The European Union (EU) competition commissioner, Margrethe Vestager, stated that Ireland, among a handful of other European nations, was evidently still a preferred location for international corporations seeking more palatable tax circumstances.
In a landmark ruling this Tuesday, the EU’s highest judiciary body declared that tech titan, Apple, was indeed accountable to Ireland for billions in unpaid taxes of yesteryears, dating back to the prior tax set up, which was beneficial to the company’s Irish operations over several years.
Regarded as a tremendous victory by Vestager, she was intrinsically involved in the Apple tax dispute. This verdict follows an eight-year-old directive from the European Commission that ordered Apple to settle a €13 billion tax liability to Ireland. The commission argued that Apple’s tax agreement was tantamount to illicit financial aid from the State. This decision was subsequently challenged by both Apple and the Irish government.
Close of this week, the final ruling by the EU court annulled the initially successful challenge, resulting in a sure victory for the commission and a significant blow to both Apple and the Irish government.
Vestager, during a media briefing in Brussels, announced that the contentious €13 billion, which was secured in an escrow account during the litigation, would ultimately be released to the Irish State.
She went on to elaborate that the tax model previously utilised by Apple in Ireland fostered the creation of a “nominally existent corporate head office” – one that was physically non-existent and simply on paper, devoid of any operational elements. This subsequently led to Apple’s tax contribution being a meagre 0.05% in 2011 on the earnings of one of its Irish subsidiaries.
Vestager mentioned her knowledge of some EU nations contemplating claims to some parts of the €13 billion tax bill, although she had since disconnected from that discourse.
As it currently stands, this isn’t something we’re involved in. The immediate next step would be to release the unpaid taxes from the escrow account to the Irish State, and how they manage it will be completely their discretion,” she stated.
Despite global tax reforms in the recent past, the Danish official expressed that corporations are still actively involved in aggressive tax planning. Ireland, Netherlands, Belgium and Luxembourg stand out as the four EU nations who continually play a crucial role in enabling multinationals to shift profits.
Ms Vestager, who is readying to conclude her role by year-end after two consecutive terms in office, stated that the court siding with the commission was an unexpected outcome. “The victory moved me to tears, as it’s vital to remind European taxpayers that tax justice can sometimes prevail,” she remarked.
She further commented, “When large corporations evade their rightful contribution, the essential services and infrastructure of our societies, such as education and health systems, do not receive adequate funding.”
Regarding the ongoing state aid cases related to tax, she revealed that the EU commission, being the executive wing of the EU, had more that would need to be followed up by her successor in the competition commissioner role.
In an attempt to expedite their investigations into large-scale corporations, Ms Vestager said that EU competition officials were striving to increase the speed of their work. “Naturally, we’ll always be a step behind, as breaking the law happens in an instant, while proving the violation takes time,” she explained.
The judgment received by the European Court of Justice marks a significant victory for Ms Vestager, concluding her second term as commissioner on a high note, despite several setbacks in court for similar cases in her tenure.