Rough justice from the EU

■ Senior Government figures were ‘blind-sided’ by commission

Fury over Apple tax court move

RELATIONS between the Government and the European Union have deteriorated dramatically after the surprise ruling over the Apple tax deal.

The decision by the European Commission to initiate court proceedings against Ireland has sent shockwaves through Government circles in Dublin and prompted a series of firm rebukes from senior Government ministers.

Dublin is now on a collision course with the commission after EU Commissioner Margrethe Vestager slapped down the Government over its failure to recoup €13bn in unpaid taxes from technology giant Apple.

Both Apple and the Government dispute the ruling and have launched appeals.

But the Irish Independent can reveal that senior Government figures, including Taoiseach Leo Varadkar, were left stunned by the decision to refer Ireland to the European Courts.

There is now serious concern at senior Government level that the decision will be followed by a renewed focus on our corporation tax rate, currently at 12.5pc.

There is also a view held among senior Government figures that Ms Vestager (inset right) is trying to make an example out of Ireland as part of her wider ambitions to become head of the commission.

The matter of Ireland’s tax arrangements with Apple was discussed at European Commission level on Tuesday – with the Government being left with the impression that a three-month reprieve would be extended.

But very senior Government figures told the Irish Independent they were “blind-sided” and “shocked” by the move.

Mr Varadkar told the Dáil yesterday that the decision to refer Ireland to the European Court of Auditors was both “wholly unnecessary” and “unwarranted”.

Tánaiste Frances Fitzgerald described the decision as “regrettable”.

The view in Dublin is that the Government will put the arrangements in place to collect the money in the coming weeks and lodge it to an escrow account.

But the row itself centres on the tax arrangements applied once Apple invested in Ireland in the 1990s.

The commission says the US multinational giant received illegal state aid and therefore owes Ireland €13bn in back taxes.

Both Ireland and Apple contest the claim.

The Department of Finance missed a deadline set for early January to recoup the €13bn.

The record-breaking case shone a spotlight on Ireland’s tax regime and led to criticism from the likes of US President Donald Trump.

Fianna Fáil finance spokesperson Michael McGrath said the decision must be respected.

“While Fianna Fáil fundamentally disagrees with the European Commission’s state aid ruling last year against Ireland, the ruling has to be fully respected while the appeals process runs its course,” he said.

“This means the Government should have moved, without delay, to collect the €13bn plus interest from Apple and place it in an escrow account.

“The European Commission confirmed its ruling against Ireland over 13 months ago on August 30, 2016, and the simple fact is the Government has failed to collect the money from Apple and place it in an escrow account.

“We have now missed the January 3, 2017, deadline for collection of the money by a full nine months.”

A Department of Finance spokesman said: “That is why it is extremely disappointing that the commission has taken action at this time against Ireland. Irish officials and experts have been engaged in intensive work to ensure that the State complies with all its recovery obligations as soon as possible, and have been in constant contact with the European Commission and Apple on all aspects of this process for over a year.”