26 Feb Commissioner Vestager questioned on Apple’s new Irish tax arrangements
Irish MEP Matt Carthy has questioned EU Competition Commissioner Margarethe Vestager regarding Apple’s new tax arrangements in Ireland, and whether they may constitute further illegal state aid to the technology giant by the Irish government.
Addressing Commissioner Vestager during a hearing of the European Parliament’s TAX3 special committee on financial crimes, tax evasion and tax avoidance in Brussels on February 19, Mr Carthy said: “My group in the Parliament, GUE/NGL, published a report last year that examined the post-2015 structure Apple has set up – the structure put in place after your state aid investigation.
“With the assistance of the Irish government, Apple has successfully created a new structure that has allowed it to gain a tax write-off against almost all of its non-US sales profits.
“It has done this by primarily by using a 100% capital allowance for intangible assets, as well as an outflow of capital from Ireland to Jersey through expenditure on intellectual property and debt.
“The chair of the government’s own Fiscal Advisory Council has suggested that Apple’s exploitation of the capital allowance regime for tax purposes may be illegal, because the law rules out using the allowance where the main purpose is for tax avoidance.
“He argued that if the same legal reasoning used in your state aid ruling on Apple and Ireland is applied, Apple is in breach of Irish tax law, and owes Irish Revenue at least 2.5 billion additional euros in unpaid tax annually from the period 2015 onwards.”
Mr Carthy questioned the Commissioner as to the timeframe of the legal challenge against her Apple ruling, and on whether the Commission is also examining whether the new structure Apple has set up in the past few years may amount to more illegal state aid from the Irish government.
Speaking after the hearing, the Irish MEP concluded: “Commissioner Vestager’s remarks today that the law introducing the 100% capital allowance is not ‘selective’ towards specific companies and therefore could not meet the selectivity requirement for launching a state aid case is correct – but it’s not the full story.
“The point is whether Apple’s specific new structure is exploiting the capital allowance regime with the intention of reducing its tax liability in Ireland. If that is the case, then the company is breaking Irish tax law and has not been challenged in any way for doing so by the Irish government.
“This is clearly an issue that requires further examination by both the Irish tax authorities and the EU Commission.”