The European Commission will appeal ruling that favored Apple in $15 billion tax case

nanoguy

Posts: 590   +8
Staff member
Recap: With $15 billions in back taxes sitting in an escrow account ready to be paid to Ireland at a moment's notice, Apple could still end up keeping the money and giving the European Commission the middle finger. However, the European Commission isn't giving up the fight, and will appeal a recent ruling in Europe's General Court that sided with Apple and Ireland.

Back in July, Apple and Ireland won an appeal against a $15 billion tax bill imposed by the European Commission. The Cupertino giant paid the amount plus interest -- a whopping $16.7 billion -- in 2016, representing unfair tax breaks and benefits received in Ireland between 2003 and 2014. What followed was a multi-year battle to overturn that decision, which is now heating up after a judge in EU's general court ruled that the Commission had failed to prove that Ireland has given a tax advantage to Apple.

Today, the European Commission announced it will appeal the July 2020 decision made by the General Court in Luxembourg and bring it before the European Court of Justice. EU vice president of digital policy Margrethe Vestager explained in a statement that while the General Court's assessment revealed important legal issues in its ruling, the Commission intends to prove the General Court has made "a number of errors of law."

Specifically, the EC will draw attention to the fact that while EU member states are allowed to determine their own taxation laws as they see fit, they must do so in respect of EU law, including rules on state aid. Failing that, multinational companies can engage in anti-competitive deals that represent illegal state aid -- in the case of Apple, its effective tax rate went from an already lowly 1 percent in 2003 to 0.005 percent in 2014.

This is possible thanks to Ireland's famous quality of being a tax haven for multinational corporations. While the country does have a corporate tax rate of 12.5 percent (versus 21 percent in the US), it also provides generous base erosion and profit shifting (BEPS) tools that allow foreign companies to achieve an effective tax rate of less than 2.5 percent on global profits that are routed to Ireland.

According to a 2019 study conducted by the International Monetary Fund, almost 40 percent of the worldwide "foreign direct investment" can be considered "phantom capital," and amounts to $15 trillion that is passed through shell companies with no real business activities in the countries where they've been established. In Ireland, two thirds of the inward investment is phantom capital, and half of the biggest users of BEPS tools are US multinationals -- including Apple.

As for the Cupertino giant, it believes "the General Court categorically annulled the Commission’s case in July and the facts have not changed since then. This case has never been about how much tax we pay, rather where we are required to pay it. We will review the Commission’s appeal when we receive it, however it will not alter the factual conclusions of the General Court, which prove that we have always abided by the law in Ireland, as we do everywhere we operate."

In the meantime, Apple has raised developer fees in Europe in response to new digital taxes implemented in several countries. Furthermore, the OECD is racing to rewrite international tax rules by the end of the year to coerce multinational companies into paying their fair share in every country they operate in.

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Endymio

Posts: 691   +553
If the EC (and other areas) would stop legislating confiscatory-level tax rates, they wouldn't have to spend so much time and resources fighting those trying to avoid them.

In any case, the court's ruling was appropriate. Setting a low tax rate -- even a tax rate of zero -- does not amount to the EC's definition of "state aid", which is an advantage given selectively to a business entity. Apple was not selected out for these tax rates ... they're available to any business in Ireland.

Interestingly enough, the EU allows and even promotes state aid in many cases, when and where it feels it is necessary for reasons of "economic development". This is a classic case of government picking winners and losers, and one of the primary reasons for the long-term economic doldrums the EU faces.
 
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Endymio

Posts: 691   +553
I live in Ireland, with current economy ruined by ongoing social welfare pays over the pandemic, and I would love to see that money coming back to the country, especially from a greedy super-rich corporation that Apple is.
Well, the EU is suing Apple and Ireland both. If it wins the appeal, it will mean less money in the Irish economy, not more. But I wouldn't worry; it doesn't seem like they have much legal standing. Apple/Ireland will likely prevail.
 
