There has been no shortage of opinions since the Court of Justice of the European Union (ECJ) ruled definitively last week that Apple must pay Ireland a disputed €13 billion in unpaid tax that has been resting in an escrow account for the best part of a decade, quietly accruing interest. Everyone has an angle – including, of course, me.
That Apple sum is now at about €14 billion with interest, even after some hundreds of millions of euro were paid out since 2019 in “third-country adjustments” to other jurisdictions which claimed tax was owed by Apple.
While it had been generally assumed that quite a significant amount of the cash would go to other countries – because these global tax movements are complex and the final destination for payments, opaque – Irish officials seem to be indicating now that only some minor portion remains outstanding.
So, most of that money will indeed end up in Government coffers. This was not, I think, where most believed this long-running drama would end.
[ Should Ireland give the Apple tax billions to poorer countries?Opens in new window ]
Ireland and Apple had challenged the 2016 determination by the European Commission that Ireland’s special tax arrangements with Apple – very low tax in exchange for significant investment – fell outside EU parameters. The EU’s powerful general court had sided with the challengers in 2020, noting that the commission had fallen short of showing to “the requisite legal standard” that the deal represented illegal state aid.
Some have said Ireland should have taken the money from the start and now should spend, spend, spend it on badly needed infrastructure and/or public services
The appeal by the commission to the ECJ always seemed overly optimistic. At best, I’d have wagered that the ECJ might concede some portion of the argument without entirely overturning it.
For one, Margrethe Vestager, the Danish EU commissioner for competition who made the original 2016 order for Apple to repay the €13 billion in back taxes to Ireland, has lost the majority of the challenges companies have brought against her state aid rulings. Some press reports have noted that her own office had prepared a response to the ECJ that would acknowledge a failure of at least some part of her decision.
Instead, her original judgment was entirely vindicated. Ireland will be forced to accept the judicial lottery win of the century.
The whole saga, though serious in its accusations and its potential implications, has verged on only-in-Ireland farcical in a plot worthy of the great satirist Flann O’Brien. What other country would be “punished” for improper tax arrangements with one of the wealthiest companies in history by being told sternly that it must accept a disputed €13 billion in unpaid tax?
[ Retail group calls for share of Apple fundsOpens in new window ]
What other country would then stubbornly refuse a sum larger than the gross domestic product of many nations, representing more than half Ireland’s total health budget this past year, or more than half again the cost of the Paris Olympics, and take a legal challenge?
As press coverage of the time showed, this baffled pretty much everybody the world over and made Ireland the butt of many jokes. And, after last week’s ruling, what other country would accept such a payment only reluctantly, while continuing to suggest it really didn’t want it?
Responses to the ECJ decision have been all over the place. Some have said it’s a sweeping indictment of Ireland’s tax and inward-investment arrangements with multinationals, others have noted this was in the past when many other countries had similar arrangements (hence the infamous Dutch sandwich sitting alongside the infamous Double Irish tax structures).
Some have said Ireland should have taken the money from the start but now that it has, it should spend, spend, spend it on badly needed infrastructure and/or public services.
Some have said the final ECJ judgment was a shock ruling; others that it should have been expected. Truth can be found in varying degrees in every one of those angles. Truth can be both, not either/or.
[ US, not Ireland, facilitated Apple’s €13bn tax-avoidance structureOpens in new window ]
I’ve always argued that these were international tax schemes which the US government in particular could have ended in a New York minute if they’d blocked US companies from repatriating funds bounced around through such structures. Similarly, global states could have agreed far earlier to limit such systems.
Ireland will be forced to accept the judicial lottery win of the century
It has long suited US politicians (and some presidents) to bluster about the way US multinationals minimise US taxes through such complicated international structures, including putting an uncomfortable spotlight on Ireland. This plays well to US voters. But ultimately they’ve done little to really crack down on US companies in any meaningful way. The US has only recently begun to take up a regulatory stick again after decades of non-use.
Finally, I suspect that while the Government may have issued a bland statement that it would “respect the findings” of the ECJ, it was delighted with the end result. And why not?
[ Apple windfall is not the EuroMillions. We need to get a gripOpens in new window ]
Because while some comment has been to the effect that it’s a shameful slap, could bring long-term harm to Ireland’s reputation and damage foreign direct investment, I’d counter that all that debate happened years back. Much of the worst of the global system was (at least somewhat) addressed.
Meanwhile, multinational tax revenues have continued to rise here. The companies are still here. Now, the final loose ends have been tidied away (thanks, ECJ) and Ireland gets €14 billion.
I imagine some bottles of bubbly have been quietly popped in Leinster House.
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