Apple Wins EU Court Case 07/15 06:52
BRUSSELS (AP) -- A European Union court on Wednesday delivered a hammer blow
to the bloc's attempts to rein in sweetheart tax deals between multinationals
and individual member countries when it ruled that technology giant Apple does
not have to pay 13 billion euros ($15 billion) in back taxes to Ireland.
The EU Commission had claimed in 2016 that Apple had struck an illegal tax
deal with Irish authorities that allowed it to pay extremely low rates. But the
EU's General Court said Wednesday that "the Commission did not succeed in
showing to the requisite legal standard that there was an advantage."
"The Commission was wrong to declare" that Apple "had been granted a
selective economic advantage and, by extension, state aid," said the
Luxembourg-based court, which is the second-highest in the EU.
The EU Commission had ordered Apple to pay for gross underpayment of tax on
profits across the European bloc from 2003 to 2014. The commission said Apple
used two shell companies in Ireland to report its Europe-wide profits at
effective rates well under 1%.
In many cases, multinationals can pay taxes on the bulk of their revenue
across the EU's 27 countries in the one EU country where they have their
regional headquarters. For Apple and many other big tech companies, that is
Ireland. For small EU countries like Ireland, that helps attract international
business and even a small amount of tax revenue is helpful for them. The net
result, however, is that the companies often end up paying very low tax.
The ruling can only be appealed on points of law and the Commission Vice
President Margrethe Vestager said she was studying the judgment and will
"reflect on possible next steps."
The Irish government welcomed the ruling, saying "there was no special
treatment provided" to the U.S. company. Apple also said it was pleased by the
decision, arguing that the case is not about how much tax it pays, but in what
country. Apple CEO Tim Cook had earlier called the EU demand for back taxes
"total political crap."
The defeat is especially stinging for Vestager, who has campaigned for years
to root out special tax deals. Trump has referred to her as the "tax lady" who
"really hates the U.S."
Despite the setback, she vowed to carry on the fight. "The Commission will
continue to look at aggressive tax planning measures under EU state aid rules
to assess whether they result in illegal state aid," she said.
The Eurodad network of 49 civil society organisations said that the ruling
showed how tough any tax policy remains. ""If we had a proper corporate tax
system, we wouldn't need long court cases to find out whether it is legal for
multinational corporations to pay less than 1% in taxes," said Tove Maria
Ryding of Eurodad.
Even though taxation remains under the authority of its member countries,
the EU is seeking to create a level playing field among the 27 nations by
making sure special deals including ultra-low tax rates with multinationals are
Wednesday's ruling will hurt that.
EU Greens legislator Sven Giegold said the verdict "is a huge setback in the
fight against tax dumping in Europe. EU state aid rules are clearly totally
insufficient to tackle the problem. This must be a wakeup call."
The ruling comes at a time when tax income for EU nations is especially
welcome because of the economic impact of the coronavirus pandemic. At a time
when cash-strapped households are suffering, the EU wants to make sure
multinationals making profits on the continent pay their fair share, too.
"In times like these when we are passing multibillion-euro economic stimulus
packages, we cannot afford to waste a single cent in tax revenue", said EU
legislator Markus Ferber of the Christian Democrat EPP Group.