The European Commission (EC) has ruled in favor of Ireland’s Apple in a dispute over a record 13 billion tax refund.
An EU court in Luxembourg has since 2016 overturned the commission’s additional request. The commission failed to prove that Apple’s tax treaties in Ireland from 1991 to 2007 created unjustified state aid, as the judges explained Wednesday.
However, this decision is not the end of the conflict politically. The dispute before the European Court of Justice (ECJ) is likely to continue in the near future. The committee has two months to file an appeal.
EU competition commissioner Margaret Westerger in August 2016 asked Apple to pay billions in Ireland as the country allowed illegal special consideration under the tax system. Ireland and Apple opposed. The key question in this process was how much of the money collected in Ireland should have been taxed in the country.
The iPhone group had told the European Court of Justice that the income of both Irish subsidiaries should be taxed primarily in the USA. That’s why Apple was asked to pay twice. The commission also failed to convince the court that Apple was receiving special rates in Ireland that were not available to other companies.
Dispute is not just a matter of big money. For the Commission, this is a major setback in long-standing disputes with individual member states, such as Luxembourg, over tax conditions for companies. For Commissioner Westergere, who is often celebrated in Europe, the high case was a high point to date in her career.
Apple manufactures explosives between the USA and Europe
The case also sparked a dispute between the United States and Europe over the imposition of taxes on American companies. It was also about popularity for Apple: the iPhone maker does not want to be seen as a tax evader and cheater.
Apple, the Irish subsidiary of Apple Sales International (ASI), has argued before a European court that it is solely responsible for the sale of the group’s devices outside of North and South America – the original values were primarily generated in the USA.
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“The iPhone, iPad, App Store, and all other Apple products and services were designed and developed by another,” Apple said. Therefore, Ireland was right to tax only a portion of the profits posted by the subsidiaries responsible for the activities of the country.
Under previous U.S. regulations, American companies were allowed to stockpile foreign profits outside their country. When transferred to the USA, 35 per cent tax had to be paid. So many companies kept the money abroad. With the tax reform coming into effect in 2018, foreign reserves will have to be paid at a significantly lower rate – whether they are brought to the USA or not.
Apple pays about $ 38 billion in taxes in the US
Apple pays about $ 38 billion in taxes to the U.S. Treasury on $ 252 billion accumulated abroad. Of this, according to the company, the European Commission estimates a profit of $ 21 billion in taxes.
The commission did not deny that Apple’s intellectual property originated in the United States. However, the Irish tax authorities have not conducted the necessary analyzes of the entire business of Apple affiliates to make a reasonable decision on where to tax which part of the profits.
At the time, the judges complained that Apple’s tax contracts had not been adequately documented – but the commission’s arguments were found to be inadequate. (dpa, Tsp)
Prone to fits of apathy. Unable to type with boxing gloves on. Internet advocate. Avid travel enthusiast. Entrepreneur. Music expert.
