What Can We Learn from the Apple Tax Case?

Apple Tax Case

Xeinadin Group



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The long-running tax saga pitting Apple and the Irish government in one corner against the EU’s antitrust authorities in the other has taken a fresh twist.

The EU’s advocate general Giovanni Pitruzzella has recommended that the European Court of Justice, the bloc’s highest court, overturn the 2020 ruling that threw out the €13bn case against Apple for underpayment of corporation tax in Ireland between 2004 and 2014.

In the original case brought in 2016, it was found that the Irish government had broken EU antitrust laws with the favourable tax conditions it offered Apple subsidiaries in Ireland, allowing the company to channel billions in profits earned across the bloc through the company to slash its corporate tax liabilities.

Time to simplify corporation tax

While the tech giant again faces the prospect of being ordered eventually to pay the bill, the case is likely to rumble on for several more years. But this new chapter again shines the spotlight on Ireland’s corporate tax policies in a not altogether favourable light.

It should be noted that Ireland’s policy approach to corporate taxation, especially in relation to overseas nationals, is different now from what it was 10 years ago prior to the Apple case being brought. While the government is still at pains to position the country’s tax regime as ‘competitive, the days of the so-called ‘sweetheart’ tax deals with global conglomerates are over.

There is also a wider recognition that Ireland’s hot streak raking in billions in tax receipts from its globally low corporate tax rates is coming to an inevitable end. And, truth be told, this should end up being a positive for all concerned.

The EU advocate general’s intervention comes a matter of weeks after an EU-sponsored report labelled Ireland one of the world’s biggest tax havens. Ireland’s economy has benefitted enormously from its business-friendly tax approach. But it’s an approach that looks increasingly untenable in the context of the country’s international commitments.

While some might believe that the sovereign ability of individual nations to determine their own tax affairs is sacrosanct, the realities of a globalised economy make that wishful thinking. One country’s gain due to low tax policy is another country’s loss. It gives multinational corporations the opportunity to engage in practices like profit shifting to minimise tax receipts, creating an uneven playing field. These things create barriers to trade and cooperation.

The case also highlights the depth of legal complexity that trans-border tax arrangements are mired in, flagging the need for more cooperation just to make life easier for everyone, national jurisdictions and corporations alike. The fact that this case has dragged on for seven years and will surely now extend to a decade says it all. How much will it end up costing all parties involved?

For its part, Apple contends that it has already paid some $20bn in tax in the US on the same profits that are under the microscope in Ireland. For all the tax avoidance opportunities it opens up, the painfully opaque nature of international tax administration can be a burden for corporations, too. 

These are all good reasons why the OECD’s push to get hundreds of countries to sign up to a coordinated approach to corporation tax – something Ireland has signed up to – represents such an important step. Sovereign jurisprudence and enormous potential tax receipts for those countries prepared to roll the dice aside, will make taxation simpler for everyone.


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