In what was a big surprise to many, the ECJ has today ruled in favour of the European Commission in the Apple tax case and determined that Ireland was in breach of State Aid rules.
As a result of this binding ruling, which overturns the 2020 General Court verdict, Apple must pay over €13bn in taxes to the Irish Exchequer. This money is currently sitting in escrow. It’s possible that ultimately some of this tax will be allocated to other jurisdictions.
Today’s decision is a blow to Ireland. It had been expected, at worst, that the case would have been sent back to the General Court for a second hearing. Many had even expected that the ECJ would have gone against the Advocate General opinion issued in November 2023, bringing closure to the case in favour of Apple and Ireland. Few had expected today’s decision, which also brings closure to the case but which is potentially damaging from a reputational perspective.
Of course this case relates to a very different era; tax legislation everywhere has been significantly overhauled since then. There is also the point that it was nuances of the US tax system that facilitated many of the structures that have long since been closed down. However “if you’re explaining you’re losing” and today’s decision will further fuel those that continue to accuse Ireland of having tax haven status.
While both Apple and Ireland vigorously defended the European Commission assessments from the outset, there is no question that Ireland’s reputation suffered as a result of the ongoing case. Today’s verdict had the ability to restore that reputation; unfortunately the verdict went the other way.
In terms of long term impact on FDI in Ireland, in our view today's ruling should not have an adverse impact. There is wide acknowledgement that the case relates to historic periods and that things have moved on significantly since the periods to which this case relates. Indeed the OCED has openly endorsed the transparency of our tax regime. So while a temporary blow to Ireland, it is something from which we should quickly recover.
