Photographer: David Paul Morris/Bloomberg

Why Apple and Ireland Are Finally Starting to Fall Out of Love

  • Irish prime minister demands Apple pay tax arrears quickly
  • Tensions mount over Apple’s proposed $1 billion data center

A gray afternoon in Dublin may have marked the point where Ireland and Apple truly started to fall out of love, at least publicly.

Up until about 4.15 p.m. on Tuesday, it was impossible to place a cigarette paper between Ireland’s hip young prime minister Leo Varadkar and Apple Inc.’s Tim Cook, as they united to fight Europe’s contention that the government had granted the iPhone maker a sweetheart tax deal.

Leo Varadkar

Photographer: Aidan Crawley/Bloomberg

That alliance began to fray this week, as Varadkar appeared to blame Apple for delays in the collection of about 13 billion euros ($15.3 billion) in back taxes Ireland has been ordered to gather from the company. The European Commission sued Ireland in October for failing to collect the money quickly enough.

“We don’t want to be in a situation where the Irish government has to take Apple to court because the commission is taking the Irish government to court,” Varadkar, 38, told lawmakers in parliament in Dublin Tuesday. “I think that message is understood.”

Apple declined to comment on this story.

Three Decades

Varadkar’s intervention is the latest sign that all may not be well in a partnership that stretches back more three decades. While the two have joined forces to battle Europe on the tax question, elsewhere strains have emerged -- mainly around the delays dogging Apple’s plan to build a $1 billion data center close to the Atlantic Coast, in the West of Ireland.

Two years ago, Apple simultaneously laid out plans to construct such vast facilities in Ireland and Denmark, as part of one of its largest investments in Western Europe. While the Danish facility is completed, the chosen site in the middle of an Irish forest lies idle, stymied by a combination of objectors and court delays.

Apple’s $1 Billion Plan Hits a Three-Person Roadblock in Ireland

After Bloomberg News first reported in September that the project was in jeopardy, Varadkar said he had been reassured that Apple remained committed to the project. Just over a month later, at a meeting with the Irish leader at Apple’s California headquarters, Cook refused to give Varadkar guarantees that it would go ahead.

Apple agreed to continue considering the site close to the tiny, historic medieval village of Athenry only “in the context of their future business plans,” according to Varadkar, leaving him open to political embarrassment back home.

Losing Patience

Meanwhile, European authorities were growing restive over the tax case. The Irish government had been due to collect the cash by Jan. 3, and hold it in escrow until an appeal process is complete. Both Apple and Ireland are fighting the EU decision, which could take up to five years.

Last month, amid a string of delays, EU Competition Commissioner Margrethe Vestager finally lost patience, and Ireland was referred to the European Court of Justice for failing to recoup the money. That could leave the government on the hook for a fine.

Up to now, the government has diplomatically avoided publicly blaming anyone for the delay, and Varadkar has to tread carefully. Apple employs about 6,000 people in Ireland, according to its website. Most of those are based in Cork, where it’s among the biggest private employers in the city. The company is also among the biggest taxpayers in the country.

Yet, yesterday, Varadkar too seemed to lose patience as well.

“We have indicated to it that we want the escrow account established and funds to be paid into that account without further delay,” he told the Irish parliament Tuesday. “That message is understood and I would anticipate progress on that in the coming weeks.”

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