Ireland “blindingly accepted” proposals from Apple when it came to how much of its profits could be taxed by Revenue, according to a lawyer for the European Commission (EC), which decided in 2016 that the iPhone maker had received €13 billion of illegal state aid from the State.
Paul-John Loewenthal, a lawyer for the commission, was speaking in the EU’s second-highest court, the General Court in Luxembourg, on Wednesday, on the second of two days of hearings relating to appeals by Apple and Ireland against the decision.
The commission has claimed that Revenue gave the Californian technology giant an unfair advantage in two “rulings”, in 1991 and 2007, which allowed it to channel most of its European sales through “head office” divisions of two group subsidiaries in Cork, which were non-resident for tax purposes.
The units were known as Apple Sales Ireland (ASI) and Apple Operations Europe (AOE). Only profits allocated to Irish “branches” within the two subsidiaries were taxed in the State.
Mr Loewenthal said that Revenue “blindingly accepted” Apple’s proposals of what profits were taxable in Ireland, as the authorities only looked at activities of the local branches, rather than how they interacted with the head offices. He said that this, in itself, conferred an advantage onto Apple.
Lawyers for the Government have argued that Revenue was only obliged to look at the Irish branches under national laws.
While the Commission’s decision is under appeal, the Government last year complied with an order that it collect the €13 billion, plus €1.3 billion of interest, and put it into escrow, pending the outcome of appeals. It is widely expected that the General Court’s ruling, expected as early as the end of this year, will be appealed.