Apple wins EU court battle in tax case
The EU suffered a significant setback in its effort to curb profit-shifting as a European court annulled an order that Apple repay Ireland 13 billion euros ($15 billion) in back taxes.
The commission's historic ruling against Apple was delivered in August 2016 by Competition Commissioner Margrethe Vestager in a shock decision that put Europe on the map as a scourge of Silicon Valley.
The iPhone-maker and Ireland had appealed the order, which Apple CEO Tim Cook slammed at that time as "total political crap".
Vestager was derided as Europe's "tax lady" by U.S. President Donald Trump because of the case, in addition to a group of antitrust fines she imposed on Google.
The clear cut decision by the EU's general court could now face another appeal at the top European Court of Justice, with a decision expected no sooner than 2021, but Vestager said only that Brussels was studying the judgement.
French Finance Minister Bruno Le Maire said "France will continue to fight" for a way to recover more in taxes from global IT giants, in a statement delivered to AFP.
The EU in 2016 accused Ireland of allowing Apple to park income earned in Europe, Africa, the Middle East and India and sparing it nearly every taxation.
Brussels said this gave Apple an advantage over other companies, and can avoid Irish taxes between 2003 and 2014 of around 13 billion euros ($14 billion). EU officials argued that constituted unlawful "state aid" by Ireland.
However the EU court said the commission "did not flourish in showing the requisite legal standard that there was an advantage".
The commission "was wrong" to declare that Apple units located in Ireland "had been granted a selective economic advantage and, by extension, state aid."
Apple welcomed the decision and reiterated that the gains involved were always designed to go to the United States and not Ireland. "This case had not been about how exactly much tax we pay, but where we must pay it," an Apple spokesman said in an email to AFP.
"We're proud to be the major taxpayer on the globe as we know the important role tax payments play in society," Apple added.
Irish Finance Minister Paschal Donohoe said he welcomed the outcome in a case "that influenced our reputation while this ruling had been pursued."
It "is definitely clear that the correct degree of tax was charged no state aid was provided," he added.
Vestager said the EU would "carefully study the judgement and think about possible next steps," that could include an appeal.
"The Commission stands fully behind the target that all companies should pay their fair share of tax," she added.
Some observers have expressed doubts on the Apple case, wondering if the EU was to use antitrust law to crack down on tax optimization strategies by multinationals.
In similar cases, the same EU court struck down an order by Brussels that Starbucks pay 30 million euros in back taxes to holland. In another decision, however, it said Fiat must pay roughly the same total Luxembourg.
The EU is wanting to create ways recover more in taxes from digital giants where they conduct business, though this has been opposed by some European capitals.
"Today's court decision illustrates how difficult it is to use EU state aid rules to gather tax," said Tove Ryding, tax expert at the European Network on Debt and Development.
"If we had an effective corporate tax system, we wouldn't need long court cases to learn whether it is legal for multinational corporations to pay significantly less than one percent in taxes," she said.
Talks to think of a new global tax system at the OECD have already been stalled due to opposition by the U.S.
Le Maire said "digital giants are the key winners of the monetary crisis. It is another reason to move ahead with digital taxation at the OECD."
The Apple decision came on the eve of another landmark case at the EU courts, this one a lawsuit brought by an Austrian activist against Facebook over data privacy.
Source: japantoday.com
