The Department of Finance countered that it is confident Ireland has not broken EU state aid rules. A spokesman said the State’s position would be vigorously defended after EU competition commissioner Joaquin Almunia announced the much-expected in-depth investigation yesterday.
Apple again said yesterday that it had received no special consideration from Irish officials and said it was subject to the same tax laws as scores of other companies in Ireland.
Formal probes were also opened into tax arrangements between Starbucks and the Netherlands, and Fiat Finance and Trade and Luxembourg.
The inquiry involving Ireland relates to the Irish branches of two Apple entities – Apple Sales International and Apple Operations Europe – and covers the period between 2004 and 2014.
The inquiry will not focus on Ireland’s 12.5pc corporation tax rate, but on so-called tax rulings, which involve “comfort letters” being issued by the tax authorities of a country to a specific company clarifying how its corporate tax will be calculated or on the use of specific tax provisions.
The Commission said tax rulings may involve state aid if they were used to provide selective advantage to a specific company.
But the department said it was confident that there was no state-aid rule breach.
“We are very confident that we will successfully defend our position as Ireland does not have a statutorily binding tax ruling system,” a spokesman said.
“Like other tax administrations in other countries, the Revenue Commissioners, in certain limited circumstances, operate a system of non-binding advance opinions where companies can seek advice on the correct application of the law in their self-assessed tax filings.
“This facility is available to all taxpayers, including companies, both large and small. Our technical experts do not believe that there is any state aid.”
Brussels began an informal probe into tax arrangements last September. It followed massive controversy in the US, Britain, Germany and France about the low taxes charged on US companies with operations here.
In Ireland’s case, the Commission said authorities were fully co-operative in providing comprehensive information during the informal probe.
While transfer pricing rules here had been tightened in recent years, the tax administration had a “significant degree of discretion in the past”, it added.
“The Commission has concerns that such discretion has been used in the case of Apple to grant a selective advantage to that company, reducing its tax burden below the level it should pay based on a correct application of the tax rules,” it said.
The Department of Finance said that, if necessary, the State would defend its position in the European courts.
The Government has one month to submit its response. Unlike the informal investigation, comments will also be invited from Apple.