Apple, the paradox of Ireland: an appeal against the EU for non-cash in 13 billion – Il Sole 24 Ore

The Irish Government intends to appeal against the judgment of the European Commission, which has ordered Apple to pay 13 billion (plus interest) in back taxes to Dublin from Brussels and treated as state aid. “I deeply disagree with the decision- said the Irish Finance Minister, Michael Noonan, speaking of the field in the prerogatives of the Member States tax invasion -. I just have to ask the Council of Ministers’ approval to take action before the European Court of Justice. “

The paradox
may seem paradoxical in front revenue, for the Irish exchequer, would amount to the health budget for an entire year. However – besides the fact that they would not “expendable” resources in the electorate but, according to the European rules, they should go to break down the national debt – must consider the future repercussions for the attractiveness of Dublin, real magnet for multinationals (especially American), pushed to settle in the Irish capital primarily from favorable tax regime.

The EU: Apple should pay 13 billion for illegal tax benefits in Ireland. Cook: negative effects on investments and employment

The only Apple employs 5,500 people in Ireland, one in five people in the country working in a multinational company. The contribution of these investments was crucial to the island’s recovery from a severe economic and financial crisis that has forced, in 2010, to ask for a plan of international aid from 67.5 billion.

The charge
The indictment against Dublin and Apple covers two “tax ruling” of 1991 and 2007, tax agreements relating to taxable profits of two Irish company belonging to the group (Apple sales International and Apple Operations Europe) which had formed part of all profits from sales in Europe of the multinational. Thanks to the tax ruling, only a small portion of those profits was taxed with already favorable Irish corporate tax (12.5%); Almost all, however, it was attributed to a “headquarters” that had no real office or employees and whose activities consisted exclusively in occasional (and short: no more than 20 minutes) meeting of the board. By virtue of specific provisions of the Irish tax law, now no longer in force, the profits attributed to headquarters were therefore not subject to tax in any country. In this way the multinational Cupertino, according to the Commission, paid on the profits of Apple Sales International only an effective rate of corporation tax from 1% that of 2003 has gradually dropped to 0.005% in 2014.

SCHEME TARGETS BRUSSELS
The mechanism to reduce the taxes paid by Apple (source: EU Commission)

the consequences for Dublin
the timing of the appeal will not be short, they speak of years. But if in the end the Commission’s argument were to prevail, Dublin would be obliged to collect the arrears, otherwise an infringement procedure for state aid that could culminate in a penalty.

The political fallout could, however, be much more immediate and create tension on whether to lodge an appeal with the independent Alliance, partner of the minority government led by Fine Gael.

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