LUXEMBOURG (reuters) – The European Union, in order for Apple’s (AAPL.(O) to the payment of 13 billion euros ($14 billion) in back taxes to Ireland, “defies reality and common sense,” the U.S. company said on Tuesday, as it launched a legal challenge in 2016 with the decision.
The iPhone-maker has accused the college of the European Commission on the use of the powers for the control of state aid in building the changes of the national laws,” in fact, it is trying to make the international tax system, and, in the process of creating legal uncertainty for businesses.
In Apple’s case to the general Court, Europe’s second largest, after the EU executive in 2016, and said that the tech giant has benefited from illegal state aid by the two Irish tax rulings, which artificially lowered the rate of taxation for more than two decades.
The case is, it is very important to the European Competition Commissioner, Margrethe Vestager, the defeat of the sweetheart deals for multinational corporations, a feature that has also led to a campaign against Starbucks (SBUX.D), Fiat (FCHA.MI), Engie(ENGIE.PA), Amazon (AMZN.(O), and others.
Apple’s Chief Financial Officer, Luca Maestri, led a six-strong delegation to the district court, where a panel of five judges will hear the arguments from both sides, as well as the republic of Ireland, Luxembourg, Poland and the efta surveillance Authority and the EFTA, in two days ‘ time.
“The Commission is of the view that, in essence, all of the company’s sales outside of the continental united states, must be attributed to the two branches in the republic of Ireland,” Apple lawyer, Daniel Beard, told the judge.
He said that the fact that the iPhone, the iPad, the App Store, and other Apple-related products and services, and the most important of the rights of the intellectual property was developed in the United States and the republic of Ireland, showed that the errors in the case of the european Commission.
“The branches of activities with a focus on the creation, development and management of these rights. Based on the facts of this case, it is the primary questions and challenges the reality and common sense,” Beard said.
“The activities of these two subsidiaries in Ireland, could not be held responsible for the generation of almost all of Apple’s profits outside of the Americas.”
Beard dismissed the criticism of the 0.005% tax rate is paid by, Apple’s main Irish unit at the end of 2014, which was pointed out by the Commission in its decision, the commission said that the regulator was only looking to “headings, listing of small numbers”.
The pay of an average global tax rate of 26%, Apple has said that it will be the largest taxpayer in the world, and it is now paying around 20 billion for U.S. income taxes on the same profits, the Commission said, should be subject to tax in the republic of Ireland.
In the current financial quarter, Apple expects revenue of $61-64 million euro and a gross margin of 37.5-38.5%.
Ireland, whose economy benefited greatly from the investments made by multinational companies attracted by low tax rates, it is also a challenge to the decision of the Commission.
“As Ireland has emphasized, it undermines the legal certainty of state aid is to be used for the subsequent installation of the modifications of the national law, and … legal certainty is an important principle of EU law, is one in which businesses rely on,” Beard said.
“What do I want to change the international tax system, but that’s a tax law issue, not aid,” he said.
Ireland has said that it has been the subject of entirely unjustified criticism of, and that’s the Apple tax was the result of a mismatch between the Irish and US tax systems.
FILE PHOTO: The Apple logo is displayed, press to an event at its headquarters in Cupertino, California September 10, 2019. REUTERS/Stephen Lam
“The decision of the Commission is fundamentally flawed,” Paul Gallagher, attorney at law for the republic of Ireland, told the court.
The lawyers for the Commission that will be the case on Tuesday. The court is expected to rule in the coming months, the losing party is likely to appeal to the european Court of Justice and a final ruling could take several years.
The common Apple, the cases are of T-778/16 Ireland v Commission and T-892/16, Apple Sales International and of Apple Operations Europe / european Commission.
Reporting by Foo Yun Chee; Editing by Mark Potter