EU Moves Forward With Appeal Against Apple's 'Contradictory' Tax Case Victory

The European Union has set out its grounds of appeal against Apple's victory in its $13 billion euro ($15.8 billion) tax dispute, saying that judges used "contradictory reasoning" when they ruled that Apple's business in Ireland was not liable for significant payments (via Bloomberg).

European Commisssion

In a summary of its appeal published earlier today, the EU set out its determination to challenge the court judgement from last year. In July 2020, the EU's General Court sided with Apple, and said the EU's executive arm, led by antitrust chief Margrethe Vestager, had failed to show Ireland's tax arrangements with the company were tantamount to illegal state aid.

The appeal alleges that the court improperly conflated Apple's number of employees at two of its Irish units and the company's level of responsibility for intellectual property on iPhone and iPad sales across Europe. Judges are said to have failed to properly weigh the EU's own analysis of Apple's Irish branches and showed "contradictory reasoning" in their findings.

The argument essentially centers on where value is created and, in turn, where it should be taxed. Apple argues that all important company decisions are made in its Cupertino headquarters, so profits should be taxed in the U.S.

July's ruling came as a surprise to EU commissioners, who have in recent years set about probing national tax rulings that effectively serve as illegal subsidies and closing tax loopholes that allow some multinational companies to lawfully pay less tax in Europe. The final decision will now be made by the EU's highest court, the Court of Justice of the European Union (CJEU).

Though losing the appeal would be seen as a major setback for the European Commission, it would not stop it from pursuing other lines of investigation into the tax arrangements of multinational companies such as Apple. However, the Commission would need to be able to demonstrate more clearly that tax rulings confer a financial advantage to the company in question and therefore constitute illegal state aid.

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Top Rated Comments

5232152 Avatar
44 months ago
Paying 0.5% in tax (or less) is fraudulent when everyone else is paying much much more. Sure you might have found a hole in the law, but your intention is to scam - end of the story. There is nothing to debate here: Pay your tax or redraw from the market.
Score: 15 Votes (Like | Disagree)
sofila Avatar
44 months ago
All of Apple defenders pointing to that hole in the law but knowing inside that 0.5% taxes is simply a scam. Long live to mighty AAPL
Score: 4 Votes (Like | Disagree)
gaximus Avatar
44 months ago
I think I’m missing something? Apple made a deal with Ireland, Apples pays Ireland Taxes that they both agreed to. But the EU doesn’t like the deal, shouldn’t the EU be suing Ireland for making the deal? Apple hasn’t done anything legally wrong here. Does the deal expire? Can they renegotiate when it does?
Score: 3 Votes (Like | Disagree)
Unsupported Avatar
44 months ago

Paying 0.5% in tax (or less) is fraudulent when everyone else is paying much much more. Sure you might have found a hole in the law, but your intention is to scam - end of the story. There is nothing to debate here: Pay your tax or redraw from the market.
There is a difference between Tax avoidance and Tax evasion. One is legal, the other is not.
Score: 3 Votes (Like | Disagree)
mazz0 Avatar
44 months ago

The argument essentially centers on where value is created and, in turn, where it should be taxed. Apple argues that all important company decisions are made in its Cupertino headquarters, so profits should be taxed in the U.S.
Wow, this is a complex issue isn’t it? What is “value”? Value for whom? If it’s value for the user then yeah, it comes from Cupertino. If it’s value for the shareholders then it comes from the sales, which happen where the customers are.

I think people would have more sympathy for Apple’s position if people thought they paid the right amount of tax in the US, but rightly or wrongly we get the impression that they don’t.

Imagine two companies:

Awesome Things:
Designs it’s products in Alistan.
Sells 100 units a year in Alistan.

Brilliant Stuff:
Designs it’s products in Alistan.
Sells 50 units a year in Alistan.
Sells 50 units a year in Boboa.

Their costs are the same, and their units sell for the same amount.

The hypothetical countries Alistan and Boboa have identical tax rules.

Intuitively you’d think Awesome Things and Brilliant Stuff should pay the same tax, but they don’t do they? Brilliant Stuff somehow ends up a lot less doesn’t it? Intuitively therefore it seems they’re avoiding their far share of tax.
Score: 3 Votes (Like | Disagree)
5232152 Avatar
44 months ago

If the law is wrong, change the law. But if someone acts carefully and within the law, they should not be liable to retroactive penalties.
Wrong. In the western world, we define obvious misconduct in this way as following The Word Of The Law but not The Spirit Of The Law. Apple, which tries to be such a socially aware company fully understands the spirit of the law. They just don't care. That makes them a third country corrupt company from a financial standpoint.
Score: 2 Votes (Like | Disagree)