Monday, 21 October, 2019

Apple takes on EU’s Vestager in record $14 billion tax fight

Apple to take €13 billion Irish back tax order to EU court Apple says $14 bln EU tax order 'defies reality and common sense'
Russell Knight | 18 September, 2019, 00:00

"The European Commission is claiming Apple was paying a percentage of taxes of profits well below one percent".

The EU forced Ireland to recuperate billions in back taxes, but Ireland doesn't want the tech giant's money.

Tech giant Apple is launching a legal challenge against a European Commission order to pay 13 billion euros in back taxes.

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

Daniel Beard, a lawyer representing Apple, maintained that since Apple's products are all developed and engineered in the United States, trying to tie profits from elsewhere in Europe to its Irish headquarters would not be fair, saying that the ruling "defies reality and common sense".

Paying an average global tax rate of 26%, Apple has said it is the largest taxpayer worldwide and is now paying around 20 billion euros in US taxes on the same profits that the Commission said should have been taxed in Ireland.

In its appeal, Apple accused the Commission of trying to retrofit "changes to national law" and creating legal uncertainty for companies.

However, the Commission relaunched this case on Monday.

Apple, which made a reputation on smashing industry conventions, "follows the rules" and the European Union was wrong to claim that profits should have been taxed in Ireland instead of the US where Apple products are developed, according to Beard.

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Apple's Chief Financial Officer Luca Maestri led a six-strong delegation to the court where a panel of five judges will hear arguments from both sides, as well as Ireland, Luxembourg, Poland and the EFTA Surveillance Authority, over two days.

The EU General Court (EGC) in Luxembourg is the bloc's second highest court.

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.

It will tell the court that the bulk of its taxes are owed to the United States because the majority of the value in its products including design, engineering and development, is created there.

The EU executive dismissed the arguments, saying it was not seeking to police global tax laws and accused Ireland of not having done its homework when assessing Apple's taxes.

The joint Apple cases are T-778/16 Ireland v Commission and T-892/16 Apple Sales International and Apple Operations Europe v Commission. Its initial 1991 tax deal with Apple involved "no real assessment" of how Apple should be taxed, when Irish officials 'simply accepted an arbitrary method proposed by Apple Ireland subsidiaries'.

The EU's Competition supremo, Vestager, is in particular accused by the United States president of "hating" the US.

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

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