Apple is appealing to Europe’s second highest court to overturn the European Commission’s 2016 ruling that it pay the record sum of over 13 billion euros to Ireland. The European Union’s order to Apple to pay over US$14 billion in back taxes “defies reality and common sense,” the U.S. firm said as the two sides sparred in the case.
Apple also accused the Commission of using its powers to combat state aid “to retrofit changes to national law”, in effect trying to change the international tax system and in the process creating legal uncertainty for businesses.
The EU executive dismissed the arguments, saying it was not seeking to police international tax laws and accused Ireland of not having done its homework when assessing Apple’s taxes. “The Commission contends that essentially all of Apple’s profits from all of its sales outside the Americas must be attributed to two branches in Ireland,” Apple’s lawyer Daniel Beard told the court.
He said the fact the iPhone, the iPad, the App Store, other Apple products and services and key intellectual property rights were developed in the United States, and not in Ireland, showed the flaws in the Commission’s case. “The branches’ activities did not involve creating, developing or managing those rights. Based on the facts of this case, the primary line defies reality and common sense,” Beard said. “The activities of these two branches in Ireland simply could not be responsible for generating almost all of Apple’s profits outside the Americas.”
MacDailyNews Take: The vast majority of the value in Apple products is created in the United States of America, where design, development, engineering work and more are accomplished. Therefore, under the current international tax system, the majority of Apple taxes are owed to the United States of America, not Ireland.
Good luck, Apple in an EU court deciding on a $14.4 billion EU-ordered tax clawback. We’re sure the judgement will be ever so fair.