Apple slams European Union as epic court battle over tax bill begins

Apple CEO Tim Cook told US Senate hearing of decisions taken in Ireland

Apple CEO Tim Cook told US Senate hearing of decisions taken in Ireland

Apple embarks on an epic court battle with the European Union on Tuesday, fighting the commission's landmark order that the iPhone-maker reimburse Ireland 13 billion euros ($14 billion) in back taxes. That's nearly €3,000 per Irishman, according to Süddeutsche Zeitung.

Apple is contesting a 2016 order by European Competition Commissioner Margrethe Vestager to pay back €13bn in taxes to Ireland, which was considered an illegal tax exemption. The country has been offering tax reliefs as its strategy to attract companies and the Irish are not going to give up this strategy.

Apple also accused the commission of using its powers to combat state aid "to retrofit changes to national law", in effect trying to change the global tax system and in the process creating legal uncertainty for businesses. The rulings reduced Apple's tax burden for more than two decades - to as low as 0.005% in 2014, according to the Commission, although Apple disputes this.

In a setback to U.S. tech giant, the European Commission in 2016 announced that Ireland must demand 13 billion euros in taxes from the Cupertino, San Francisco-based company. But Apple and Ireland, whose economy benefits from hosting a number of multinational firms, are appealing against the decision at Europe's General Court, its second highest.

Apple did not do a special Irish tax deal in return for creating jobs, Mr Beard argued.

The lead lawyer for the Government, former attorney general Paul Gallagher SC, said the Commission had failed to prove its case - particularly its claim that the State had provided a special deal to Apple not provided to others - and in the process had tarnished the reputation of Ireland.

They simply accepted an arbitrary method proposed by the Apple Ireland subsidiaries.

Ireland considers the Commission's ruling an infringement of national sovereignty.

At the first day of the court hearing, Apple's lawyer Daniel Beard said the Commission's view was that all of Apple's profits from all of its sales outside the Americas must be attributed to two branches in Ireland.

Irish lawyer Paul Gallagher calls the Commission's decision "fundamentally flawed", and says that Ireland had been the subject of entirely unjustified criticism, and the Apple tax case is due to a mismatch between Irish and USA tax systems.

This became possible after a major tax overhaul in the United States at the end of 2017 that allowed Apple to repatriate profits made overseas.

Apple's CEO, Tim Cook, has dismissed the case as "total political crap".

The court is expected to rule in the coming months, with the losing party likely to appeal to the EU Court of Justice and a final judgment could take several years.

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