Decision of the General Court of the European Union in the Apple Case: Statements Dail Éireann — 2020-07-24 ============================================================ Paschal Donohoe (FG), Dublin Central I congratulate the Leas-Cheann Comhairle on her election. I welcome the opportunity to comment on the recent judgment of the General Court of the European Union. It was always important that the State challenged this decision and did not accept the Commission's reasoning, as some in this House and elsewhere wanted. The decision of the previous Government to appeal the Commission decision was based on our strong conviction that Ireland did not give favourable tax treatment to Apple and that no state aid was provided, with the full amount of tax paid by the Irish branches of the relevant Apple companies. Ireland does not do special deals with individual taxpayers and the court judgment supports our position on these points. In particular, I emphasise some observations relating to the case in response to the public narrative that has developed in the days since the announcement of the judgment. First, the court annulled the Commission's primary line of reasoning, which claimed that the profits derived from the Apple intellectual property licences should have been allocated to the Irish branches of Apple Sales International, ASI, and Apple Operations Europe, AOE, and the profits of that intellectual property taxed in Ireland. The Commission had tried at that point to rewrite Irish law by arguing the Revenue Commissioner should tax all of the worldwide profits of ASI and AOE in Ireland. There was no basis in Irish law for the approach asserted by the Commission. The decision misrepresented the activities of those two Irish branches. The branches carried out functions and there was no allocation that would have justified the Apple intellectual property licences in those branches. These are the facts as set out by the European General Court. Any appeal will be based on a point of law and not on the facts of the case. Over the past week, and ever since we decided to appeal the Commission decision, some have questioned Ireland's stance in this regard. However, the judgment of the court has fully endorsed both our decision to appeal and the underlying principles and transparency of our corporate tax regime. In particular, the judgment will reaffirm certainty in our taxation regime and that it can be relied upon as a fair and appropriate system. If the decision had gone unchallenged, businesses operating in Ireland, either domestic or foreign-owned, would have had no certainty that decisions being made and the prevailing Irish tax law at the time could not be contested a quarter of a century later. This would have constituted a serious and material business risk which, in my view, would have had a chilling effect on investment and employment decisions. Ultimately, this case related to a mismatch in international tax law. Two branches were incorporated in Ireland but not resident in Ireland for tax purposes as they were managed and controlled in the United States. The significant value creation was in the US but the companies were not resident in the US for tax purposes as they were not incorporated in the US. There was thus a significant mismatch between the Irish and American tax systems but it is clear, and it has been said previously, that state aid law does not constitute an appropriate mechanism for addressing the gaps that exist in the international tax system. Indeed, this case involves an issue that is now of historical relevance only. The opinions date back to 1991 and 2007. They are no longer in force. Ireland has already introduced changes to the law to deal with the mismatch of Irish and US rules regarding company residence. I would like to address next some of the issues circulating because of the decision and Ireland's tax system more generally. It is important to makes these points as they do not seem to be well understood or appreciated. This case did have a significant reputational impact on Ireland and on our corporate tax system. The annulment of the decision should redress some of the reputational outcomes of the decision. It is unfortunate to hear the arguments that were debunked in this judgment still given credence over the past week. There has been inappropriate and unfair labelling of our tax system, including by some Members of this House, because of our low tax rate. These assertions are untrue and unhelpful. As this case involves an issue that is now of historical relevance, some commentary has failed to acknowledge the changes that have been made not only to our tax system but to the international tax system over the past decade. Ireland is committed to having a corporate system that meets international standards. Ireland's Corporation Tax Roadmap, which I published last year, provides ample evidence of the significant actions we have taken to date, and will continue to take. I firmly believe that the changes agreed to date internationally will significantly limit the ability of multinationals to engage in aggressive tax planning. Further changes were made to the Irish corporation tax code in the Finance Act 2019. We have been successful in attracting investment into Ireland and we fully tax companies on the profits attributable to activity that takes place in Ireland. Where companies have in the past been able to use mismatches in Irish and US law to book profits in zero tax countries, we have taken action unilaterally to amend our tax code. US tax reform should also limit the effectiveness of any future aggressive tax planning schemes that could be designed by multinational companies or organisations. We are a leader in tax transparency and one of only 24 jurisdictions worldwide to be recognised as fully compliant with international best practice. The best way to ensure tax is paid in the right place is to ensure that all countries have the necessary information to risk-assess and to audit companies. Our openness and transparency are designed to ensure that we facilitate the exchange of all relevant information with other tax authorities. The breadth of these changes can be seen when comparing Ireland's effective rate of corporation tax with our headline rate of 12.5%. At the end of June, Revenue published entity-level data on effective tax rates for 2018, showing internationally owned multinational enterprises in Ireland report an effective tax rate of 11.6%, with the top ten companies with a rate of 11.3%. This is further enforced by a recent OECD study and, for Ireland, the figures show an average effective tax rate of 12%. --- Source: Houses of the Oireachtas. Licensed under CC BY 4.0 (https://creativecommons.org/licenses/by/4.0/). The Official Report is revised after first publication; the fetch timestamp below identifies the version quoted. Record URI: https://data.oireachtas.ie/akn/ie/debateRecord/dail/2020-07-24/debate/main Retrieved: 2026-08-14T04:48:28+00:00 Sitting date: 2020-07-24