Apple tells European Commission it's nutty for slapping €13bn tax bill on Irish subsidiary

Sweetheart deal crackdown 'defies reality and common sense' apparently

Ireland map, photo via Shutterstock

Apple has appealed against the European Union's 2016 decision to impose a €13bn tax bill on the iPhone maker's Irish subsidiary.

The case is part of a wider EU crackdown on multinationals' tax arrangements but hinges on issues of competition law and state aid. The EU demands that Apple pays the missing billions to the Irish government – though the Irish government is also trying to overturn the ruling.

For its part, Ireland is accused of offering sweetheart deals to companies in order to guarantee investment and jobs.

Apple's lawyer told the General Court in Luxembourg that the EU's order "defies reality and common sense", according to Reuters.

The company used complex licensing arrangements to ensure subsidiary revenues fell under Irish tax rules. Its lawyer dismissed the European Commission's claim that Apple paid an effective tax rate in Ireland of 0.005 per cent, saying it was merely chasing "headlines by using tiny numbers".

The commission's legal team said the case was not an attempt to levy global taxes on Apple and that the Irish government had failed to properly examine the assets and activities of Apple's Irish subsidiaries back in 1991, and instead simply accepted what Apple told them.

The commission said in 2016 the arrangements equated to unfair state aid, allowing the company to substantially reduce its tax bill. The EU told the Irish government to reclaim the €13bn it believed was underpaid.

Apple said at the time that it neither asked nor received any kind of special deal from the Irish government.

The appeal will provide an acid test for competition commissioner Margrethe Vestager's legal moves against a raft of companies with similar arrangements in Ireland, Luxembourg and the Netherlands.

Both sides are back in court tomorrow (18 September) followed by a wait of several months before a verdict is released.

Given the huge sums of money involved, the losing side is likely to appeal to the European Court of Justice – a process expected to take several more years. ®

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