The decision of the European Commission to appeal the decision on alleged state aid from Ireland to Apple to the European Court of Justice is unfortunate from an Irish viewpoint. Given the outright rejection of the European Commission's case by the EU General Court, it looks unlikely that the appeal will succeed. However, it ensures the issue remains in the spotlight at a time when Ireland is already under pressure on the corporate tax issue. In July, the EU General Court ruled that the commission had erred in its decision that Ireland had offered illegal State aid to Apple, upholding the appeal put forward by the State and Apple. The commission's appeal is likely to take at least another two years. In the meantime, the €14.3 billion lodged by Apple in an escrow account pending a final outcome will remain there.
The arrival of such a large sum into the Irish exchequer would, of course, be welcome. But this looks unlikely. And in the meantime the hearings to come will keep the issue in the news at a time when international corporate tax is already in the spotlight.
Already the country is facing increasing charges of being a “tax haven” and faces longer-term threats to its corporate tax revenue base. The Government’s argument that reforms have been made in the Irish regime in recent years is correct. Yet inevitably further changes in the way big companies are taxed are on the way and this will involve further reforms and almost inevitably some cost for Ireland.
As has been the case for some time, Ireland’s best interests rely on negotiations under the auspices of the OECD coming up with a global solution, though US objections have thrown this into doubt. The OECD process will mean some sacrifices for Ireland. But no agreement and a free-for-all internationally would be worse, particularly for a small country reliant on inward investment. In the meantime, sparks could fly on the corporate tax issue during the US election campaign and the risk of this creating wider trade tensions remains real.