The European Commission (EC) will refer the Republic of Ireland to the European Court of Justice for failing to recover back taxes from Apple worth €13 billion.
In 2016, the EC ruled tax incentives Ireland offered Apple were illegal under EU State aid rules, because they allowed Apple to pay substantially less tax than other businesses.
Commenting in an EC statement, Competition Commissioner Margrethe Vestager said: “We of course understand that recovery in certain cases may be more complex than in others, and we are always ready to assist. But member states need to make sufficient progress to restore competition”.
The deadline for Ireland to implement the Commission’s decision on Apple’s tax treatment was 3 January 2017.
In its statement, the EC explained the company continues to benefit from an illegal advantage, noting: “although Ireland has made progress on the calculation of the exact amount of the illegal aid granted to Apple, it is only planning to conclude this work by March 2018 at the earliest.”
“The commission has therefore decided to refer Ireland to the Court of Justice for failure to implement the Commission decision”.
In December Apple and the Irish government outlined their grounds to challenge the EC decision.
Apple’s argument centred on claims the EC disregarded advice from Irish tax experts and deliberately “exploited loopholes” to maximise the fine.
The Irish government also tried to have the ruling reversed, accusing the commission of “exceeding its powers” and “misunderstanding the relevant facts and Irish law”.
In a separate, related, move, the EC called for Luxembourg to recover around €250 million from Amazon after ruling the state granted undue tax benefits to the company.
Vestager said: “Almost three quarters of Amazon’s profits were not taxed. In other words, Amazon was allowed to pay four times less tax than other local companies subject to the same national tax rules. This is illegal under EU state aid rules. Member states cannot give selective tax benefits to multinational groups that are not available to others.”
In August 2016 the US Treasury Department said the European Commission’s investigation into corporate tax breaks threatens to have an “outsized impact” on US companies.