apple received €13 billion of illegal tax aid from the State.

Speaking to reporters on Friday as EU finance ministers gathered for two days of informal meetings in Helsinki, Mr Donohoe indicated he was confident in the Government’s case as the EU’s second-highest court, the General Court in Luxembourg, hears arguments next Tuesday and Wednesday. Both the Government and Apple are challenging the commission’s August 2016 decision.

“We absolutely respect the judicial process that will be under way, but we will be putting forward a very robust and positive case on it,” Mr Donohoe said.

The commission’s case is that Revenue gave Apple an unfair advantage in two “rulings” in 1991 and 2007, which allowed the US technology giant to channel most of its European sale through “head office” divisions of two group subsidiaries in Ireland, which were non-resident for tax purposes.

The Government and Apple argue that because Apple’s products and services are created, designed and engineered in the US, the bulk of the profits of the units were due on the other side of the Atlantic.

Still, the State last year complied with a commission order that it collect €14.3 billion from Apple, including interest on the original €13 billion amount, and put it into escrow, pending the outcome of appeals against the 2016 decision.

Any ruling from the General Court is likely to be appealed before the Court of Justice of the European Union, the EU’s highest court.

Carbon tax

Meanwhile, Mr Donohoe said he had not yet decided whether to proceed with a carbon tax increase in Budget 2020 next month. Department of Finance officials have suggested that carbon tax be increased from €10 to €20 per tonne next year as part of a trajectory to reach €80 per tonne by 2030.

“We are now considering options in relation to [whether] this is a move that can made, and if it is made, how we will deal with the revenue that would emerge from it,” the Minister said.

“Firstly, I have to consider the decision in light of the effect that Brexit may have on our economy.”

Secondly, he said that if the argument for increasing carbon tax is to be won, “we have to relate the proceeds from tax change to how we change behaviour in the economy”, he said.

Finland, current holder of the EU presidency, is pressing finance ministers across the union at the informal gathering to put climate change at the heart of their budget plans. Climate change emerged as a priority issue across the European electorate in parliamentary elections in May.

Meanwhile, Mr Donohoe said that the threat of a disorderly Brexit posed the biggest risk to the Irish and wider European economy.

He said Ireland would be “very supportive of an extension” to UK’s October 31st EU exit deadline, although he agreed with the European Council view that if one were to be granted, it should only be given for a specific reason.