Apple tax: Brussels ups the ante

The decision of the European Commission to refer Ireland to the European Court of Justice in relation to the payment of Apple's tax bill has escalated tensions sharply between Dublin and Brussels. By taking this course, Brussels has upped the ante significantly. There must be questions about why it has done so, as arrangements to collect the money are clearly advancing, albeit not as quickly as the commission would like. There appears to be an element of grandstanding here from the commission which risks inflicting further damage on Ireland.

A lot now hangs not only on what the European Court of Justice says in this case – if indeed its ruling is still relevant by the time it is delivered – but also on what the European courts decide about the appeals from Apple and Ireland on the original decision. The commission's original ruling that Apple owed Ireland more than €13 billion in back tax was based on an interpretation of state aid rules which Ireland rejects.

Last year’s decision was a landmark ruling, unprecedented in its scale. The appeals process could take years and in the meantime Ireland must collect the money and hold it in an escrow account.

Ireland’s case is that this is complicated, that a lot of money is involved and that calculating Apple’s exact liability under the ruling and setting up a mechanism to collect it take time. The commission says that a year on not a cent has been collected. While we are not privy to the detail of what has passed between Dublin and Brussels, the annoyance in Government here at the commission’s latest move was palpable.

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Deteriorating relations between Dublin and Brussels are not welcome. And there is a wider context here, both in relation to the EU moves on corporate tax and the bigger question about whether Brussels is using state aid rules to interfere in an area which should be under national control. Ireland looks to be facing some battles here in the months ahead – an unwelcome situation when we rely on Brussels to help limit the economic and political damage of Brexit.