Daily Management Review

Apple And Ireland File Cases Against EU Decision For Apple To Pay €13bn Tax


United States based tech giant Apple Inc said that the order of the European Union to the company to pay €13bn in back taxes to Ireland “defies reality and common sense”. This was comment was made by Apple as it and the Irish government initiated a dual legal course ot challenge the 2016 ruling of the EU on the back taxes. 
The European Commission was accused by the iPhone of using its powers to combat state aid “to retrofit changes to national law”, which was equivalent to trying to change the international tax system and thereby creating legal uncertainties for business to function in the EU’s jurisdiction.
In 2016, the EU executive arm said illegal state aid had benefited the US company because of two tax rulings in Ireland which helped the Apple to artificially bring down its tax burden and this had been going on for two decades. The argument by Apple were then made at Europe's second-highest court, the General Court in Luxembourg, in context of the above comment by the EU. 
Entirely unjustified criticism had been made against Ireland, said lawyers representing the State, who also added that a mismatch between the Irish and US tax systems was representative of the Apple tax case.
“The Commission's decision is fundamentally flawed,” Paul Gallagher, a lawyer representing the Government, told the court. “It is the Commission that should be criticised.”
This Apple case is crucial for the European competition commissioner Margrethe Vestager and her attempts as clamping down on the so called sweetened deals for multinationals, and companies like Starbucks, Fiat, Engie, Amazon and others have faced action from the EU under that campaign.
A court ruling on the case is expected in the coming months and it is likely that the party losing out in the court would file an appeal with the EU Court of Justice. A final judgment could take several years.
“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. The flaws in the Commission's case is shown glaringly because the iPhone, the iPad, the App Store, other Apple products and services as well as the critical intellectual property rights of the company were developed and secured in the United States, and not in Ireland, he said.
“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. “The activities of these two branches in Ireland simply could not be responsible for generating almost all of Apple's profits outside the Americas.”
The citation by the European Commission of the 2014 tax rate for Apple in Ireland, which was 0.005 per cent, as was brought up while announcing the decision, was dismissed by Beard and added that the European regulator was just trying to get attention and “headlines by quoting tiny numbers”.