On Wednesday, the General Court of the European Union will give its ruling in the appeal by Ireland and Apple against the European Commission's €13bn tax ruling.
The Commission found that the Revenue determinations did not correspond to economic reality, because almost all the profits recorded by the two companies were attributed internally by Apple to a "head office". The Commission argued that the intellectual property value of the products being sold through the Irish companies should have been attributed to those firms and as a result, so should the profits on them.Under EU state aid rules it is illegal for any country to give preferential treatment to one company over another when they are both subject to the same tax rules in that state.The effects of that went wider than Ireland though.
Apple CEO Tim Cook wrote in a letter to customers in August 2016, that over the years it had received guidance from the tax authorities here about how it could comply correctly with the Irish tax law. "This would strike a devastating blow to the sovereignty of EU member states over their own tax matters, and to the principle of certainty of law in Europe," he pointedly wrote.
Taking away that certainty or calling into question the basis upon which many firms have built sizeable operations here is not good for business. They were therefore not creating the bulk of the value. This was instead being generated mostly through the US, and therefore the profits should be taxed there.
The economic shock brought about by the Covid-19 pandemic has left a gaping hole in the public finances this year and upended the Exchequer's planned budgetary arithmetic for the year.