A ruling on Apple’s tax arrangements in Ireland was made public by The European Commission this month and it could have major implications for future foreign direct investment in the country. Apple was ordered to pay €13 billion in back taxes to Ireland, which could possibly rise to €19 billion with interest. Tax incentives provided to the eighth largest public company in the world were ruled as illegal state aid. Apple employs nearly 6,000 people across Ireland, but it is the amount of money that it has managed to save in taxes that is under the scrutiny of the rest of Europe.

In recent years, Apple, Google, Facebook, Airbnb and a whole host of other tech and pharma companies have set up their EU headquarters in Ireland for a variety of reasons. Ireland has been an EU member state for the past 37 years, we are an English speaking country and have a highly skilled workforce. We also have an excellent standard of living, historical links with the US and Europe and a large network of international air routes.

However it is our tax incentives that really attract the big players from the US and set us apart from the rest of Europe. Many will have heard of the magic number of 12.5% which refers to our corporate tax rate, a key pillar of the government’s tax strategy. In comparison, Luxembourg’s is almost 30%, the Netherlands’ is 25% and the UK’s is 20%. This gives us a decided advantage over other EU Members.

The rest of Europe, most notably France and Germany, are understandably annoyed with this low tax rate because it gives Ireland a great advantage in the competition for foreign direct investment.

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