Scots take note as EU bites Apple
- Scots plans for a tax haven would never have taken off
- EU makes important move to a level playing field
Ireland has been providing illegal state aid to Apple for more than 20 years according to an EU commission that has been investigating the tax arrangements between the country and multinational companies.
The EU’s preliminary findings should finally move Europe towards a proper single market. It has been a long time coming and there is an important message here for those who had similar ambitions about creating a tax haven in Scotland.
Apple, along with a number of other global companies such as Fiat and Starbucks, has enjoyed negligible tax liabilities in Ireland for years. This is not about low rates of corporation tax, but special “sweetheart” deals that have given Ireland Luxembourg and the Netherlands an advantage over other member states.
The US tech giant denies any wrongdoing, specifically over any tax agreements with the Irish in 1991 and 2007. It pays just 2% tax, but both the company and the Irish government deny this amounts to state aid.
These deals defy the idea of a single market and a level playing field. For the EU, this matter goes further and amounts to unlawful state aid. It has the ability to fine companies up to 10% of turnover so Apple could face a chunky penalty.
This has been a long-running affair but it has to be borne in mind that one of the EU’s objectives is to offer support to deprived regions of the European bloc, so there is a balancing act involved in determining what is legitimate subsidy and what amounts to bending the tax rules.
The EU’s attempts at creating a more equal competitive environment will at least go some way to eradicating any ideas that one country may have at becoming a tax haven.
There were many commentators and analysts who suggested Scotland might adopt such a status if it had voted for independence. The fact that the idea was never seriously promoted by the Scottish Government suggests that ministers knew it was unsustainable.