Margrethe Vestager, European commissioner in charge of competition policy, said at a press conference on 30 August: “Member States can not give tax benefits to selected companies – this is illegal under EU state aid rules”.
Advertisement
EU regulators concluded in August that Apple had received undue tax benefits from Ireland – where the company’s European headquarters are located – which allowed it to pay substantially less than other companies.
KitGuru Says: We’ve known about Apple and Ireland’s plans to appeal the EU’s tax ruling for a while but it seems that the ball is finally rolling. Therefore, it is inappropriate to attribute more tax to its Ireland operations.
Ireland and Apple’s tax tussle with the European Commission could be the last big case of its kind, if U.S. President-elect Donald Trump’s desire to let domestic companies repatriate cash is more than a one-off.
ASI paid less than €10m in corporation tax in Ireland in 2011 giving an effective rate of about 0.05% on its overall annual profits.
Apple will tell judges this week that the Commission was not diligent in its investigation because it disregarded tax experts brought in by Irish authorities.
At the core of the commission’s case against Ireland is an assessment that the company unfairly channelled taxable profits from sales through a “head office” division of a non-resident Apple subsidiary in Ireland. The Commission ruled that Ireland offered preferential tax treatment to Apple, something illegal under European Union law.
The tech firm said it had been “singled out” as it was a “convenient target”.
As for Ireland, the Department of Finance maintained that it is legal for the country to impose far less tax on profits. “In the year that the commission says we paid that tax figure, we actually paid $400m”, he told the Irish Independent.
It claims these opinions involved no such departure from Irish law, but simply applied Section 25 of the Taxes Consolidation Act 1997 which in accordance with the territoriality principle, taxes only the profits attributable to the branch, not the non-Irish profits of the company.
These methods have apparently enabled Apple to pay just a mere 1 percent of their tax pay in 2003, which dropped even lower in 2014.
Apple has filed an application stating its argument which runs to some 50 pages, against the EU’s decision.
“The [European] Commission has exceeded its powers and interfered with national tax sovereignty”.
Advertisement
According to Bloomberg, Apple will officially have to pay back the takes within a matter of weeks, though the money will be held in escrow.
