European Commission to appeal court decision on Apple tax case_china

Daniel Fowler
September 27, 2020

The European Commission has launched an appeal against a decision to overturn an order for Apple to pay back €13bn (£11.8bn) in alleged state aid to Ireland. The judgement in July 2020 was made by the EU's second-hightest court, and the appeal is expected to be heard in the European Court of Justice.

The Luxembourg-based General Court in July scrapped the Commission's 2016 ruling, saying that European Union competition enforcers had not met the requisite legal standard to show that Apple had enjoyed an unfair advantage. An Apple spokesperson said, "This case has never been about how much tax we pay, rather where we are required to pay it".

The General Court considers that the Commission incorrectly concluded, in its primary line of reasoning, that the Irish tax authorities had granted ASI and AOE an advantage as a result of not having allocated the Apple Group intellectual property licenses held by ASI and AOE and, consequently, all of ASI and AOE's trading income, obtained from the Apple Group's sales outside North and South America to their Irish branches.

Apple said that, from 2003 to 2014, it paid 577 million U.S. dollars (504.6 million euro) in tax on profit generated in the country, in line with the tax laws in Ireland.

"The General Court judgment raises important legal issues that are of relevance to the Commission in its application of State aid rules to tax planning cases", she said in a statement.

The European Commission had in 2014 begun its investigation of Apple's tax arrangements in Ireland, and two years later in 2016 concluded that Apple had been able to avoid taxation on nearly all profits generated in the EU single market.

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Ireland always argued it did not grant Apple any selective advantage, and can not tax Apple on profits that are not taking place in the country.

Vestager added that: "We need to continue our efforts to put in place the right legislation to address loopholes and ensure transparency".

"From Ireland's perspective, the appeal by the EU Commission keeps the matter in the spotlight for a few more years, which could have adverse reputational implications for Ireland, regardless of the ultimate outcome", he said.

"So, there's more work ahead - including to make sure that all businesses, including digital ones, pay their fair share of tax where it is rightfully due". The company stated that they will evaluate the appeal once they receive it and bullishly claimed that they had complied with all the relevant laws in Ireland just like they have been doing in other markets.

The July hearing by Europe's General Court stated that, while member states can determine their own laws about taxation, they have to do so in a way that respects European Union law.

In its ruling at the time, the court said: "Although the General Court regrets the incomplete and occasionally inconsistent nature of the contested tax rulings, the defects identified by the commission are not, in themselves, sufficient to prove the existence of an advantage".

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