Le: Aire Airgeadais; Jack Chambers
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This morning, I updated Cabinet on the judgment from the Court of Justice of the European Union (CJEU) in the Apple State aid case.
The full text of the judgement has now been published and my officials are now examining the detailed judgment carefully.
The Irish position has always been that Ireland does not give preferential tax treatment to any companies or taxpayers.
In 2013, the European Commission launched a State aid investigation into Apple’s operations in Ireland and announced its decision in 2016. Both Ireland and Apple rejected the Commission’s decision and appealed it to the General Court of the European Union.
In 2020, the General Court issued its judgement which annulled the Commission’s State aid decision and rejected all lines of reasoning put forward by the Commission.
The Commission then appealed the judgement of the General Court to the CJEU.
Today, in its judgement, the CJEU has set aside the General Court’s judgement from 2020, and has ruled that the Commission’s 2016 decision now stands.
The CJEU has found that the amount of tax paid by Apple was insufficient and that a greater amount of taxation was required to be collected. Ireland will of course respect the findings of the Court regarding the tax due in this case.
In order to comply with the 2016 Decision of the Commission, the alleged State aid was placed by Apple into an Escrow Fund with the proceeds to be released only when there has been a final determination in the European Courts.
Today’s judgment provides the final determination in this case and the process of transferring the assets in the Escrow Fund to Ireland will now commence in the manner prescribed in the Deed governing the operations of the Escrow Fund.
This is a complex process which is expected to take a number of months to conclude.
The government will need to carefully consider what is the best course of action to take with this revenue, and I will be engaging with the party leaders over the coming weeks on the matter.
I need to be clear however, that this will not impact on the parameters already set for Budget 2025. The Summer Economic Statement, published by the government in July, has set out the available package for the Budget and Minister Donohoe and I will deliver Budget 2025 on October 1st in line with those parameters.
Ireland’s corporate tax regime has been built on certainty and predictability for Multinational companies that have made Ireland their home, that have been established here for many decades, and are significant employers. They are also significant contributors to the Exchequer through corporate taxes, and through income taxes paid by the many thousands of our citizens’ who work in good and stable jobs linked to Foreign Direct Investment.
The Apple case involved an issue that is now of historical relevance only; the Revenue opinions date back to 1991 and 2007 and are no longer in force; and Ireland has already introduced changes to the law regarding corporate residence rules and the attribution of profits to branches of non-resident companies operating in the State.
The global tax environment has changed dramatically over the last decade and Ireland has been at the forefront of these developments. We actively contributed to OECD work to address Base Erosion and Profit Shifting arising from mis-matches in tax rules between jurisdictions globally, and have fully implemented the measures of the two Anti-Tax Avoidance Directives agreed at the EU.
Ireland then entered into the OECD Two-Pillar Agreement in October 2021 with the view that an agreed, multi-lateral solution to the challenges of an increasingly digitalised and globalised society would provide much-needed certainty to businesses, following almost a decade of intense debate on global taxation.
Much has been said about Ireland’s corporation tax regime in recent years. However, a few key facts are often left out of the discussion. Ireland’s corporate tax policy, and broader industrial strategy, has consistently been focussed on attracting real, substantive investment and the creation of employment. We have been very successful at this and a low but substantive competitive tax rate is just one small part of the story.
The strengths for which we are admired are clear - the talent of our workforce, the quality of our education system and how it interacts with industry, our place at the heart of Europe, the stability of our political system, and that we are an English speaking, common law jurisdiction with predictable tax policy. The increasingly diverse nature of our workforce – with almost one in five of those working in Ireland not having been born here – is a great asset. Overall, we are seen a trusted and reliable partner, that honours commitments and gets things done.
Ireland has, in recent Finance Acts alone: fully completed the transposition of the Anti-Tax Avoidance Directives (ATAD); introduced legislative defensive measures against listed jurisdictions through enhanced Controlled Foreign Company Rules; updated transfer pricing rules; and introduced legislation for BEPS measures on mandatory disclosure rules. Most recently, in Finance (No.2) Act 2023, Ireland transposed the Minimum Tax Directive (Pillar Two) and legislated for the introduction of defensive measures that apply to outbound payments to jurisdictions listed on the EU list of non-cooperative jurisdictions for tax purposes, as well as zero-tax and no-tax jurisdictions.
We understand that many do not believe that companies are paying the right amount of tax in the right places. We have always said this type of issue can only be resolved globally through a stable global consensus for how and where companies should be taxed.
Ireland continues to advocate for the OECD Two-Pillar solution, and is continuing to work with our international partners to ensure a global solution is implemented which provides for fair and transparent global taxation.