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'The Commission has exceeded its powers': Government sets out 8 ways it will fight Apple ruling

A strongly-worded statement released by the Department of Finance sets out eight ways the State will fight the decision.

Finance Minister Michael Noonan
Finance Minister Michael Noonan
Image: Niall Carson

GOVERNMENT OFFICIALS HAVE set out how they will take on the European Commission over August’s bombshell ruling ordering the State to collect billions of euros of unpaid taxes from tech giant Apple.

The formal appeal was lodged last month. This morning, the Department of Finance has published an outline of the main arguments it will make in the case on its website.

The appeal 

The State’s action is a response to the Commission’s ruling that Apple must pay €13 billion in back-taxes, and its finding that Ireland broke EU state aid rules.

The EU’s competition commissioner, Margrethe Vestager, has argued that the deal Ireland offered Apple allowed the tech firm to pay a corporate tax rate of 1 percent on its European profits in 2003 – down to 0.005 percent in 2014.

Immediately after the Commission ruling the government said it would appeal the decision, on the basis that Apple had paid its taxes to the Irish state in full.

Ministers also cited the potential impact retrospective penalties could have on the country’s future ability to attract foreign direct investment.

Eight arguments 

A strongly worded statement released by the Department of Finance sets out eight ways the State will fight the decision.

The Department will argue that the Commission has misapplied State Aid law, that it “misunderstands Irish law”, that it failed to follow required procedures, that it has exceeded its powers “and interfered with national tax sovereignty”, and that it has failed to provide proper reasons for its decision.

The opening paragraph of the Department’s statement asserts that the Commission has “misunderstood the relevant facts and Irish law”:

The Commission Decision of 30 August 2016 (the Decision) wrongly asserts that two Opinions given in 1991 and 2007 by the Irish Revenue Commissioners “renounced” tax revenue that Ireland would have otherwise been entitled to collect from the Irish branches of Apple Sales International (ASI) and Apple Operations Europe (AOE).
The Opinions involved no departure from Irish law. The ordinary tax rules applicable to branches in Ireland of non-resident companies are in Section 25 of the Taxes Consolidation Act 1997. The Opinions simply applied Section 25, which in accordance with the territoriality principle, taxes only the profits attributable to the branch, not the non-Irish profits of the company.

Strong statements 

Point five in the Department statement asserts that the Commission “never clearly explained its State aid theory during the Investigation, and the Decision contains factual findings on which Ireland never had the chance to comment. The Commission breached the duty of good administration by failing to act impartially and in accordance with its duty of care.”

Point seven argues that:

The Commission has no competence, under State aid rules, unilaterally to substitute its own view of the geographic scope and extent of the Member State’s tax jurisdiction for those of the Member State itself.

The Department’s final point contends that the Commission “has manifestly breached its duty to provide a clear and unequivocal statement of reasons in its Decision, in relying simultaneously on grossly divergent factual scenarios, in contradicting itself as to the source of the rule that Ireland is said to have breached, and in suggesting that Ireland granted aid in relation to profits taxable in other jurisdictions”.

eight1 Source: Department of Finance

Full details of the Department’s statement will be available on its website today.

Speaking on the day the State’s appeal against the Apple ruling was lodged in the General Court of the EU, Finance Minister Michael Noonan reiterated that Ireland’s reputation had been damaged unfairly by the commission’s stance.

“We don’t believe that Apple owed this money in Ireland at all,” Noonan said.

We share the OECD view that whatever they owe they owe to the United States and they paid everything that was due to be paid in Ireland.

Noonan added that Apple is the biggest corporate taxpayer in Ireland on profits generated in the country, where it employs 6,000 people in its Cork campus.

- With reporting from AFP 

Read: Margrethe Vestager, scourge of Apple, is going after more multinationals >

Read: MEPs laugh at Jean-Claude Juncker when he says Europe is fighting tax evasion >

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