Apple embarks on EU court battle over €13 billion tax bill

Apple CEO Tim Cook reacts at the end of the Apple Special Event in the Steve Jobs Theater at Apple Park in Cupertino, California, USA, 10 September 2019. [EPA-EFE/JOHN G. MABANGLO]

Apple embarks on an epic court battle with the EU on Tuesday (17 September), fighting the commission’s landmark order that the iPhone-maker reimburse Ireland €13 billion ($14 billion) in back taxes.

Lawyers for the world’s biggest company will face EU officials in a Luxembourg court, challenging a decision that CEO Tim Cook slammed at the time as “total political crap”.

The European Commission’s conclusion was delivered in August 2016 by Competition Commissioner Margrethe Vestager, a shock decision that put Europe at the forefront of an emerging effort to rein in the power of US big tech.

The two days of hearings on Tuesday and Wednesday will take place at the EU’s lower General Court, where judges will give their judgement no earlier than 2020.

Any appeal would then go the EU’s highest court, the European Court of Justice, for a final decision that could land as late as 2021.

Apple, Ireland strike deal on €13bn tax payment

Ireland’s government on Tuesday (24 April) said it was signing a deal with Apple for the US tech giant to pay €13 billion in back taxes as ordered by the European Commission.

The EU accuses Apple of parking untaxed revenue earned in Europe, Africa, the Middle East and India, in Ireland, which has emerged as a European hub for big tech and global pharma giants.

This privilege allegedly gave Apple an advantage over other companies, allowing it to avoid taxes between 2003 and 2014 of around €13 billion which, according to Brussels, constituted illegal “state aid” by Ireland.

Apple fiercely denies the tax bill. The US government also insists the order by Brussels constitutes a major breach of international tax law.

“The European Commission has tried to rewrite Apple’s history in Europe, to ignore Ireland’s tax laws and, in doing so, to disrupt the international tax system,” Tim Cook said in an open letter in 2016.

The group insists that it is in the United States, where the company invests in research and development and thus creates wealth, that it must pay taxes on the revenue in question.

This became possible after a major tax overhaul in the US at the end of 2017 that allowed Apple to repatriate profits made abroad. Apple has promised to pay Washington a tax bill of $37 billion, in addition to the taxes already paid in the United States.

Brussels discloses full decision on Apple’s tax schemes

The European Commission released yesterday (19 December) its full decision on Apple’s tax arrangements in Ireland. The document reveals the details of the tech giant’s tax scheme for the first time in Europe.

‘Strong case’

The California-based giant is supported in its fight by Ireland which has also appealed, refusing to be singled out as a tax haven.

“We will present a very strong case,” promised Irish Finance Minister Paschal Donohoe on Friday.

The two days of hearings are taking place in a tense trade context between the EU and the United States where President Donald Trump accuses Europeans of deliberately attacking American technology giants.

The EU’s Competition supremo, Vestager, is in particular accused by the US president of “hating” the US. He has slammed her as the “tax lady” because of the investigations and heavy fines imposed on US groups such as Google.

Pending the conclusion of the case, Apple has blocked the funds in an escrow account: a total of €14.3 billion, after interest.

The group, which has been present in Ireland since the 1980s, employs around 6,000 people in Cork, the country’s second-largest city.

The first signs of how the Apple case may finish will come as early as September 24 when the General Court will rule on whether the EU was right to demand unpaid taxes from Starbucks and a unit of Fiat Chrysler.

Ireland makes U-turn, says will collect €13 billion back taxes from Apple

The Irish government has reached an agreement with Apple to start collecting the €13 billion owed by the tech giant, it announced on Monday (4 December).

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