Apple has won its tax battle – but the war is far from over

The case put Ireland in the uncomfortable, even comedic, position of fighting an effort by Brussels to hand it funds to help businesses, workers and its health service, writes James Moore

EU competition commissioner Margrethe Vestager has led efforts to bring multinationals to heel (EPA)

Taxing times for exchequers have been made more taxing by a European court throwing out a demand that Apple pay €13bn (£11.8bn) in back taxes.

The EU’s general court, its second highest, ruled that the European Commission was “wrong to declare” Dublin had granted Apple “a selective economic advantage and, by extension, state aid” through arrangements it entered into with the tech giant that let the latter get away with the equivalent of paying tuppence ha’penny into Irish state coffers on profits made in that country and overseas.

The ruling also said that the Commission “did not succeed in showing to the requisite legal standard that there was an advantage”.

Which, of course, doesn’t necessarily mean that there wasn’t one.

This can’t be seen as anything other than a blow to attempts by Brussels to rein in multinationals’ use of sophisticated and cynical tactics to avoid tax in collusion with certain EU governments.

In May, the European Commission said it believed that features of the tax systems in Cyprus, Hungary, Luxembourg, Malta and the Netherlands, as well as Ireland, were being used by companies to engage in “aggressive tax planning” with a view to substantially lowering their bills.

Notwithstanding the ruling, the EC’s competition commissioner Margrethe Vestager seems minded to continue her campaign aimed at correcting this, even to the extent of getting creative with treaties and provisions that haven’t previously been called upon.

Some of the so named member states can hardly complain given how creative they’ve got when it comes to the construction of deals such as the one Apple worked out with Ireland. Not that that will stop them. Why let a little hypocrisy get in the way of trying to hold the line in favour of a dirty game of beggar thy neighbour?

The case that’s just been annulled was a perfect showcase for the madness of the current state of affairs. Dublin fiercely opposed it, putting the Irish government in the decidedly uncomfortable, even comedic, position of fighting an effort by the EC to hand it enough money to all but cover the amount it has so far committed to help businesses, workers and its health service cope with the coronavirus pandemic. Needless to say, said package turned its budget surplus in 2019 into an estimated deficit of at least 7.4 per cent of GDP.

Nonsensical? Sure. But the companies Ireland and the others collude with usually give them sweeties, such as making them their homes from home and suchlike, which, to their minds, makes it just about worth it to them.

International efforts have been proceeding to bring some clarity to a global tax system that is complex, creaky, and subject to abuse by any number of multinationals – the techs are just among the worst offenders because they have some of the best accountants – through the OECD. But surprise, surprise, it’s been slow going.

The Commission is an all too rare example of an institution that has the capacity to bring a degree of common sense and fair play to a rotten system off its own bat.

It is an uncomfortable fact that Apple, Google, Facebook, Amazon and their ilk, are now so large, and so powerful, they can thumb their noses at almost any other nation state and institution when they aren’t showering lobbying cash upon their leaders.

The US is another, but it is currently only minded to interfere with Silicon Valley should one or another of the tech giants puncture the fragile ego of President Donald Trump.

It’s by no means clear that the election of Joe Biden would do much to change things for the better. The record of previous Democrat-led administrations is hardly stellar.

So it’s back to the grindstone for the impressive Vestager. She’s lost a battle, but this was always going to be a long war.