Apple says EU tax bill 'defies reality and common sense'

Daniel Fowler
September 20, 2019

U.S. tech giant Apple has launched an appeal to a European Commission 2016 ruling that they must pay a record €13 billion ($14 billion) in back taxes in Ireland.

Apple, which has a European headquarters in Ireland for tax purposes, was originally ordered to pay the back taxes in 2016 after the company paid a tax rate of just 0.005 per cent in the country for 2014.

The European Commission released yesterday (19 December) its full decision on Apple's tax arrangements in Ireland. The EU demands that Apple pays the missing billions to the Irish government - though the Irish government is also trying to overturn the ruling.

The Cupertino-based company also accused the European Commission of using its powers to combat state aid "to retrofit changes to national law".

"Ireland has been the subject of entirely unjustified criticism", argued Paul Gallagher, former attorney general and leader of the Irish legal team, in his opening statement to the European Union general court. The document reveals the details of the tech giant's tax scheme for the first time in Europe.

Ireland, meanwhile, lashed out at the EU's "astonishing" interpretation of tax law.

The 2 days of hearings are taking decide up 22 situation in a disturbing exchange context between the EU and the United States where President Donald Trump accuses Europeans of deliberately attacking American technology giants.

But Apple's arguments cut little ice with the legal team for the European Commission. The court is expected to rule in the coming months, with the losing party likely to appeal to the EU Court of Justice and a final judgment could take several years.

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The appeal will provide an acid test for competition commissioner Margrethe Vestager's legal moves against a raft of companies with similar arrangements in Ireland, Luxembourg and the Netherlands.

The cases are: T-892/16, Apple Sales International and Apple Operations Europe v. Commission, T-778/16, Ireland v. Commission.

Richard Murphy, a professor at London's City University, said the EU's case "is about making clear that no company should be beyond the geographic limits of tax law".

In its current financial quarter, Apple expects revenue of $61-64 billion and a gross margin of 37.5-38.5 per cent. She urged them to use "our influence to build an worldwide environment that helps us reach our goals" in talks on a new global agreement to tax technology firms.

The EU forced Ireland to recuperate 14.3 billion euros in back taxes - the original fine plus interest - by January 2017.

Pending the conclusion of the case, Apple has blocked the funds in an escrow tale: a total of 14.3 billion euros, after hobby.

Other than the defence of its own tax regime, Irish policy makers have always argued that backing Apple sends a message to global investors that Ireland will back such investors.

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