The Government is scrambling to control the fallout from the Apple tax ruling after the Court of Justice of the European Union found the computing giant must pay €13 billion to Ireland.
Senior ministers insisted the future risks to Ireland’s Foreign Direct Investment (FDI) model were limited, but some within the Coalition say there are concerns it could add to headwinds for investment in Europe and Ireland from overseas.
Minister for Finance Jack Chambers pushed back against the idea it could make Ireland a less attractive place to invest. “I don’t believe it does, because it relates to historic and legacy tax provision.”
But one Government figure described it as a “blow to the FDI friendliness of Ireland”, coming against a backdrop where the State is facing shortfalls in infrastructure which have resulted in negative decisions for some multinational projects in recent months.
There was concern in some quarters that the decision would have implications in the boardrooms of US companies when deciding where to invest, with Europe facing strong competition from other markets, and companies likely to factor in the possibility of retrospective interventions when making decisions. “Europe needs to be competitive and stop the naval gazing,” said one senior Coalition figure.
Mr Chambers said Ireland is “very much in line with the multilateral system in the EU, within the OECD” and was a “constructive contributor” to international corporation tax reforms introduced in recent years.
[ Apple to take up to €9.1bn charge on Irish tax case after ECJ rulingOpens in new window ]
[ Ireland still facilitating multinational ‘profit shifting’, says EU commissionerOpens in new window ]
However, EU competition commissioner Margrethe Vestager said Ireland and a small group of other European countries appeared to still be “central” to efforts by multinational corporations to move profits to favourable tax jurisdictions. She told The Irish Times that it was “very difficult” to say what implications the court ruling had for the corporate tax payments of other multinationals who may have availed of similar arrangements to Apple in the past.
She added that any future examination of Apple’s current operation in Ireland would be a matter for her successor. Mr Chambers said he was not aware of any other potential investigations into past tax operations of companies in Ireland.
One experienced FDI executive said the ruling was historic and that the direct impact was negligible, but nonetheless deemed the development “not positive from a reputational perspective”. They said it would be a “negative talking point” in a context where Ireland’s offering had become “less attractive on a number of fronts” in recent years, although this would be offset to a degree by the vigour with which Ireland defended the case.
[ Ireland Apple tax case Q&A: What does it mean and where does the €13bn go?Opens in new window ]
The finding also raises the question of what to do with almost €14 billion, when interest is included, that will now flow into the exchequer, with Taoiseach Simon Harris saying the ruling brought “finality” to the saga. He said it would not be used for day-to-day spending, as ministers said it would not change budget arithmetic for next year.
Further talks are expected between Coalition leaders and ministers in the coming weeks, with Mr Harris saying “careful consideration” should be given on how to utilise it for Ireland. Cabinet sources said ministers had agreed not to “fly kites” on what it could be used for in their departments.
A senior source acknowledged that “people will want the €13 billion today”. The opposition was quick to pile pressure on the Government to deploy the cash, as well as heaping criticism on successive administrations for fighting the court case and siding with Apple.
The total amount available to Ireland has come down by €455 million after some was repatriated to other countries’ tax authorities for tax due there in recent years, with a possibility more claims could follow.
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