Apple to challenge EU over record $14 billion tax dodging case

A panel of judges in Luxembourg on Tuesday will begin hearing arguments concerning the US tech giant Apple and the world’s biggest tax case.

The EU General Court (EGC) will begin hearing the appeals lodged by Ireland and Apple against the EU tax ruling. It has to weigh up whether regulators were right to levy a record €13 billion ($14.4 billion) fine on the company.

The European Commission ruled in August 2016 that Apple had received unfair tax incentives from the Irish government. It ordered Ireland to recover the unpaid money plus interest.

Both Apple and Dublin appealed the initial ruling, claiming the tax treatment had been in line with Irish and EU law.

Apple is expected to make an argument that in Ireland it pays taxes for the functions it does there and that the vast bulk of the firm’s taxes are due in the United States where the company generates intellectual property, and develops, designs, and engineers products.It alleged the commission failed to prove that Apple was treated selectively.

According to a 2017 document published on the court’s website, the Irish side is claiming that the EU commission made errors of assessment in misunderstanding Irish law and the relevant facts. It claims that the tax rulings of 1991 and 2007 did not involve a departure from Irish law and simply applied the relevant tax rules.

The EGC’s ruling, which is likely to take months, could empower or halt EU Competition Commissioner Margrethe Vestager’s tax investigations on the Big Tech companies. She has been tasked to come up with a “fair European tax” by the end of 2020 in case global efforts to reform digital taxation don’t make progress.

“Politically, this will have very big consequences,” Sven Giegold, a Green member of the European Parliament, was cited as saying by Bloomberg. “If Apple wins this case, the calls for tax harmonization in Europe will take on a different dynamic, you can count on that.”

Experts say the legal battles between Apple, Ireland, and the EU may go on for a few years more. EGC rulings can be appealed once more to the EU’s highest court, the EU Court of Justice.

Apple deposited a total of €14.3 billion into an account, which represents the full recovery of €13.1 billion in unpaid taxes plus interest of €1.2 billion, in the event the company loses the case.