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EU court to decide if Apple has to pay €13bn in Irish back taxes today

Written by Business World, on 15th Jul 2020. Posted in Technology

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Apple's clash with EU competition regulators comes to a head on Wednesday as Europe's second-highest court rules on whether it has to pay 13 billion euros in Irish back taxes, a key part of the EU's crackdown against sweetheart tax deals.

In its order four years ago, the European Commission said Apple benefited from illegal state aid via two Irish tax rulings that artificially reduced its tax burden for over two decades - to as low as 0.005% in 2014.

Defeat for European Competition Commissioner Margrethe Vestager could weaken or delay pending cases against Ikea's and Nike's deals with the Netherlands, as well as Huhtamaki's agreement with Luxembourg.

Vestager, who has made the tax crackdown a centerpiece of her time in office, saw the same court last year overturn her demand for Starbucks to pay up to 30 million euros in Dutch back taxes. In another case, the court also threw out her ruling against a Belgian tax scheme for 39 multinationals.

The Apple dispute is seen by some analysts as a lose-lose situation for Ireland, which has appealed against the Commission's order alongside the iPhone maker.

While 14 billion euros - including interest - would go a long way to plugging the coronavirus-shaped hole in the state's finances, Dublin is seeking to protect a low tax regime that has attracted 250,000 multinational employers.

If Ireland's appeal succeeds, the government will be ridiculed by opposition parties for not taking the cash, which could cover at least half of a budget deficit forecast to balloon to as much as 10% of GDP this year.

Should Ireland lose, the government will be castigated by the same politicians for launching the appeal. A ruling in favor of the Commission could also raise questions about the application of Ireland's tax code at a sensitive time, when new global rules for taxing digital giants are being debated.

Defeat could also hurt Ireland's ability to attract investment, although the promotional blitz undertaken after the Commission's 2016 decision appears to have worked. The numbers employed by multinationals like Apple, Facebook and Google have grown by 25%, accounting for one in ten Irish workers.

For Apple, defeat would be a blow, but manageable given its cash holdings topped $190 billion at the end of its fiscal second quarter. (Reuters)

Source: www.businessworld.ie

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