Ireland faces fewer EU friends with Apple tax appeal, S&P signals

The Republic could trigger a "more conflicted relationship" with some fellow European Union states if it appeals a European Commission ruling it recover €13 billion of unpaid taxes from Apple, according to Standard & Poor's.

Some EU partners “have eyed Ireland’s tax policies with suspicion in the past,” S&P, one of the world’s three largest credit ratings agencies, said on Thursday.

S&P said that while the commission’s ruling on Tuesday would appear at first glance to be favourable to the Government, amounting to about 6 per cent of its gross debt, the sums involved “will not, in our view fundamentally change Ireland’s credit metrics”.

The ratings firm said its A+ rating on Ireland, which is four levels below its top-notch AAA stance, is unaffected by the commission’s decision, which Taoiseach Enda Kenny is trying to get Cabinet approval to appeal. However, Independent Ministers have so far refused to back this.

Coalition splits

“The initial reaction has exposed hitherto invisible splits on the issue inside the ruling coalition, which could negatively affect the effectiveness, stability, and predictability of the sovereign’s policymaking and primary institutions, which we currently assess as a credit strength,” S&P said.

Forgoing a windfall by appealing against it could see the Government’s credibility suffer in the eyes of the electorate, it said.

If Ireland’s loses its attractiveness as a location for multinational corporations as a result of the case, S&P said it may need to reconsider its economic assessment of the State.

The market interest rate, or yield, on Ireland’s benchmark 10-year bonds has nudged up to 0.43 per cent from 0.40 per cent since the EU’s ruling was published on Tuesday. However, the rate remains well off the 14.2 per cent peak it reached in 2011, at the height of the financial crisis.