You would have been hard pushed to miss the recent upset in the taxation camp in the last couple of days as it was announced that a ruling took place on August 30th in relation to the tax arrangements of tech giants Apple in Ireland, the ruling stated that the company had been offered special treatment in Ireland. The European Commissioners will be required to raise a tax assessment on Apple in the coming months as the EU rules that the company’s Irish tax arrangements were illegal under state aid rules. This ruling is expected to come in the next couple of days. It is likely that the company could face a bill for back taxes of up to €13billion. Both the Irish government and Apple’s CEO Tim Cook have insisted that Apple were not in fact offered any special deal on taxation.

Whilst from the outward appearances a gain of this magnitude for Irish finances may seem like a bonus for important spending like hospital, schooling and housing, it has been stated that should all appeals be lost and this cash revert to the Irish state, it has been suggested by experts that it be immediately be used to pay down the national debt instead. Finance Minister Michael Noonan insisted that Ireland would appeal the ruling in order to;

“Defend the integrity of our tax system; to provide tax certainty to business and to challenge the encroachment of EU state aid rules into sovereign member state competence of taxation.”

Whilst Apple CEO Tim Cook has staunchly denied that there was any special treatment given, stating that:

“We now find ourselves in the unusual position of being ordered to retroactively pay additional taxes to a government that says we don’t owe them any more than we’ve already paid. […]  We are committed to Ireland and we plan to continue investing there, growing and serving our customers with the same level of passion and commitment. We firmly believe that the facts and the established legal principles upon which the EU was founded will ultimately prevail.”

As well as stating that Apple are not only the biggest tax payer in Ireland, but the biggest tax payer in the world. The issue that arises here would be the damage that could be done to the business reputation of Ireland should this ruling come to pass and Ireland be ruled to have given illegal state aid to Apple in this case. Whilst the cash would be a boon to our debts, the government will not want to damage our international reputation with top global corporations with Minister Noonan going as far as to say that to collect the tax would be like “eating the seed potatoes” as the ruling could have far reaching implications for EU member states and their taxation systems as well as causing havoc for Ireland which has long been a haven for global companies due to the very nature of the taxation system in place.

Should you require any help or guidance with your own business or tax matters (the October 31st deadline for filing is approaching faster than you might think!) please don’t hesitate to contact us here at DCA Accountants where we will be happy to help.

– – – – –