Ireland to decide what to do with 13 billion euros

A landmark ruling by the European Union’s top court means Ireland will receive 13 billion euros ($14.4 billion) in unpaid taxes from Apple – a windfall that Dublin had spent years fighting to avoid.

It leaves the small EU member state in a politically awkward, if enviable, position. Irish lawmakers are expected to determine how best to spend the incoming cash infusion before a general election, which must be held no later than March next year.

In a decision of the European Court of Justice (ECJ) he said was final, the EU’s top court ruled on Tuesday that Apple must pay Ireland billions of euros in back taxes.

The decision was welcomed by tax justice advocates as well as the bloc’s outgoing competition chief Margrethe Vestager, who is described declaring it a “huge victory” for European citizens.

Apple he said in a statement that it is disappointed with the decision, while the Irish government is described the case as “a matter now of only historical importance.”

The Irish government said in a statement that its position has always been that it “does not give preferential tax treatment to any company or taxpayer”. A spokesman added that the process of transferring the assets held in an escrow fund in Ireland would now begin.

“The Irish government in particular is now in a position where they are telling the Irish people and the international community that they don’t want that 13 billion [euros] — it’s not ours,” Aidan Regan, an associate professor of political economy at University College Dublin in Ireland, told CNBC by phone.

“They’re facing a lot of internal pressure politically, there’s an election probably in a couple of months and now they’ve potentially got a windfall of £13bn. [euros] in a context where there are huge infrastructure problems and a housing crisis,” he continued.

“So I suspect the Irish government will be paying far less attention to what is happening internationally and the reputational cost of this decision and wondering what they are going to say to the Irish electorate ahead of an election in a few weeks. “

A spokesman for Ireland’s finance ministry referred CNBC to the government’s written statement when reached for comment.

Ireland, which serves as Apple’s EU base, has one of the lowest corporate tax rates in the bloc of 27 nations.

For years, Ireland has consistently argued that the iPhone maker did not have to pay back unpaid taxes to the country. He had challenged the case amid fears it could threaten the country’s ability to attract investment from companies keen to limit their taxation of overseas profits.

However, the ECJ’s ruling on Tuesday confirmed the European Commission’s 2016 ruling that the country had provided the US tech behemoth with “illegal aid which Ireland must recover”.

The decision comes at a time when Ireland are in the unusual position of running a fiscal surplus multi-billion euro, partly due to strong corporate taxation.

“The decision is lucrative for Ireland, resulting in a windfall for the country, but undermines the government’s long-standing position that Ireland does not provide preferential tax treatment to taxpayers, companies or others,” said Robert Dever, tax partner at Multinational law firm Pinsent Masons told CNBC via email.

“We would hope that any damage to Ireland’s reputation internationally will be limited given the changes to the Irish tax code, including the rules on corporate tax residence and the attribution of profits to branches of non-resident companies, in recent years,” Dever said. .

“The process of transferring the assets to the escrow fund, set up to hold funds representing the tax liability and interest allegedly owed by Apple pending a final decision, in Ireland will now begin following today’s decision, but it will take some months to finalize,” he added.