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EU scraps Ireland lawsuit in Apple ‘state aid’ case

The EU is no longer planning to sue Ireland over its failure to recover €14.3bn (£12.7bn) in back taxes and interest from Apple after the company handed over the money.

However, a continuing legal row may mean Irish coffers never see a cent of the windfall.

The European Commission ruled, in 2016, that Apple owed the sum after finding Dublin guilty of providing illegal state aid to the company in the form of tax incentives.

Then, last year, EU officials launched a lawsuit against Ireland citing delays in the country recovering the back taxes demanded.

They confirmed that case was to be dropped after Ireland’s finance ministry confirmed the tech firm had paid up.

However, Finance Minister Paschal Donohoe confirmed the cash – enough to fund the country’s health budget for a year – would be held in a protected account pending the conclusion of an appeal by Apple and the Irish government against the original state aid ruling.

Irish Finance Minister, Paschal Donohoe with a copy of Ireland's 2018 budget
Paschal Donohoe will not get to spend the windfall if Ireland and Apple win their appeal in the disputed tax case

He said: “While the government fundamentally disagrees with the commission’s analysis in the Apple State Aid decision and is seeking an annulment of that decision in the European Courts, as committed members of the European Union, we have always confirmed that we would recover the alleged state aid.

“We have demonstrated this with the recovery of the alleged state aid which will be held in the Escrow Fund pending the outcome of the appeal process before the European courts.

“This is the largest State Aid recovery at €14.3bn and one of the largest funds of its kind to be established.

“It has taken time to establish the infrastructure and legal framework around the Escrow Fund but this was essential to protect the interests of all parties to the agreement.”

The department, which denies any suggestion of selective tax treatment, admitted it could take several years for the appeals process to be completed.

Margrethe Vestager is the European Commissioner for Competition
Margrethe Vestager, the European Commissioner for Competition, led the EU’s case

It believes the ruling risks damaging overseas investment in the country.

The commission found Apple paid an effective corporate tax rate of just 0.005% on its European profits in 2014 through a sweetheart deal with the Irish authorities.

A commission spokesperson said of the planned lawsuit on Tuesday: “In light of the full payment by Apple of the illegal State aid it had received from Ireland, Commissioner (Margrethe) Vestager will be proposing to the College of Commissioners the withdrawal of this court action.”

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