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Apple Takes EU to Court Over $14 Billion Tax Bill

Apple State Aid Ireland EU

American tech giant Apple has appealed the European Commission’s decision that the US multinational pay $14 billion in back taxes owed to Ireland.

In its latest statement before a European court, Apple claimed that the penalty imposed by the EU is nonsensical.

Apple’s lawyer Daniel Beard said, “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.”

However, Apple states that all of its products, services and intellectual property rights were designed and created in the US and not in Ireland, which therein makes the European Commission’s decision problematic.

“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 added.

“The activities of these two branches in Ireland simply could not be responsible for generating almost all of Apple’s profits outside the Americas.”

Furthermore, Apple’s lawyers played down the EU’s claim that the American firm only paid a tax rate of 0.0005% in 2014, suggesting that the EU’s motivation behind this attack was to make “headlines by quoting tiny numbers.”

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The European Commission & Ireland Respond to Apple’s Appeal

In response, as reported by Reuters, the European Commission’s lawyers said that Apple’s claims “that all its intellectual property-related activities take place in the United States was inconsequential.”

Richard Lyal, the Commission’s lawyer for this case, said, “To a large extent that is perfectly correct and perfectly irrelevant,” considering that the EU was levying a tax on the company’s subsidiaries in Ireland.

According to Lyal, Ireland paid little attention to the work being carried out by Apple’s subsidiaries in the country and therefore offered the US tech giant illegal tax benefits.

Lyal said: “They simply accepted an arbitrary method proposed by the Apple Ireland subsidiaries. That in itself gives rise to a presumption of a special deal, exceptionally advantageous treatment. It is clear that the tax authorities made no assessment in 1991.”

“What is the case not about? Not about the Commission as policeman of international taxation, not about making sure tax is paid somewhere, though that would be a nice idea, not about resolving tax mismatches,” Lyal concluded.

Ireland, who like Apple has also opposed the EU’s move, said the decision ultimately stems from differences between US and Irish tax systems.

Paul Gallagher, who is Ireland’s lawyer in this case, believes “The Commission’s decision is fundamentally flawed.”

Additionally, Irish representative Maurice Collins said, “The Commission decision simply ignores Irish laws.”

As explained by DW, “Dublin has enjoyed a boost to its economy in recent years as multinational corporations are attracted by the low tax rates in the country and is seen as unwilling to accept a ruling suggesting that its tax laws are too lax.”

Still, Lyal insists, “There is no tax mismatch here.”

How will the Apple-Ireland-EU saga end? Will it be years before all is said and done?