EU court victory for Apple in 13-bn-euro tax case

BRUSSELS

A European court on July 15 annulled an EU order that Apple repay Ireland 13 billion euros ($15 billion) in back taxes, in a major legal setback for Brussels.

The iPhone-maker and Ireland had appealed the 2016 order that Apple CEO Tim Cook had slammed at the time as "total political crap".

The unambiguous decision by the EU’s general court will be open to a further appeal at the top European Court of Justice no earlier than 2021.

The commission’s historic ruling against Apple was delivered in August 2016 by Competition Commissioner Margrethe Vestager in a shock decision that put Europe on the map as a scourge of Silicon Valley.

Vestager was derided as "tax lady" by US President Donald Trump because of the Apple case as well as the heavy antitrust fines she imposed on Google.

The EU accused Ireland of allowing Apple to park revenue earned in Europe, Africa, the Middle East and India and sparing it almost any taxation.

Brussels said this gave Apple an advantage over other companies, allowing it to avoid Irish taxes between 2003 and 2014 of around 13 billion euros ($14 billion).

EU officials argued that constituted illegal "state aid" by Ireland.

But the EU court said the commission "did not succeed in showing the requisite legal standard that there was an advantage" as required by EU law.

The commission "was wrong" to declare that Apple units based in Ireland "had been granted a selective economic advantage and, by extension, state aid."

Apple welcomed the decision and reiterated that the profits in question were always intended to go to the United States and not Ireland.

"This case was not about how much tax we pay, but where we are required to pay it," an Apple spokesman said in an email to AFP.

"We’re proud to be the largest taxpayer in the world as we know the important role tax payments play in society," Apple added.

Dublin also hailed the decision.

The government said it had "always been clear" Apple received no special treatment, adding: "The correct amount of Irish tax was charged... in line with normal Irish taxation rules."

The EU’s competition supremo, Vestager, has been accused by US President Donald Trump of "hating" the United States. He has slammed her as the "tax lady" because of the Apple case as well as the heavy antitrust fines imposed on Google.

Some observers have expressed doubts on the Apple case, wondering whether the EU was using antitrust law to crack down on tax optimization strategies by multinationals.

In similar cases, the same EU court struck down an order by Brussels that Starbucks pay 30 million euros in back taxes to the Netherlands.

In a separate decision, however, it said Fiat must pay roughly the same amount to Luxembourg.

The case comes as the EU is trying to come up with ways to better ensnare digital giants to pay taxes where they do business, though this has been opposed by some European capitals.
"Today’s court decision illustrates how difficult it is to use EU state aid rules to collect tax," said Tove Ryding, tax expert at the European Network on Debt and Development.

"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 one percent in taxes," she said.

Talks to come up with a new global tax system at the OECD have been stalled due to opposition by the US.
The Apple decision came on the eve of another landmark case at the EU courts, this one a lawsuit brought by an Austrian activist against Facebook over data privacy.