23/05/23

INTERNATIONAL TAX: Top EU court to hear commission's Apple tax case appeal.

As published on rte.ie, Tuesday 23 May, 2023.

The EU's highest court will today hear the European Commission’s appeal against a ruling overturning the executive’s 2016 finding that Apple had underpaid €13.1 billion in tax due to Ireland.

If the Commission wins, the money will be paid over to the Irish State.

The case dates back to a European Commission probe which seven years ago found that two tax rulings in 1991 and 2007 issued by Revenue to the firm had "substantially and artificially lowered the tax paid by Apple in Ireland since 1991".

The commission found the technology company had underpaid taxes totalling €13.1 billion between 2003 and 2014 and ordered it to pay the money to Ireland along with €1.2 billion worth of interest.

Apple and Ireland appealed those conclusions to the EU’s General Court and the case was heard over two days in September 2019.

The following July the court issued its judgment annulling the commission’s findings.

However, the commission did not accept the decision and in September 2020 announced that it would lodge an appeal, which will be heard today.

The commission’s appeal must be based on what it claims are errors in law in the lower court’s decision.

Among its arguments are that the General Court misinterpreted its decision by concluding that its finding that Apple had advantage conferred on it relied solely on the lack of employees and physical presence in the head offices of two Apple companies at the centre of the case.

The commission’s legal team will claim that the General Court did not attempt to show that the Irish branches of the two Apple companies in fact performed functions justifying the allocation of the Apple intellectual property licences to those branches.

It will also argue that the General Court committed an error of law in the application of the rules on the standard of proof the commission must meet to show an advantage.

The hearing is expected to last around a day, with an Advocate General likely to issue a non-binding opinion in around six months’ time, with the judgment following around six months after that.

Apple sources are hopeful that the appeal will fail, while ahead of today’s oral hearing, the Department of Finance said the Government still believes the decision of the General Court is the correct one.

However, if the commission were to win its case, Apple would be forced to pay the unpaid taxes and interest to the State.

Currently that money is sitting in an escrow or third-party holding account and due to the investment environment had fallen in value to €13.635 billion at the end of 2021.