It seems the European Commission are continuing to ask fresh questions of Ireland on the Apple State Aid case with Commissioner Vestager telling a European Parliament committee yesterday that she did not know when the case would be ready for a decision.
The Financial Times have devoted an article in their ‘The Big Read’ series to the case. See here.
Lots of data published today. From the CSO:
The Central Bank have the latest mortgage arrears statistics. The NTMA issued a six-month T-Bill at a yield of –0.22%.
The Foundation for Fiscal Studies awards an annual prize to recognise outstanding contributors in the area of Irish fiscal policy. A prize of €1,000 will be awarded, together with a commemorative Gold Medal.
Nominations are invited for work completed during the period 2014 and 2015 which has added to the public knowledge or understanding in areas such as taxation, public expenditure and other related fiscal policy topics. These contributions may include research papers, reports, books, book chapters, blog posts, opinion pieces or any other method which has publically provided new and relevant insights into these topics in Ireland.
Further details in relation to eligibility are contained in the attached call for nomination.
Last year’s prize was awarded in September 2015 to Rónán Hickey and Diarmaid Smyth for their paper – ‘The Financial Crisis in Ireland and Government Revenues‘ – which is available to read on the FFS website by following the link.
The authors presented their paper and received their prize from Minister Harris at an FFS event in the Mansion House – details here.
Interested parties should note that the closing date for nominations is 30th April 2016 and that nominations of worthy work are encouraged from any party including the authors themselves. Nominations for the Prize should be made by email to info@fiscal.ie.
The European Commission have responded to the recent interventions by the US Treasury into the tax related state-aid investigations with this letter from Margrethe Vestager to Jack Lew.
On one of the issues raised by the US Treasury the response is as would be expected:
I also hope we agree that the taxation systems of EU Member States entitle them to tax the profits generated by companies operating in their territory, including US companies. The Commission has the duty to ensure that these rules are applied in a non-discriminatory manner by excluding preferential treatment in any form that constitutes incompatible State aid. This does not put into question the US taxation system or go against double taxation treaties concluded by EU Member States.
So we await whether DG Comp are going to conclude that the estimated $120 billion of profits earned by Apple Sales International between 2004 and 2013 were generated in Ireland and so should be taxable in Ireland as opposed to only those profits earned by ASI’s branch in Ireland. The Commission could also conclude that the allocation of profit to ASI’s Irish branch was “wrong” but if that was to be the case then this ongoing exchange of letters would have been wholly disproportionate.
The Commission are also investigating Apple Operations Europe (AOE). AOE also has an Irish branch which undertakes manufacturing of a specialised range of computers. However, ASI is the global hoover of Apple’s profits – it contracts with third-party manufacturers in China (with all agreements signed in the US) and sells on the products to Apple distributors at an “arm’s length price”. The difference between the fee paid to the manufacturer and the price charged to the distributor is considerable. Hence, the estimated $120 billion of profits earned by ASI between 2004 and 2013, with 90 per cent of that occurring in the final four years of the period.
ASI is a subsidiary of AOE so it is possible that the Commission could rule that the profits are taxable in Ireland when they are distributed as a dividend by ASI to AOE. This could potentially bring our 25 per cent Corporation Tax rate into the equation. But that seems very unlikely. The focus will probably be on the trading profits earned by ASI, though if it ends up being a dispute over the profit allocated to ASI’s Irish branch we really will be left wondering what all the excitement was about.
How long more will they keep us waiting? And if a decision is published by DG Comp is there a timeframe within which an appeal to the CJEU must be made?
One of the less notable events over the weekend was the publication of the European Commission’s Country Reports. The report will form the basis for Country-Specific Recommendations (CSRs) which will be published in May. Here is the Country Report on Ireland for the few who may be interested – Ireland: Country Report 2016