With the European Commission ruling that Apple owes Ireland €13bn (£11bn) in back taxes due to illegal tax deals, many fear the country will be seriously rethinking their membership. Branded Irexit, it comes as news of the latest round of UK Brexit negotiations fail to reach any conclusions in regard to trade, one of the key concerns for both British and Irish businesses.

 Although member states are not allowed to give tax breaks to selected companies, the Irish government negotiated a deal which effectively saw Apple paying no more than 1% corporate tax, compared to the regular 12.5% rate in Ireland (BBC News). However, after a three-year investigation, the European Commission declared the arrangement illegal and ordered Ireland to recover the amount owing in back taxes. Although both Apple and the Irish government plan to appeal the decision, it highlights the issue of fiscal control for member states and questions the value of membership versus the lack of control.

In June this year, Irish MEP Brian Hayes clearly stated that any attempt to restrict the Republic of Ireland in terms of their corporate tax would not be tolerated and may result in Ireland following the UK’s Brexit footsteps (Irish Times).

As Ireland is the only EU country that shares a land border with the UK, chief EU negotiator Michel Barnier admitted that although he will be working towards avoiding a hard border between the UK and Ireland post-Brexit, customs controls will prove to be difficult (The Telegraph). Despite the Irish government dismissing calls to consider leaving the EU, economist Ray Kinsella of University College Dublin claims the Irish economy is too intrinsically linked to the UK’s to allow make it feasible to remain within the union post-Brexit. He argues that Brexit would make Ireland more vulnerable, as the EU is a “flawed monetary union, skewed towards surplus countries” (The Guardian).

 

The UK is Ireland’s biggest export partner, with 40% of Ireland’s fresh produce exported to the UK (Freight Business Journal). In addition, UK imports account for 15% of all Irish imports, up 2% from 2016 (Trading Economics). As a result, any changes to customs tariffs could have a detrimental effect on both Irish and UK businesses.

Paul Hull at KMB Shipping, states “As the value of the pound has decreased, we have seen Irish export growth rates slowing, or in some areas even decreasing from previous years. As a result we are seeing a shortage of UK trailers shipping back to Ireland”

 According to Aidan Flynn, general manager of The Freight Transport Association of Ireland (FTAI), Brexit negotiators must strive to avoid a “cliff-edge” scenario. Flynn has warned of the dangers of not including the transport and logistic sector in negotiations, and that ignoring the needs of the freight industry would lead to “disruption and chaos” (Freight Business Journal).

Paul Hull is European & Irish Director at KMB Shipping, who offer 30 years’ experience in delivering our full range of shipping services to over 70 different countries, to a growing international client list. As members of BIFA, we offer a flexible and fully tailored service, managing the whole shipping process for you from initial phone call to safe delivery. Contact our professional, friendly and highly experienced team today to discuss how we can accommodate your shipping requirements.