Ireland has been referred to the European Court of Justice for failing to recover €13bn in illegal state aid from tech giant Apple, the EU’s competition watchdog said.
In an order that reverberated across the Atlantic, the European Commission last year slapped Apple with a multibillion-euro bill, saying Ireland granted unfair deals that reduced the company’s effective corporate tax rate.
The commission’s competition supremo Margrethe Vestager ruled in August 2016 to the effect the Revenue Commissioners had cut sweetheart deals with Apple, in 1991 and in 2007.
The outcome was that by 2014 Apple was paying as little as 0.005% on its European profits, according to the commission’s ruling.
The finding that Ireland had given preferential state aid to Apple rested on two tax rulings for Apple entities incorporated here, Apple Sales International, and Apple Operations Europe.
Margrethe Vestager, the EU’s competition commissioner, said: “Ireland has to recover up to €13bn in illegal state aid from Apple.
“However, more than one year after the commission adopted this decision, Ireland has still not recovered the money, also not in part.
“We of course understand that recovery in certain cases may be more complex than in others, and we are always ready to assist.
“But member states need to make sufficient progress to restore competition.
“That is why we have today decided to refer Ireland to the EU Court for failing to implement our decision.”
The Department of Finance has said Ireland has never accepted the Commission’s analysis in the Apple state aid decision.
They said: “However, we have always been clear that the Government is fully committed to ensuring that recovery of the alleged Apple state aid takes place without delay and has committed significant resources to ensuring this is achieved. Ireland fully respects the rule of law in the European Union.
“That is why it is extremely disappointing that the Commission has taken action at this time against Ireland.
“Irish officials and experts have been engaged in intensive work to ensure that the State complies with all its recovery obligations as soon as possible, and have been in constant contact with the European Commission and Apple on all aspects of this process for over a year.
“It is extremely regrettable that the Commission has taken this action, especially in relation to a case with such a large scale recovery amount. Ireland has made significant progress on this complex issue and is close to the establishment of an escrow fund, in compliance with all relevant Irish constitutional and European Union law.
“The work on the establishment of the escrow fund to deal with the unprecedented recovery amount will continue, notwithstanding the fact that Commission has taken this wholly unnecessary step.”
Also, online retail giant Amazon is facing a bill of at least €250m in back taxes after the European Commission ruled its tax affairs failed to comply with state aid rules.
The European Commission’s ruling, which comes after a three-year investigation, found Luxembourg gave Amazon “illegal tax benefits” under an agreement that saw most of Amazon’s European profits recorded in the country, but not fully taxed.