The opinion from the advocate general of the European Court of Justice (ECJ) in relation to the Apple tax case is another twist in this long-running story. Its return to the headlines, and the rejection in the opinion of key points made by the Government and the company, mean that the outcome remains in the balance. Apple may, or may not, owe Ireland more than €13 billion.
Having won their case in the lower European General Court, the latest opinion comes as a setback to the Government and to Apple. The advocate general, Giovanni Pitruzzella, said that the lower court committed a series of errors in its decision, which had overturned the original ruling from the European Commission that the money was owed to Ireland. It remains to be seen if the European Court of Justice takes the same view in its judgment next year, though as the advocate general is a key adviser it may well do so.
If the ECJ does take the same line, then the case will be referred back to the General Court, which will have to look at it afresh. Given the conclusion in the latest opinion that it erred in a number of areas in its earlier 2020 decision, the outcome of this is unpredictable. It all means that the case – dating back to an original European Commission ruling in 2016 – could continue for a few more years. Whichever side loses following a re-evaluation by the lower court, could appeal that decision back to the ECJ.
In the meantime, for Ireland, a question mark will hang over historic aspects of the corporate tax system. Avoiding this scenario and rejecting the charge that a special tax deal was done with Apple was the reason the Government originally decided to support the company’s case that the money was not owed to Ireland.
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Losing the case would be a messy outcome, potentially raising questions over tax payments by other companies in Ireland. It might also well lead other countries where Apple did business to claim that a share of the ¤13 billion plus was owed to them, though the company points out that subsequently it has paid tax on the revenues involved in the US. The irony of course is that the exchequer would get a significant once-off cash boost were the final outcome to favour the commission.
As part of the OECD process of tax reform, many of the more controversial aspects of the Irish corporate tax regime have been phased out since the original commission ruling. This may not stop other countries from continuing to point the finger at Ireland, but it means the Government can argue that things have now changed.
It will have hoped that winning the Apple case and signing up for this OECD programme would have put the controversy about Ireland’s corporate tax system to bed. Instead the ghost of previous tax policy – at least some of which was ill-advised – will now linger on.