Apple Corporation is appealing to Europe’s second-highest court to overturn the European Commission’s 2016 ruling that ordered it to pay 13 billion euros in back taxes to Ireland, which gave Apple tax breaks since the 1990s. The European Union’s decision that the iPhone maker has to pay the record sum back to Ireland “defies reality and common sense”, the US technology giant argued as the two sides are at loggerheads over a legal case that is a centerpiece in Brussels’ crackdown on sweetheart deals to multinationals. EU competition commissioner Margrethe Vestager ruled in 2016 that Apple Corporation had benefitted from a mere 1 percent corporate tax rate in Ireland between 2003 and 2014, which the EU rules define as illegal tax treatment.
The European Commission’s ruling that the country gave Apple €13bn in illegal tax aid “fundamentally flawed”, lawyers representing Ireland said (17 September) in an appeal against the decision EU’s General Court in Luxembourg. “Ireland has been the subject of entirely unjustified criticism,” argued Paul Gallagher, former attorney general and leader of the Irish legal team, in his opening statement to the EU general court. The EU executive’s shock ruling in 2016 that the tech giant benefited from illegal state aid put Europe at the forefront of an emerging effort to rein in the power of what was increasingly perceived as US’s almighty technological companies.
This week’s appeal case could make or break the Commission’s campaign, which has also led to action against Amazon, Starbucks, Engie, Fiat and other major multinational corporations. The first indications of what outcome the Apple case may end up with will come as early as 24 September, when the General Court is due to rule on whether the EU competition commissioner was right to demand unpaid taxes from Starbucks and a unit of Fiat. The key argument behind the Apple’s appeal to the General Court revolves around the fact the iPhone, the iPad, the App Store, other Apple products and services and key intellectual property rights were allegedly developed in the US, and not in Ireland, which, according to Apple’s lawyers, essentially shows the flaws in the commission’s case.