© Reuters. FILE PHOTO: This image shows a 3D printed Apple logo in front of a displayed Irish flag
By Foo Yun Chee and Padraic Halpin
BRUSSELS / DUBLIN (Reuters) – The conflict between Apple (NASDAQ 🙂 and the EU competition authorities came to a head on Wednesday when Europe's second highest court ruled whether Irish taxes of 13 billion euros (15 billion US dollars) would be paid have to. An essential part of the EU’s response to tax treaties.
On its behalf four years ago, the European Commission said Apple had benefited from illegal state aid through two Irish tax rulings that artificially reduced its tax burden over two decades – to just 0.005% in 2014.
A loss for EU Competition Commissioner Margrethe Vestager could weaken or delay pending proceedings against Ikea and Ikea Nike (NYSE 🙂 & # 39; s dealings with the Netherlands as well as Huhtamaki's agreement with Luxembourg.
Vestager, who made taxation a core part of her tenure, saw the same court last year lift her demand for Starbucks (NASDAQ 🙂 to pay Dutch taxes of up to 30 million euros. In another case, the court also overturned its decision against a Belgian tax system for 39 multinational companies.
The Apple dispute is viewed by some analysts as a loose-lose situation for Ireland, which has appealed against the Commission's order alongside the iPhone maker.
While € 14 billion, including interest, would make a big contribution to closing the coronavirus-shaped public finances, Dublin is trying to protect a low-tax system that has attracted 250,000 multinational employers.
If Ireland's appeal is successful, opposition parties will ridicule the government for failing to take the money, which could cover at least half of a budget deficit that is expected to reach up to 10% of GDP this year.
Should Ireland lose, the same politicians will indict the government for initiating the appeal. A decision in favor of the Commission could also raise questions about the application of Irish tax legislation at a sensitive time when new global rules for taxing digital giants are being discussed.
A defeat could also affect Ireland's ability to attract investment, even though the flash of advertising launched after the 2016 Commission's decision appeared to have worked. The number of people employed by multinationals such as Apple, Facebook (NASDAQ 🙂 and Google (NASDAQ 🙂 has increased by 25%, which is one in ten Irish workers.
Defeat would be a blow to Apple, but manageable given the cash holdings of over $ 190 billion at the end of the second quarter.
The cases are T-778/16 Ireland v Commission and T-892/16 Apple Sales International and Apple Operations Europe v Commission. The defeated side can appeal to the EU Court of Justice, the highest European court.
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