Tech

Billions claim: EU Commission argues with Apple and Ireland to court

In the dispute between EU Commission, the computer corporation Apple and Ireland for additional tax payments in the amount of 13 billion euros, the three parties meet on 17 and 18 September 2019 before the EU Court (ECJ) in Luxembourg. In a two-day trial, they will present their arguments and ask questions from the judges.

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According to the European Commission, Ireland has granted Apple favorable tax rates for years to win the company as an employer. But this is an anti-competitive aid, it says in a decision in August 2016. Therefore, Apple should pay back the taxes, including interest, a total of 13 billion euros, to Ireland. Both Apple and Ireland have filed a lawsuit against the Commission's decision (Cases T-892/16 and T-778/16).

"Routine tasks" in Ireland

In his complaint (PDF) throws Apple the European Commission "serious mistakes" because they did not recognize "that the profitable activities" the Irish company daughters, "in particular, the development and commercialization of intellectual property, controlled and managed in the United States, the profits made with these activities are attributable to the United States, not Ireland",

Ireland grants Apple from the point of view of the EU Commission an inadmissible tax savings. (Graphic: EU)

Apple credits profits from Europe, the Middle East, Africa and India to a head office headed by the US. The two subsidiaries only did "Routine tasks"As stated in plea 4. The Commission has doubts as to the legality of this head office and therefore believes that the profits should be returned to the Irish Apple companies and consequently taxed there. These are profits from the years 2003 to 2013. However, Apple did not tax these profits at the time of the decision even in the US.

Profits taxed in the US

In the meantime, that has changed. With the tax reform of President Donald Trump in 2018, a discount on the profits accumulated by US firms abroad was due at a much lower rate. It did not matter whether the profits were in foreign accounts or whether the money was being transferred to the US.

Apple was one of the many American companies that brought their billions to their home country after this political change. The US government had accordingly stressed that the tax payments were theirs. According to data from January 2018, Apple paid approximately $ 38 billion in taxes to the overseas money deposit of $ 252 billion. The EU Commission subsequently emphasized that the move does not change the requirement to pay taxes in Ireland. Apple filed interest together with 14.3 billion euros in a trust account.

Vestager ascended in commission

For EU Competition Commissioner Margrethe Vestager, the case against Apple was one of the highlights of her career so far. In the new commission headed by Ursula von der Leyen, Vestager will in future also be responsible as Vice President for Digital Agenda. Its tasks could include the introduction of an EU-wide digital tax if no agreement can be reached globally.

A decision of the EU court is expected only in several months. After that, the pages can still appeal to the European Court of Justice (ECJ). That should extend the dispute for another year.