After some seriously loud discussions in Dublin, the Irish have chose to appeal the European Commission’s judgement earlier this week that might have compelled Ireland to collect $14.5 billion in back taxes from the tech giant.
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The European Commission is closely scrutinising a slew of Irish tax opinions, less than a week after its competition division decided its dealings with Apple amounted to illegal state aid.
If it were found that there were any “sweetheart deals” not in line with European rules, there could be further rulings similar to the one on Apple’s back taxes.
The ruling against Apple has pushed the issue into the limelight and raised the risk of a significant push-back from the U.S., said analysts, where some lawmakers are saying the result represents a European encroachment on the USA potential tax base. Juncker said the order that Apple should pay back 13 billion euros ($14.5 billion) to Ireland’s Treasury was about fairness.
Apple’s bill far exceeds the previous European Union record for a state aid case: 1.3 billion euros for the Nurburgring race track in Germany. The EC alleges that the firm received illegal state aid. This alone is responsible for about 1,40,000 jobs.
But it has now been revealed the European Commission is actively scrutinising multiple “comfort letters” provided to multinationals in Ireland regarding their tax affairs.
Apple’s CEO Tim Cook quickly penned down an open letter challenging the ruling by the EC. Apple constructed its company to use the tax regime.
You can read the complete letter here. If the court backs the Commission, hundreds of other complex tax arrangements used by US companies to minimize taxes on European sales could also be challenged.
On the other hand, the United States feels that the country’s firms are being targeted by the EC.
In October Brussels ordered U.S. coffee giant Starbucks and Italian automaker Fiat to each repay up to €30 million in back taxes to the Netherlands and Luxembourg respectively.
Many reports are out claiming the move is political.
The row over how much tax technology giant Apple should pay to the Irish government has triggered a new argument about sovereignty and a government’s right to set taxes within the European.
But that view was rejected by Commission chief Jean-Claude Juncker.
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“Free trade must be fair trade”, Juncker said at a news conference with Donald Tusk, president of the European Council.
