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EU Expected to Appeal 14.3 Billion Euro Apple Decision

EU Expected to Appeal 14.3 Billion Euro Apple Decision

The European Union is expected to appeal the European court’s July decision that Apple does not owe Ireland 14.3 billion Euros in back taxes (plus interest) as a result of allegedly receiving illegal state benefits.

Back in July, the European Court stated that the European Commission failed to show “the requisite legal standard” that Ireland offered illegal state aid to Apple.

Overall, the Court considered “that the commission did not prove, in its alternative line of reasoning, that the contested tax rulings were the result of discretion exercised by the Irish tax authorities.”

The case will now be appealed, potentially moving to the European Court of Justice in a process that might drag on for at least a couple of years.

Speaking to the significance of this case, a EU official said, “This case is very important because it will set a precedent for cases we want to fight going forward.”

According to the Financial Times, it is believed the EU will “argue that the court is setting the bar “unreasonably high”, making it virtually impossible for Brussels to present any legitimate case in the future.”

Furthermore, writes the Financial Times’ Javier Espinoza, “EU officials will seek to have clarity on what amounts to unfair tax treatment in their appeal.”

If the EU fails to submit its appeal by today (Friday, September 25, 2020), the Irish government, which has been holding the sum in discussion in escrow as bonds since 2018, would start paying it back to the American tech giant.

As explained by The Irish Times, the EU’s case against Apple purported that a couple of rulings “allowed Apple to push most of its European sales through employee-less “head office” parts of two Irish-registered units, which were non-resident for tax purposes,” and “only the activities of Irish “branches” within the same units were subject to tax in the State.”

The European Commission argued that Apple’s Irish subsidiaries held the intellectual property associated to the American firm’s various products and therefore Ireland had the right to tax its related profits.

On the other hand, Apple said that their IP was housed in the company’s main office in the US.

According to the Irish Times, the final July decision stated that the EC failed to demonstrate, one, “that the valuable IP should have been allocated to the Irish branches,” and, two, “that even if the Irish branches did not hold the IP, Revenue officials did not apply a proper arm’s-length principle of transfer pricing when it came to working out what profits could be taxed in the Republic.”

Stay tuned for the next chapter in this never-ending international tax saga!

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