In its final report on the Apple tax ruling, the EU Commission accused Ireland of illegal State aid and claimed the Government did not have “any justification at all for the selective treatment” the multinational received. The damning report found that the level of tax paid by Apple was “issued on the basis of Irish Revenue’s discretion” as there was “no consistent criteria” relating to the tax system. This meant Apple received a “selective advantage," the commission found, an advantage other companies did not receive, the Irish Examiner has reported.

So to give you the real history of this mess, Apple set up registered offices in each European country back in the day and each of them ran as an independent business unit within its own national territory. Apple France sold in France, paid income taxes, value added taxes and corporate taxes to the French Government and it was the same everywhere else. Then came the internet and the return of Steve Jobs. He spent a fortune setting up the "AppleStore" online, localized for each of those countries instead of a local Apple office. Purchasing then switched to the web.

Of course, the online store doesn't necessarily reside in any one country. However, Apple still paid income taxes on direct employees in their home countries as before and as each country had its own localized online AppleStore, sales taxes were, and still are, paid to that country's Government as before. But as there is no Corporate presence there any longer, corporate tax is no longer paid anywhere in Europe except Ireland where the company's European Headquarters is situated.

They have close to 6,000 employees in Cork and they pay income tax for all of them to Dublin. They pay VAT also on all Irish sales of their products. On top of this, they pay corporate tax based on their Irish sales as well. Irish sales are tiny in the wider EMEA context but it is a grateful addition for our Revenue Commissioners nevertheless. So our Revenue are correct when they assert that Apple have paid everything due to us and are prepared to stand by that with hard figures.

So where, you are asking, did the figure of €13BN quoted by the EU's Competition Commissioner, Margrethe Vestager come from? Well, Tim Cook announced that Apple had €130BN offshore America and the presumption is this money came through Cork over time. To explain how this works, you need to know that, "Intellectual Property Rights," are the true pot of gold for successful companies. They are the actual wealth. For example, Steve Jobs paid a Fortune 500 company to value the Apple Logo and their finding was that it is priceless. Apple has more registered patents than anyone else on earth and each and every one of them are their Intellectual Property. When you buy any Apple product anywhere, you get to use their various technologies and designs and these too are the company's Intellectual Property Rights. Are you still with me?

So Apple, an American Company, routes the proceeds of its sales in various countries back to its Euro headquarters and this breaks no laws anywhere by doing so. The EU is not complaining about this as all big companies in Europe do exactly the same thing. So where's the problem?

In an earlier article I pointed out that Ireland never experienced the original Industrial Revolution but in the late seventies, through hard work and smart thinking, we did manage to attract some Pharma and IT companies to site themselves here. Apple was then in its infancy and they were one of the first to choose Ireland. Neither our Government nor our taxman had any experience of how to deal with such companies and they just had to learn as they went along. It evolved rather than was planned and one time back then our corporate tax rate was actually very high. The move to 12.5% was a gamble because in theory it could have more than halved the income from that source. But it was intended to attract even more foreign direct investment and it did do that. By now, tax rates are no longer the only attraction of this country for Corporate America but it is still one of them.

This is where we get to the nub of it though. Apple in Cork, Ireland has two subsidiaries, Apple Operations Europe (AOE) and Apple Sales International (ASI). Neither of these have any employees and the EU Commission found they were “stateless," with no physical presence. The actual money received was routed first into Apple Operations Europe (AOE), a bank transfer. Then Apple Sales International (ASI) invoiced Apple Operations Europe (AOE) for its Intellectual Property Rights. It is no business of our taxman where this goes but the invoices are both valid and legal and inter-company transactions on Intellectual Property Rights are common in big companies. Our taxman might presume this intellectual money goes back to the USA and Apple Corp. but like I say, that is not their business. The fact that it went to the Cayman Islands is not a decision of anybody but Apple. We got paid what we were due and what Apple does with its other profits is not up to little Ireland. No Irish laws were broken and everything here is above board. Apple Operations Europe (AOE) paid Apple Sales International (ASI) over a period of time and that dough is offshore USA waiting for a permanent home.

Apple Corp. in America has likely a different arrangement because it pays 35% corporate tax to the US Government so all is just as likely to be above board over there as well. America is all one country unlike Europe. You can be sure though that in its stateside accounts the company will deduct the same Intellectual Property Rights money before calculating their corp. tax bill. President Trump though is about to change the playing field yet more. Donald wants all of these companies to move back to America, make their shit over there by employing Americans and pay all of their taxes in the good old USA. He forgets what "Multi-National" and "Globalism" is all about though. But he's a canny businessman and he'd already talking to the big boys directly as reported by the Silicon Valley News. We have also heard that Trump intends to cut the US tax rate from 35 per cent to 15 per cent. The predictable reaction here was that a "Flood of companies’ to quit Ireland under Donald Trump's planned tax regime." This sentiment was echoed here. Colm Kelpie at the irish Independent then voiced a more moderate reaction here. Elsewhere in the Indo they speculate that, "While there are many unknowns, we know one thing for sure: America under Trump the billionaire, anti-business businessman is a more unpredictable place."

So where does that leave us? So far we only have the EU's Competition Commissioner, Margrethe Vestager making a 'competition' finding against Ireland. What she's saying is that if Ireland have such a deal with Apple then they have to have the same deal with all the other Multinationals here also because otherwise it is unfair, hence anti-competitive. Margrethe calculates that the advantage offered to Apple amounts to €13BN. She is not saying that Ireland under-taxed Apple and in fact, she concedes that Ireland's tax rates are a matter for that sovereign state. So our 12.5 per cent rate is not under attack yet and our Government's argument is that our deal with Apple is not uncompetitive. They say they've been paid what's due to them and they can probably prove this. The court case though may not happen for three to five years.

In the meantime the actual cash in the Cayman Banks may make its way back to the good old USA if Donald gets his way and then there won't be any €13BN to argue over.