Cantillon: Don’t spend the €13bn yet: there will be appeals, and maybe a battle over the spoils
about 12 hours ago
The Cabinet finds itself in quite a pickle over whether to appeal the Apple decision. The economics of the situation are that it may not make a huge difference whether it does or not. The politics, of course, are another matter entirely.
Given that Apple has said it will appeal, Ireland is certainly not going to get its hands on the money in the short term. Apple may have to pay it over – though it also remains to be seen how this plays out – but, when it does, it would have to be held in some kind of an escrow account, pending the legal proceedings. And then there is the considerable uncertainty of the legal proceedings and what the European courts will make of the case made by the European Commission.
However, the commission press release opened up another possibility: that other European countries, or even the US, could seek a share of this tax. This would be on the basis that Apple should have paid more tax in the markets where it sold most of its products, rather than booking most of the sales through its Irish subsidiary.
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In an interesting analysis, the Financial Times has calculated that the amount of tax Apple paid in all European markets outside Ireland in the last decade was just €344 million, a fraction of the €13 billion tax bill which the commission says should be levied by Ireland.
To put this in context, the company reported operating profits of €87 billion on sales of €250 billion in Europe in the past decade.
Apple contends that it pays all the tax that is due – and substantial sums in the US where its valuable products were developed. But the commission ruling is an open invitation for revenue authorities elsewhere to start picking through the detail of how the Irish organisation was structured. And every additional euro paid in other European markets – or the US – means one less which would ever be paid in Ireland.
This web of uncertainty over whether we will any see any money and, if so, how much, will not play politically, of course. Irish politics is conducted in black and white and any greyness is carefully ignored.