Apple may have to repay billions in back taxes after a top legal counsel to the European Union’s highest court said Thursday it should reverse a 2020 appeal ruling that tax breaks Ireland offered the U.S. tech giant were legal. File Photo by John Angelillo
Apple may have to repay $13.9 in back taxes after a top legal counsel to the European Union’s highest court said Thursday it should reverse a 2020 appeal ruling that tax breaks Ireland gave the U.S. tech giant to headquarter its European business in Cork were legal.
Advocate General Giovanni Pitruzzella at the Court of Justice said a series of legal mistakes meant the case needed to be revisited due to failures to correctly assess “the substance and consequences of certain methodological errors that, according to the Commission decision, vitiated the tax rulings”. Advertisement
He said the judgment should be set aside and referred the case back to the General Court for a new decision. Pitruzzella’s opinion is not binding but the court usually follows the legal advice of advocate generals.
An Apple spokesman responded to the recommendation saying the initial ruling made it “very clear that Apple received no selective advantage and no state aid” and that the company believes the ruling should be upheld.
Irish Finance Minister Michael McGarth said his department would consider Pitruzella’s opinion “in detail” but stood by its ruling that Apple had paid sufficient tax. Advertisement
“It has always been, and remains, Ireland’s position that the correct amount of Irish tax was paid and that Ireland provided no state aid to Apple,” McGarth said.
The row goes back to 2016 when the European Commission won a case alleging that the ultra-low rate at which Apple was taxed in Ireland broke state aid and anti-trust laws by allowing the tech-giant to book all EU earnings to its Irish “shell” operation, thereby avoiding paying tax on sales in the EU.
Apple and Ireland mounted a successful appeal with the General Court ruling there was insufficient evidence to prove Apple breached EU competition rules.
The commission originally brought the case after a two-year investigation begun in 2014 that alleged tax arrangements Dublin agreed with Apple in 1991 and 2007 “substantially and artificially lowered” the taxes Apple paid in a fashion that bore no relation to the state of the country’s economy.
The deals slashed Apple’s effective corporate tax to just 0.005% in 2014, down from 1% in 2003, or $50 for every $1 million in profit, leading EU Competition Commissioner Margrethe Vestager to argue Ireland had provided unlawful subsidies by allowing it to pay substantially less tax than its competitors over an extended period. Advertisement
