Ireland says EU Apple judgement is ‘fundamentally flawed’ in appeal

17 Sep 2019

Image: duha127/Depositphotos

Apple and the Irish Government have launched their appeal against the EU Commission’s 2016 tax ruling.

Lawyers representing Ireland have called the European Commission’s ruling that the country gave Apple €13bn in illegal tax aid “fundamentally flawed” today (17 September) in an appeal against the decision in one of the EU’s highest courts, according to Reuters.

“Ireland has been the subject of entirely unjustified criticism,” argued Paul Gallagher, former attorney general and leader of the Irish legal team, in his opening statement to the EU general court.

EU competition commissioner Margrethe Vestager ruled in 2016 that the tech giant had benefitted from a 1pc corporate tax rate in Ireland between 2003 and 2014, in what amounted to illegal tax treatment under EU rules.

To comply with the ruling, Apple deposited €14.2bn in back taxes and EU interest into an escrow account last year. However, both Apple and the Irish state had pledged to overturn the ruling.

In May of this year, it was reported that the legal costs arising from the controversial tax case had already exceeded €7.1m and, as the appeal begins, this figure will likely continue to rise.

‘Defies reality’

Daniel Beard, a lawyer representing Apple, maintained that since Apple’s products are all developed and engineered in the US, trying to tie profits from elsewhere in Europe to its Irish headquarters would not be fair, saying that the ruling “defies reality and common sense”. The firm did not pay any federal tax in the US last year and made $11.2bn in profit.

A lawyer for the Commission, Richard Lyal, has contended that this argument about intellectual property is “perfectly correct and perfectly irrelevant”, and pointed out that Ireland was taxing Apple’s Irish subsidiaries, not the entire company.

He criticised Ireland’s involvement in the deal, arguing that the State blindly accepted the method proposed by Apple Inc, which gave rise to a “special deal” and “exceptionally advantageous treatment”.

The ruling for this appeal is expected to come in a few months, while a subsequent appeal to the highest court, the EU Court of Justice, could take years.

Apple Store on Fifth Avenue. Image: duha127/Depositphotos

Eva Short was a journalist at Silicon Republic