The Irish Apple Tax Disaster

On August 30, 2016, the European Commission (EC) concluded that Ireland and Apple, Inc. (Apple) had violated the European Union (EU) State Aid rules when Ireland granted tax advantages to Apple; therefore, the EC ordered the Irish government to collect up to €13 billion Euros ($15.3 billion USD) in tax underpayments from Apple for the 2003 to 2014 period (EC Press Release 2016). This was the largest sum in history that the EC had ever charged a company; the previous record was set by EDP Energy in 2015 when it was charged €1.4 billion ($1.7 billion USD) (Simon-Lewis 2017).On October 4, 2017, the EC announced that it was taking Ireland to the European Court of Justice for its failure to collect the €13 billion Euros ($15.3 billion USD) of tax due from Apple as a result of the 2016 EC decision. The EC concluded that Ireland had missed the deadline of January 3, 2017 for collecting the tax, and until the tax was recovered, Apple continued to benefit from an unfair advantage. Ireland’s Finance Ministry said that Ireland had never accepted the EC’s decision, but was committed to collecting the tax due pending Ireland’s own appeal of the ruling. Apple appealed the case (Blenkinsop 2017).The EU had granted concessions to Ireland in exchange for Ireland accepting the Treaty of Lisbon. One of these concessions was allowing Ireland to retain competence over its own tax laws (Brugha 2009). This meant that Ireland was not required to obtain EC approval in order to grant State Aid to Apple or to any other company. It appeared that the EC was ignoring the protocol it had granted to Ireland in exchange for the latter’s vote in favor of the Treaty of Lisbon