Apple says $14b EU tax order ‘defies reality and common sense’
The European Union’s order for Apple to pay 13 billion euros ($14 billion) in back taxes to Ireland “defies reality and common sense,” the US company said on Tuesday, as it launched a legal challenge against the 2016 ruling.
The iPhone maker also accused the executive European Commission of using its powers to combat state aid “to retrofit changes to national law,” in effect trying to change the international tax system and in the process creating legal uncertainty for businesses.
Apple’s arguments at the General Court, Europe’s second-highest, came after the EU executive in 2016 said the tech giant benefited from illegal state aid due to two Irish tax rulings which artificially reduced its tax burden for over two decades.
The case is key to European Competition Commissioner Margrethe Vestager’s crackdown on sweetheart deals for multinationals, a campaign which has also led to action against Starbucks, Fiat, Engie, Amazon and others.
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 Commission contends that essentially all of Apple’s profits from all of its sales outside the Americas must be attributed to two branches in Ireland,” Apple’s lawyer Daniel Beard told the court.
He said the fact the iPhone, the iPad, the App Store, other Apple products and services and key intellectual property rights were developed in the United States, and not in Ireland, showed the flaws in the Commission’s case.
“The branches’ activities did not involve creating, developing or managing those rights. Based on the facts of this case, the primary line defies reality and common sense,” Beard said.