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Irata

Posts: 893   +1,274
TechSpot Elite
Well, the EU is suing Apple and Ireland both. If it wins the appeal, it will mean less money in the Irish economy, not more. But I wouldn't worry; it doesn't seem like they have much legal standing. Apple/Ireland will likely prevail.
Actually, the EU commission wants to force Ireland to collect taxes from Apple, so the money would go to the Irish government.
 

Alfatawi Mendel

Posts: 72   +122
Whilst hoping the European Court of Justice comes down on the side of the commission - It has to be recognised that there are other tax-havens operating within the EU that need reigning in as well.
Luxembourg and its arrangement with Amazon for example.
 

Endymio

Posts: 691   +553
Actually, the EU commission wants to force Ireland to collect taxes from Apple, so the money would go to the Irish government.
Yes, but the moment a court granted such a move, Apple -- and several hundred other corporations -- would cease operations there, and Ireland would wind up with far less in revenue. Why do you think Ireland is fighting the case? It's a classic case of the Laffer Curve.
 

toooooot

Posts: 1,309   +617
One of my biggest dreams these days is American companies that sent most of their jobs abroad but still for some "unknown" reasons still have the benefits and discounts of "American" companies are slapped with every f%#$#ng taxes and fees that international companies are to pay when selling in the Us.
Let them, let them hide their money and avoid taxes in whatever tax heaven they want to, but make them pay every dime as a foreign company.
 
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Irata

Posts: 893   +1,274
TechSpot Elite
One of my biggest dreams these days is American companies that sent most of their jobs abroad but still for some "unknown" reasons still have the benefits and discounts of "American" companies are slapped with every f%#$#ng taxes and fees that international companies are to pay when selling in the Us.
Let them, let them hide their money and avoid taxes in whatever tax heaven they want to, but make them pay every dime as a foreign company.
Totally agree. It‘s sickening that so many companies move their profit to tax havens but still expect their „home“ governments‘ protection.

The cruise industry is suffering ? Well, ask the Bahamas government for aid ? Problems with pirates ? Ask for protection from the Panamanian or Liberian Navy because that‘s where your ships are registered. EU / Chinese / ... rules not to your liking ? Let Panama lobby for you....
 

Endymio

Posts: 691   +553
The cruise industry is suffering ? Well, ask the Bahamas government for aid
The cruise industry received none of the pandemic bailout aid from the U.S. government, as they were all foreign firms. Even U.S. firms had to also have a majority of their employees stateside to qualify for aid.

One of my biggest dreams these days is American companies that sent most of their jobs abroad but still for some "unknown" reasons still have the benefits and discounts of "American" companies are slapped with every f%#$#ng taxes and fees that international companies are to pay when selling in the Us.
You have it backwards. Rather than "discounts", U.S. firms pay more in taxes (the highest tax rate in the industrialized world, prior to the 2017 tax cut), along with having to follow hundreds of thousands of pages of federal, state, and local laws and regulations, many of which change on a near-continual basis. Foreign firms do not pay U.S. taxes, nor are they in general subject to extra fees.

Many governments around the world have tried the scheme of "protecting" local jobs by slapping foreign firms with heavy tariffs and/or other fees. Invariably, it has the opposite effect of what was intended, and leads to a closed, stagnant economy with both high unemployment and lower standard of living. The only solution which has ever worked in practice is for government to create a stable, cost-effective environment in which business can thrive.
 
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Maxiking

Posts: 132   +150
Colour me surprised, so socialists are not only ill educated when comes to economics, it is the same with the law.

I can imagine they must be desperate to grab those money. They always envy what's.not theirs.
 

EClyde

Posts: 2,345   +915
Euros need that money to pay for their defense by the USA. That's why they file SOOO many lawsuits
 

Avro Arrow

Posts: 245   +250
Yes, but the moment a court granted such a move, Apple -- and several hundred other corporations -- would cease operations there, and Ireland would wind up with far less in revenue. Why do you think Ireland is fighting the case? It's a classic case of the Laffer Curve.
If Apple leaves because they're being forced to pay taxes, that's Apple's fault, not the EC's. Huge corporations not paying their fair share of taxes is the biggest reason that the world is going to hell in a handbasket.