Ireland: We didn’t give state aid to Apple

Ireland reinforced its opposition to any potential European Union tax decisions that it would find unfavorable amid a looming ruling on the country’s tax practices with Apple Inc., Bloomberg News reports.

The EU is on the cusp of issuing a decision on whether Ireland granted Apple state aid or beneficial tax arrangements in exchange for bringing jobs to the country. According to Reuters, the ruling will be released on Tuesday.

{mosads}European authorities initially found that taxes Ireland granted the tech company were in violation of EU rules that prevent members from using targeted tax breaks to gain an edge over other members.

The EU has yet to make a final decision.

“We don’t believe we gave any state aid to Apple,” Ireland junior Finance Minister Eoghan Murphy said on Irish news channel RTE. “It’s in the national interest that we defend our international reputation in this regard.”

Apple has also said that it did not receive improper aid from Ireland.

The U.S. Treasury stepped in last week by issuing a 26-page special report defending Ireland and Apple. The paper urged European officials not to rule that either had done anything improper or in violation of regulations.

In its report, the Treasury said a decision against the Apple and Ireland would be “deeply troubling,” and “would effectively constitute a transfer of revenue to the EU from the U.S. government and its taxpayers.”

U.S. tax laws allow companies to delay paying taxes on foreign income until they return earnings to the U.S.

“There is the possibility that any repayments ordered by the Commission will be considered foreign income taxes that are creditable against U.S. taxes owed by the companies in the United States,” the paper said. “If so, the companies’ U.S. tax liability would be reduced dollar for dollar by these recoveries when their offshore earnings are repatriated or treated as repatriated as part of possible U.S. tax reform.”

The paper also cited similar findings by Congress who noted in a letter to Treasury Secretary Jack Lew that “these investigations raise serious questions about our ability to rely on bilateral tax treaties negotiated with EU Member States.”

According to experts who spoke with Bloomberg, such as JPMorgan Chase analyst Rod Hall and Matt Larson of Bloomberg Intelligence, Apple could have to pay a multibillion-dollar settlement in an extreme scenario. Lawyers for the EU expect the number to be in the hundreds of millions.