Apple prepares to launch EU legal challenge over €13bn Irish tax bill
Apple is set to launch a legal challenge tomorrow over an order by the European Commission to pay €13bn (£11.5bn) in Irish back taxes, as the EU seeks to crack down on tax avoidance by multinational companies.
What’s the case about?
The tech giant was accused of having dodged taxes and received €13bn illegal state aid from Ireland by the European Commission in 2016.
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The Commission said Irish tax rulings in 1991 and 2007 had artificially reduced Apple’s tax burden over two decades, enabling the tech titan to pay a tax rate of less than one per cent – in defiance of EU law.
Margrethe Vestager, European competition commissioner cited the 0.005 per cent tax rate paid by Apple’s Irish unit in 2014 as evidence of unusually low tax payments by the company.
How did Apple respond?
Both Apple and Ireland appealed the ruling, and the court battle will begin tomorrow at the Luxembourg-based general court – the EU’s second highest court.
Apple is expected to send a six-person delegation led by chief financial officer Luca Maestri to the two-day hearing.
The company paid the tax bill – which totaled €14.3bn with interest – last year, but it has been held in escrow.
Chief executive Tim Cook has previously called the EU’s ruling “total political crap”, and said the Commission’s claim “has no basis in fact or law”.
What’s Apple’s argument?
The company is set to argue it did nothing wrong as it had followed Irish and US tax laws.
Apple will also that the bulk of its taxes are owed in the US because the majority of the value in its products – including design, engineering, and development – is created there.
How did Ireland respond?
Ireland, which has accused the Commission of meddling with its sovereignty over tax affairs, is also challenging the ruling.
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It is expected to argue that it has not granted Apple any advantage, and could not tax the company in Ireland for profits that have not taken place in the country.
The country’s tax regime is a key attraction for multinationals, which employ around 10 per cent of Ireland’s workforce.
Main image credit: Getty