The Commission ruling on Apple handed down by Commissioner Margrethe Verstager is a disgraceful and unedifying abuse of power by the institutions of the EU. Its brazen character is stark but is in character with the soul of the federalist behemoth in Brussels.
I carry no candle for multinational capitalists who preach corporate ethics and posture as philanthropists but ruthlessly avoid corporate taxation by labyrinthine means.
But I do carry a candle for Ireland as an independent sovereign state that has the right to determine its own taxation laws and policies, that has never surrendered that right to the EU, and that was solemnly assured by the other member states of the EU on the re-running of the Lisbon Treaty referendum that that right was not and would not be infringed.
And I heartily object to the wilful abuse of power by the EU Commission and by the preening, posturing Commissioner Verstager that we have witnessed this week.
On any analysis of the EU treaty provisions on “state aid” and on the case law of the ECJ (a tribunal to which I will return), the opinions furnished by the Irish Revenue in 1991 and 2007 did not, and do not, amount to an illicit state aid.
Verstager tellingly said the following:
“The amount of unpaid taxes to be recovered by the Irish authorities would be reduced if other countries were to require Apple to pay more taxes on the profits recorded by Apple Sales International and Apple Operations Europe for this period. This could be the case if they consider, in view of the information revealed through the Commission’s investigation, that Apple’s commercial risks, sales and other activities should have been recorded in their jurisdictions. This is because the taxable profits of Apple Sales International in Ireland would be reduced if profits were recorded and taxed in other countries instead of being recorded in Ireland.
The amount of unpaid taxes to be recovered in Ireland would also be reduced if the US authorities were to require Apple to pay larger amounts of money to their US parent company for this period to finance research and development efforts.”
Thus, it would appear that the illegal state aid allegedly given by Ireland depended on the tax laws and enforcement practices of other states!
This highlights the unlawful, absurd reasoning of Verstager’s ruling. The Irish Revenue in 1991 and 2007 and the Irish state thereafter breached EU law, she alleges, because other states failed to address underpayment of taxes in their own jurisdictions! That is nonsensical. Why not argue that other states gave illicit state aid by not taxing Apple locally?
The cornerstone of Irish corporate tax law was that only profits arising in Ireland were subject to Irish corporation tax in the case of non-resident companies and that profits from technology design and marketing generated outside Ireland cannot be charged with Irish tax under Irish tax law.
The loophole that allows Apple to pay a tiny amount in tax does was not created by an Irish tax law or an Irish implementation practice specially crafted for Apple. It arises from a mismatch in general law and practice as between states. No special favour or concession was given to Apple. The Irish Revenue applied and implemented the general tax law as it was obliged to do, and entitled to do.
The Commission’s press release states clearly that the Apple ruling was motivated by, and to be seen in the context of, a “far reaching strategy” including a “framework to ensure effective taxation where profits are generated and a strategy to re-launch the Common Consolidated Corporate Tax Base for which a fresh proposal is expected later this year”.
That underlines the true nature of the economic mugging of Ireland. We are being softened up for an EU common corporate tax regime in which the larger economies will, as a matter of EU law, tax profits attributable to activities in their countries and which will prohibit smaller countries from being the location of corporations paying tax at local rates on profits made from trading activity in those larger countries.
This strategy of centripetal concentration of power and resources in the EU is what the Franco-German hegemony is all about. The EU periphery is to become a powerless zone of economic control. The Siamese twin of that strategy is the federalist strategy for closer political union.
Although it may well be true that the Franco-German alliance serves the dual purpose of concealing German strength and French weakness simultaneously, we cannot afford to ignore its more ruthless ambitions – just remember Sarkozy’s predatory lunge at our corporate tax regime when we were at our most vulnerable, bailing out German bondholders at the diktat of the Commission.
Dangling a windfall of €13 bn. before our eyes in exchange for acquiescence in such a gross abuse of the “state aid” powers of the Commission reminds one of the bountiful rewards dangled before Grattan’s parliament to accept the Act of Union.
We have got to fight once more for our independence. From now on the Irish state must stop bleating weakly about its determination to be at the heart of European integration. Our interest, as I wrote here last week, is in maintain the EU as it is – a partnership of sovereign states operating substantially at an inter-governmental, inter-state level. Integration is no more in Ireland’s interest today than it was in 1800.
Iveagh House must appreciate that “boxing above our weight” involves throwing the odd punch. With the UK in the EU’s departure lounge, we are entering a brave new world where bravery will matter.
The ECJ is not to be relied on either. It is irremediably ambitious to expand the powers and competences of the EU. It forgets that it is, at bottom, a treaty tribunal without the competence to define its own competences (or as the German Constitutional Court puts it, it lacks the “kompetenz kompetenz”). It will not easily over-rule the Commission.
Have you noticed, by the way, that our own coterie of federalist “fifth columnists”, who are usually so loquacious on EU matters, seems to have been struck dumb on the Apple issue – as if Ireland fighting its own corner against the Commission is somewhat distasteful. Funny that!