Can Ireland remain a tax haven?

Ireland is the favorite destination of overseas tech companies because of the country’s favorable tax rules. Multinational companies can tax their non-US income on favorable terms if they locate their interests in Ireland, so they only have to pay a minimum tax on the income. Due to favorable tax conditions, Apple, Google, Facebook and several other tech giants have also relocated their non-US headquarters to Ireland. However, the European Commission tried to oppose this practice by multinational companies in 2016 when it issued a condemnatory decision against Apple because they claimed the company had agreed with the Irish state on tax terms that other companies would not have had a chance to negotiate, thereby Apple received illegal state aid for more than 10 years. In its decision, the Commission ordered the company to pay € 13.1 billion in unpaid taxes and € 1.2 billion in interest due between 2003 and 2014. However, as expected, both Apple and Ireland appealed against the decision to the General Court of the European Union.

The appellants argued that Apple did not seek or receive any special tax treatment and that its operation and taxation complied in all respects with the Irish laws in force at the time. The Commission, on the other hand, continued to claim that Apple was able to benefit from the decisions of the Irish tax authorities which significantly and artificially reduced the amount of tax that would otherwise be payable. The General Court found the Commission's allegations to be unfounded, as it considered that the Commission had not been able to substantiate credibly its claim that the contested Irish tax assessment constitutes as prohibited state aid and that the tech giant has been granted individual treatment.  

Margarethe Vestager, Executive Vice-President of the European Commission commented on the decision, that they will decide on the next steps after studying the judgment of the General Court. However, they committed to support their objective that for maintaining the fair competition the availability of certain benefits to all competitors is essential. Where this is not ensured, free competition is not guaranteed either, although Member States have the sovereign right to determine their tax policy independently, but in all cases it must be in accordance with EU principles, in particular with state aid rules. The Executive Vice-President stated that they would still not give up their objective, regarding that the Member States should not favor any multinational company operating within the EU, and they will continue their investigations.

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