Vestager takes Ireland to court over Apple’s taxes

‘Member states need to make sufficient progress to restore competition,’ commissioner said.

Competition Commissioner Margrethe Vestager is taking Ireland to Europe’s highest court over delays in collecting some €13 billion in back taxes from Apple, in a dramatic escalation of the simmering dispute between Dublin and the Commission.

“More than one year after the Commission adopted this decision, Ireland has still not recovered the money, also not in part,” 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.”

Vestager’s decision to rely on rarely used powers to enforce her decisions against national capitals underlines the tensions around the case and will reinforce allegations that Dublin is too-ready to bend Europe’s tax rules.

In August 2016, Vestager told the American tech giant to reimburse a record-breaking €13 billion, plus interest, ruling that the company’s Irish tax deal amounted to illegal state aid. Both Apple and Ireland appealed.

The proceedings could eventually result for fines for Dublin — although Vestager expressed hope Dublin would collect the money “before we enter into more conflictual waters.”

The action comes as Dublin is still hunting for an investment manager to oversee the money, which would be dripped into an escrow account over time, according to a person familiar with the situation. In July, Ireland launched a search for someone to administer the escrow account, and in September it asked investment managers to apply to manage the giant sum.

Ireland called the Commission’s action “regrettable” and said it “has made significant progress on this complex issue and is close to the establishment of an escrow fund.”

But the commissioner has repeatedly expressed her frustration about the length of the negotiations between Ireland and Apple over how the money should be held and who should bear the liability for any losses during appeals. The Commission set a deadline of January 3, 2017, for collection.

Under the EU treaties, the Commission can refer member countries it considers to have failed to comply with a state aid ruling to the EU Court of Justice. If they fail to comply with the subsequent ruling they can face fines.

The move comes just a week after Dublin said it would veto a wider EU legislative push to force big tech firms — many of which have their European headquarters in Ireland — to pay more taxes.

Apple repeated a statement from earlier this year, saying that the Commission’s ruling against Ireland undermined longstanding international tax agreements.