Shoppers on Wicklow Street in Dublin, Ireland, Thursday, March 28, 2024.
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A landmark ruling by the European Union's highest court means Ireland will receive 13 billion euros ($14.4 billion) in unpaid taxes from Apple, a windfall that Dublin has fought for years to avoid.
That puts the small EU member state in an unenviable but politically tricky position: Irish lawmakers will be expected to outline how to spend the new money most effectively ahead of a general election, which must be held by next March.
In a ruling by the European Court of Justice (ECJ), said Following the final decision, the EU's highest court ruled on Tuesday that Apple must pay billions of euros in back taxes to Ireland.
The decision was welcomed by tax justice advocates and by the European Union's outgoing competition chief, Margrethe Vestager. Explained He called the announcement a “huge victory” for European citizens.
apple said The Irish government issued a statement expressing disappointment at the verdict. Explained The case is “an issue that is now only of historical relevance.”
The Irish government said in a statement that its position has always been “not to provide preferential tax treatment to any company or taxpayer.” A spokesman added that the government would begin the process of transferring the assets held in the escrow fund to Ireland.
European Union (EU) Antitrust Commissioner Margrethe Vestager speaks to a press conference in Brussels, Belgium, on September 10, 2024, following the European Court's ruling in Apple's case ordering it to pay a record 13 billion euro back taxes to Ireland by EU competition authorities.
Joanna Geron | Reuters
“The Irish government in particular has made a statement to the Irish people and the international community that they do not want to commit this $13 billion. [euros] “It's not ours,” Aidan Regan, an associate professor of political economy at University College Dublin in Ireland, told CNBC by phone.
“They are facing political pressure at home, probably with elections in a couple of months, and now they could have $13 billion in windfall. [euros] “We have huge infrastructure problems and we have a housing crisis,” he continued.
“So I think the Irish government is not really paying attention to what's going on internationally and what the impact of this ruling is on their reputation, but rather thinking about what they're going to say to Irish voters ahead of the elections in just a few weeks.”
When reached for comment, a spokesperson for the Irish Treasury referred CNBC to a written statement from the government.
Profitable decisions
Apple's EU base in Ireland One of the lowest corporate tax rates In a bloc of 27 countries.
Ireland has long maintained that the iPhone maker should not have to repay unpaid taxes to the country, a claim it has contested, saying it could threaten its ability to attract investment from companies looking to pay less tax on their overseas earnings.
But the ECJ's ruling on Tuesday upheld the European Commission's 2016 decision that Ireland had given “unlawful assistance which should be recovered” to the US tech giant.
This decision was made by Ireland Budget Surplus This comes in the billions of euros, thanks in part to strong corporate tax revenues.
Prime Minister Simon Harris waits to arrive for talks with Prime Minister Sir Keir Starmer at Ireland's official state guesthouse, Farmleigh in Dublin, ahead of the Republic of Ireland v England football match in the Irish capital.
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“While this decision is in Ireland's favour and will bring a windfall to the country, it undermines the government's long-standing position that Ireland does not offer preferential tax treatment to taxpayers, businesses or anyone else,” Robert Dever, a tax partner at multinational law firm Pinsent Masons, told CNBC in an email.
“Given the changes to Irish tax law in recent years, in particular the rules on corporate tax residence and the attribution of profits to branches of non-resident companies, any damage to Ireland's international reputation will hopefully be limited,” Dever said.
“The process of transferring to Ireland the assets of the escrow fund established to hold tax and interest owed by Apple pending final judgment will commence following today's judgment but is likely to take several months to complete,” he added.
Tax Cooperation
Alex Cobham, CEO of the Tax Justice Network, which tracks corporate tax evasion, said on Tuesday he welcomed the ECJ's ruling on Apple's tax issues in Ireland.
“However, this ruling only highlights the complete failure of international tax rules to protect the right of countries to tax economic activity within their jurisdiction,” Cobham told CNBC in an email.
“This shows the urgency of the global reform process currently underway through the negotiations of the UN Framework Convention on International Tax Cooperation,” he added.
Shoppers and staff are photographed at an Apple Store in Chongqing, China, on September 10, 2024, inside the store, which features sleek, modern décor and a prominent Apple logo.
Chen Xin | Getty Images
Meanwhile, Chiara Putaturo, an EU tax expert at global poverty charity Oxfam, said on Tuesday the ECJ ruling “exposes the EU's love affair with tax havens and multinational corporations.”
“This ruling cannot just be seen as a victory – we need the EU to close all the loopholes that allow companies to avoid paying their fair share of taxes,” Putaturo said in a statement.
“It's time to stop starving government finances and use the revenue to fight the climate crisis and build hospitals, schools and other services for our people.”
