EU vs Apple: European Union moves top court in $14 billion tax fight against Apple

EU competition regulators have taken their fight against sweetheart tax deals between multinational corporations and European Union states to the bloc's highest court. On Tuesday, they appealed to the Court of Justice of the European Union (CJEU) to overturn a previous ruling and order Apple to pay a record-breaking €13 billion ($14 billion) in Irish back taxes. This case, spearheaded by EU antitrust chief Margrethe Vestager, carries significant implications for corporate tax liabilities.

Paul-John Loewenthal, a lawyer representing the European Commission, emphasised that the outcome of the case would determine whether member states could continue offering substantial tax breaks to multinational companies in exchange for investments and job creation. The Commission's 2016 decision argued that Apple had benefited from two decades of Irish tax rulings that artificially reduced its tax burden, resulting in an effective tax rate as low as 0.005 per cent in 2014.

However, the General Court ruled in 2020 that the regulators had not met the necessary legal requirements to prove that Apple had received an unfair advantage. Disagreeing with this decision, Loewenthal contended that the judgment was "legally flawed" and should be overturned by the CJEU.

In response, Apple denied the Commission's allegations, asserting that it had paid its fair share of taxes in the appropriate jurisdictions. Daniel Beard, representing the tech giant, argued that the profits in question had already been subjected to the United States tax regime. He stated that Apple had set aside reserves to fulfil its US tax obligations and had paid approximately €20 billion in taxes in the U.S. on the same profits that the Commission claimed should have been taxed by Ireland. According to Beard, Apple had fulfilled its tax obligations under the Irish tax code.

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The EU competition enforcer has faced recent setbacks in court battles with major companies like Stellantis, Amazon, and Starbucks. However, it did achieve a legal victory in September when the CJEU sided with it in a Belgian tax break case involving a group of multinational corporations. Despite these mixed outcomes, Vestager has been successful in compelling Ireland, the Netherlands, and Luxembourg to abandon contentious tax structures, contributing to a global push for fairer corporate tax rates.

The CJEU's Advocate General, Giovanni Pitruzzella, will provide a non-binding opinion on November 9, followed by the Court's final ruling. The case, identified as C-465/20 P Commission v Ireland and Others, holds considerable significance for the future of tax practices within the EU and the extent to which member states can grant tax advantages to multinational corporations.

The European Commission argues that Apple benefited from two decades of Irish tax rulings that artificially reduced its tax burden, resulting in an extremely low effective tax rate. However, the General Court ruled in 2020 that the regulators had not provided sufficient evidence to prove Apple's unfair advantage.  The case has significant implications for corporate tax liabilities of around $14 billion.

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