EC Challenges Court’s Quashing Of Apple £12bn Tax Bill

Image credit: European Commission

European regulator appeals court ruling, which rejected EU order for Apple to pay 13 billion euros ($11.8bn) in Irish back taxes

Apple is once again faced with a multi billion dollar challenge by European regulators over its tax payments in Ireland.

European Commission executive VP Margrethe Vestager announced on Friday that she had decided to appeal the General Court’s judgement of July 2020 on the Apple illegal state aid case in Ireland.

Vestager said the Commission “respectfully considers that in its judgement the General Court has made a number of errors of law.”

EU competition commissioner Margrethe Vestager.  European Commission

Court rejection

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 almost all profits generated in the EU single market.

The EC then ordered the Irish government to recover up to 13 billion euros (£11.8bn) plus interest in “illegal tax benefits”.

But both Apple and the Irish government decided to appeal the mammoth fine by the Commission, and that appeal began in September 2019.

Apple’s delegation last September told the EU’s General Court that the EC penalty “defies reality and common sense”.

And it is seems the General Court agreed.

In July this year, the General Court of the European Union (GCEU) sided with the Irish government and Apple on the matter, and rejected the EC order that Apple has to pay 13 billion euros ($11.8bn) in Irish back taxes.

National sovereignty

Essentially, the European Commission alleged that Apple and Ireland entered into an “artificial” profit arrangement that allowed it to pay a tax rate of less than 1 percent on its sales from across Europe.

Ireland meanwhile accused the Commission of infringing upon national sovereignty and undermining the country’s low corporate tax regime.

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

Apple, for its part, has previously said it has abided by Irish and US tax laws, and that the tax rate it pays in Europe is low because key work such as design, engineering and development takes place in California.

Apple CEO Tim Cook has previously said the EC penalty has no basis in fact or in law, and that the Commission was ordering Apple to retroactively pay additional taxes to a government, that says Apple don’t owe it any more than Apple had already paid.

European Court of Justice

But the European Commission is not backing down, and will appeal the July quashing of Apple’s back tax order, to the European Court of Justice

“The Commission has decided to appeal before the European Court of Justice the General Court’s judgement of July 2020 on the Apple State aid case in Ireland, which annulled the Commission’s decision of August 2016 finding that Ireland granted illegal State aid to Apple through selective tax breaks,” noted Vestager.

“The General Court judgement raises important legal issues that are of relevance to the Commission in its application of State aid rules to tax planning cases,” she added. “The Commission also respectfully considers that in its judgement the General Court has made a number of errors of law. For this reason, the Commission is bringing this matter before the European Court of Justice.”

Vestager said that making sure that all companies, big and small, pay their fair share of tax remains a top priority for the Commission.

“If Member States give certain multinational companies tax advantages not available to their rivals, this harms fair competition in the European Union in breach of State aid rules,” she stated.

“We have to continue to use all tools at our disposal to ensure companies pay their fair share of tax,” Vestager said. “Otherwise, the public purse and citizens are deprived of funds for much needed investments – the need for which is even more acute now to support Europe’s economic recovery.”