Apple Case: Ireland´s reaction to getting 13 bln EUR richer

| Image Credits: “Luck of the Irish” by Laura Tancredi

As the European Court of Justice reinstates the 2016 Apple Tax Decision, Ireland´s Minister for Finance, Jack Chambers, has provided an update to the Cabinet. 

The ECJ ruling, which overturns a 2020 decision by the General Court, confirms the European Commission's 2016 finding that Apple’s tax payments in Ireland were insufficient.

Chambers noted that the full text of the judgment has been published, and officials are carefully reviewing the details. Ireland maintains that it does not offer preferential tax treatment to any companies or taxpayers.

CASE BACKGROUND

The case originated in 2013 when the European Commission initiated a State aid investigation into Apple’s operations in Ireland. In 2016, the Commission ruled that Apple had received unfair tax advantages. Both Apple and Ireland rejected this conclusion and appealed to the General Court of the European Union.

In 2020, the General Court annulled the Commission’s decision, siding with Ireland and Apple. However, the European Commission then appealed to the ECJ. In its latest judgment, the ECJ has now set aside the 2020 ruling, reinstating the original decision from 2016. The court found that Apple’s tax contributions were insufficient and that additional tax is owed.

ESCROW FUND AND NEXT STEPS

To comply with the Commission’s 2016 ruling, Apple placed the disputed tax payments into an Escrow Fund, with the proceeds to be released only once the European courts reached a final decision. With the ECJ´s ruling now finalized, the process of transferring the assets in the Escrow Fund to Ireland will begin. This is expected to be a complex procedure that will take several months to complete.

The Irish government will now carefully consider how to handle this substantial revenue. Minister Chambers indicated that discussions with party leaders would take place in the coming weeks to determine the best course of action. He emphasized, however, that this development will not impact the upcoming Budget 2025, as the parameters for that budget have already been established.

INTERNATIONAL TAX REFORM

Chambers also highlighted the broader context of Ireland’s corporate tax policy, emphasizing its long-standing commitment to transparency and fairness. While the Apple case involves historical tax rulings from 1991 and 2007 that are no longer in effect, Ireland has already implemented significant changes to its corporate tax laws. These include reforms to corporate residence rules and profit attribution for non-resident companies.

The Minister further states that Ireland has been at the forefront of international efforts to modernize the global tax system, actively contributing to the OECD’s work on Base Erosion and Profit Shifting (BEPS) and fully implementing the EU’s Anti-Tax Avoidance Directives. In 2021, Ireland joined the OECD's Two-Pillar Agreement to address global taxation challenges in a digitalized economy.

While there has been much debate about Ireland's corporate tax regime, Chambers underscored that its success lies not just in its competitive tax rate but also in the country’s skilled workforce, quality education system, political stability, and strategic position within the European Union. Ireland is widely regarded as a reliable partner that honors its commitments, a reputation that continues to attract foreign investment and multinational corporations.

In recent years, Ireland has enacted a range of tax reforms, including the transposition of the Anti-Tax Avoidance Directives, updates to transfer pricing rules, and legislation for BEPS measures. The Finance (No.2) Act 2023 introduced additional measures, including the Minimum Tax Directive and defensive actions against jurisdictions on the EU list of non-cooperative tax havens.

Chambers concluded by reiterating Ireland’s support for the OECD's Two-Pillar solution, which seeks to establish a global consensus on corporate taxation, ensuring fairness and transparency in the international tax system.

SOURCE/ RECOMMENDED READ: 

• Statement by Minister Chambers on judgment by the Court of Justice of the European Union in the Apple State aid case (www.gov.ie)