Apple appeals landmark EU tax ruling

AFP . Brussels | Update:

An Apple logo hangs above the entrance to the Apple store on 5th Avenue in the Manhattan borough of New York. Photo: Reuters

Apple on Monday launched a legal challenge against a landmark EU decision that the tech giant pay billions in back-taxes to Ireland, claiming the EU has ignored the law.

The European Commission, the EU executive arm, in August ordered iPhone maker Apple to reimburse a record 13 billion euros ($14 billion) in unpaid taxes in Ireland.

The EU, led by its competition chief Margrethe Vestager, accused Ireland of giving Apple a secret tax deal that allowed the iPhone maker to enjoy near zero tax on its huge sales worldwide for more than a decade.

The deal was in breach of the EU’s state aid rules, argued Vestager, a former Danish finance minister who has made clamping down on tax deals a priority.

“It’s been clear since the start of this case there was a pre-determined outcome,” a spokeswoman for Apple told AFP, confirming the appeal.

“The Commission took unilateral action and retroactively changed the rules, disregarding decades of Irish tax law, US tax law, as well as global consensus on tax policy, that everyone has relied on,” she added.

The appeal, lodged at an EU court in Luxembourg, came after the bloc’s anti-trust teams released their full 130-page argumentation in the case.

“The Commission will defend its decision in court,” the Commission said in a short statement, describing a court process that could take years.

With the release, the Irish government also laid out its arguments against the EU case, accusing Brussels of a major breach of national sovereignty.

“The Commission has exceeded its powers and interfered with national tax sovereignty,” Ireland’s finance department said in a three-page outline of its main arguments.

“The Commission has no competence, under state aid rules, unilaterally to substitute its own view of the geographic scope and extent of the member state’s tax jurisdiction for those of the member state itself,” the ministry added.

Pro-business reputation

In August, the EU verdict shocked the business world and infuriated Apple, with CEO Tim Cook calling it “political crap”.

It also raised tensions with Washington, which accused Brussels of “disproportionately” focusing on US corporations. Google, Starbucks and Amazon are also in the EU’s crosshairs.

“We continue to believe the Commission is retroactively applying a sweeping new state aid theory that is contrary to well-established legal principles,” the US treasury said in a statement.

By the Commission’s calculations, Dublin allowed Apple to pay a tax rate of 1 percent of its European profits in 2003 which then dropped to 0.005 percent by 2014.

Ireland formally lodged its appeal in November after winning the backing of the Irish parliament, with MPs willing to forgo the decision’s potential windfall in order to preserve Dublin’s pro-business reputation.

Once a corporate backwater, Ireland found economic success by building a low tax entryway to Europe for multinationals seeking access to the EU, the world biggest market. Dublin’s official corporate tax rate is 12 percent, one of the world’s lowest.

Dublin also claimed procedural errors in the Commission’s investigation, which was launched in 2014, arguing Ireland was not contacted to comment on findings contained in the ruling.

“The Commission breached the duty of good administration by failing to act impartially and in accordance with its duty of care,” said the submission.

Apple—with 6,000 staff in its Cork city campus—is a valued employer in Ireland where it has had operations since 1980.

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