EU makes its case for overturning the $15.8B Irish Apple tax ruling

The European Union has published a summary of its appeal against the $15.8B Irish Apple tax ruling that decided that the Cupertino company did not have to pay. The EU had argued that Apple had reached an illegal agreement with the Irish government, but a court disagreed.

The EU argues that the judges in that case used “contradictory reasoning” in reaching their decision …

Background

Apple funneled the revenue from all its sales throughout the EU through its European HQ in Ireland. Apple likely chose the location because the country already had an extremely low rate of corporate tax compared to other EU countries, at just 12.5%, and the Irish government further sweetened the deal with special arrangements that meant the iPhone maker paid even less.

In 2016, the EU ruled that these arrangements were illegal. It was the Irish government, rather than Apple, which was found to have broken the law, but because the arrangement was not lawful it meant that Apple owed the taxes that should have been collected.

As both Apple and the Irish government appealed, it was agreed that Apple would pay the sum into an escrow account, where it would be held pending the outcome of the court battle.

Apple last year won the initial court battle, the judges telling the EU it had not proven that Apple had been given an economic advantage, but the EU filed a last-minute appeal in September of last year.

EU’s appeal of the Irish Apple tax ruling

Bloomberg reports that the EU’s basis for appealing has now been published.

The European Union is seeking to overturn Apple Inc.’s victory in a 13 billion-euro ($15.8 billion) tax dispute, saying judges used “contradictory reasoning” when they found that the company’s Irish units weren’t liable for huge payments […]

The EU said that the lower court improperly conflated Apple’s lack of employees at two Irish units and the company’s level of responsibility for intellectual property on iPhone and iPad sales across Europe. Judges failed to properly weigh the EU’s analysis of the Irish branches and showed “contradictory reasoning” in a separate part of their findings […]

Apple’s Irish units recorded almost all profits from sales outside the Americas, she said, and treating parent and group companies separately allows businesses to “have their cake and eat it” by reducing tax payments.

Apple has always taken the line that it simply follows the law in each of the countries in which it operates, but has historically taken an aggressive stance on tax avoidance. The company has used complex measures that are legal but widely considered to go against the intent of the law, which is for all companies to be treated equally. Only very large multinational companies can adopt these kinds of tax avoidance tactics.

CEO Tim Cook favors global tax reform, lending his support to an OECD initiative to agree on rules across 137 countries.

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