Apple Tax Case: EU Takes Ireland to Court for Not Claiming Windfall

The European Commission said on Wednesday it was taking Ireland to the European Court of Justice for its failure to recover up to EUR 13 billion ($15.3 billion) of tax due from Apple Inc, a move labelled as "regrettable" by Dublin.

The Commission ordered the US tech giant in August 2016 to pay the unpaid taxes as it ruled the firm had received illegal state aid, one of a number of deals the EU has targeted between multinationals and usually smaller EU states.

"More than one year after the Commission adopted this decision, Ireland has still not recovered the money," EU Competition Commissioner Margrethe Vestager said, adding that Dublin had not even sought a portion of the sum.

"We of course understand that recovery in certain cases may be more complex than in others, and we are always ready to assist. But member states need to make sufficient progress to restore competition," she added.

The Commission said the deadline for Ireland to implement its decision had been January 3 this year and that, until the aid was recovered, the company continued to benefit from an illegal advantage. Apple is appealing the case.

Vestager, who was also announcing a demand for Amazon to pay about 250 million euros in taxes to Luxembourg, declined to comment on possible penalties on Ireland if it were not to comply with an eventual ECJ ruling against it.

Ireland's finance ministry said it had never accepted the Commission's analysis in the Apple state aid decision, but was committed to collecting the money due pending Dublin's own appeal of the ruling.

Ireland, it said, had been in constant contact with the Commission and Apple for more than a year and was close to setting up an escrow account. This would include the hiring of at least one investment manager to handle the fund.

"It is extremely regrettable that the Commission has taken this action, especially in relation to a case with such a large scale recovery amount," the ministry said in a statement.

Vestager told a news conference that in other cases of illegal tax advantages, such as Fiat in Luxembourg, Starbucks in the Netherlands and a Belgian scheme for 35 companies, the money was recovered even before appeals were exhausted. However, the amounts involved were far smaller.

The Commission said that Ireland had made progress on calculating the exact amount due, but was only planning to conclude the work by March 2018 at the earliest.

Ireland, like the Benelux countries, faces criticism from bigger EU states that they are siphoning off tax revenues and the bloc's governments are negotiating reforms.

© Thomson Reuters 2017