Apple and Ireland begin appealing €14.3bn tax bill

Lawyers representing Apple and the Irish Government has begun their arguments in the EU’s lower General Court in an attempt to protect the suspect corporate tax environment.

In 2016, the European Commission ordered the Irish Government to collect back-taxes off Apple to the tune of €14.3 billion, including interest. Apple does not want to pay tax. Ireland does not want to collect it. Europe wants a level playing field. The lawyers are looking forward to nuance to bolster their bank accounts.

During the opening arguments, Apple’s lawyers suggested the European Commission decision “defies reality and common sense,” according to Reuters. Both the iPhone manufacturer and the Irish Government will argue against the decision to tax environment contravenes state aid rules.

Let’s be clear. Ireland is a tax haven. It is facilitating corporate tax avoidance. It is helping corporates collect greater profits without rewarding the societies they strain. Irish Government officials should be embarrassed they are helping technology giants abuse its European partners, the very same European partners which bailed it out of financial doomsday a decade ago.

This is a selfish position, and just at the time when the country is looking to Europe to protect it as Brexit looms large on the horizon.

Some might argue the Irish Government is entitled to charge whatever tax it wants. However, a modern society works because the general public and corporations pay taxes. It pays for roads, schools, hospitals, police officers and postal workers. There are technology giants out there who are asking consumers to strain their wallets further each year and care less about their right to privacy, but they are not willing to contribute to the societies which are fuelling the monstrous profits reported every three months.

With international borders being broken down, much to the distaste of some, irregular taxation policies can be taken advantage of. This is what is happening here. It beggars belief that Ireland can argue the benefits of the single economy, and still maintain this position, weakening the position of partners, depriving them of much needed taxes.

This is not the position the European Commission has taken, but it is the one each of Ireland’s partners in Europe should. Why should Ireland be able to collect all the benefits of Apple’s assaults on the European digital economy when it is citizens of every other nation which is fuelling the iLeader’s growth?

For some, it might sound bizarre that the Irish Government doesn’t want to collect €14.3 billion off Apple, but there are two reasons for this.

Firstly, if the Irish lawyers were not to fight back against the enforced tax run, it is effectively conceded to the assertion that it is a corporate tax haven. The last thing the Irish Government wants to do is admit that it is helping the already richly rewarded residents of Silicon Valley rip-off neighbouring governments further with creative tax strategies.

Secondly, Ireland needs to ensure it is viewed as a friendly corporate-tax environment moving forward if it is to continue to attract corporations to its borders. Ireland doesn’t necessarily have the best talent, it doesn’t have the largest economy and it doesn’t have a local supply chain for manufacturing. It needs a plug to interest the likes of Apple, Facebook, IBM, Intel, Twitter, Pinterest, PayPal and Amazon to house their European HQ in the country.

The value of the technology industry to both the Irish Government and society should not be undervalued. The Irish economy entered severe recession in 2008, and then an economic depression in 2009. The country was in tatters, though it was saved by the technology industry.

Over the last decade, technology giants thrived in the tax haven, creating new jobs directly and indirectly, and continues to be one of the biggest drivers today. Silicon Docks is as important to Dublin as Silicon Valley is to California.

That said, the European Commission does not agree this dynamic should be allowed to continue.

Should the Irish Government continue this favourable tax regime for certain companies, a competitive advantage is offered. The Commission, ably led by Margrethe Vestager, has been tackling anti-competitive business practises for years. If such a monstrous company like Apple is given a competitive advantage, state aid to run riot, start-ups will always be on the back-foot. Competition will likely never emerge, and the consumer will be in a precarious position.

Over the next couple of days, lawyers representing Apple and the Irish Government will argue against the opinion of the European Commission, attempting to overturn an order to collect back-taxes and create a more reasonable tax environment. It will argue that it is perfectly reasonable for it to help Apple bleed the consumer dry and then hide profits from governments who are asking for a fair contribution back to society to pay nurses.

Ireland should be embarrassed.

Europe lets Ireland off the hook after €13bn Apple tax collection

After the Irish government announced it has recovered Apple’s €13 billion tax debt, the European Commission has confirmed it will also drop its lawsuit against the country.

Having begrudgingly collected €13 billion in back taxes from the iLeader, it seems the Irish government has jumped through enough hoops to avoid the courtroom and having to explain why it was willing to help Apple’s tax avoidance strategy.

“In light of the full payment by Apple of the illegal State aid it had received from Ireland, Commissioner Vestager will be proposing to the College of Commissioners the withdrawal of this court action,” Commission spokesman Ricardo Cardoso said in an email statement to Reuters.

While the lawsuit, which was filed on the grounds Apple was receiving illegal tax benefits, was filed last year, Ireland did not collect the first payment until May. That said, the full amount has been collected, currently placed in escrow due to an Irish appeal, and it would seem this is enough for the European Commission.

“While the Government fundamentally disagrees with the Commission’s analysis in the Apple State Aid decision and is seeking an annulment of that decision in the European Courts, as committed members of the European Union, we have always confirmed that we would recover the alleged State Aid,” Irish Finance Minister Paschal Donohoe said.

Ireland is clearly not happy, though you can understand why. In allowing Apple to conduct ‘creative’ accounting practises, the technology industry has thrived in the country. Apple is not the sole reason for this recovery, though it would certainly be a contributing factor. €13 billion is of course a lot of money, though a technology renaissance has meant a lot more to the Irish economy and society. No wonder Ireland was content in keeping Apple happy.

What is always worth remembering is the employment history of European Commission President Jean-Claude Juncker. Prior to bagging the top job in Brussels, Juncker was the 23rd Prime Minister of Luxembourg and also the Minister for Finances, during which time the country turned into a major European centre of corporate tax avoidance. This was also a time Juncker spent a considerable amount of time secretly blocking EU efforts to tackle tax avoidance by multinational corporations.

But at least he’s willing to sue Ireland for facilitating tax avoidance now it suits his agenda.