Apple has launched a legal challenge to a record 13 billion euro tax bill from the European Union.
Senior executives at the iPhone and iPad maker say it is doing that because EU regulators ignored tax experts as well as corporate law.
They also accuse the European Competition Commissioner of deliberately picking a method of calculating the penalty that maximised it.
Brussels has declared the company’s taxation deal with the Irish government is the equivalent of illegal state aid as it is liable for only a fraction of the tax it would pay in the countries where Apple’s products are designed, made and sold.
Ireland’s tax treatment has allowed Apple to avoid tax on tens of billions of dollars of non-US profit. Over the past 10 years, the company has paid tax at a rate of 3.8 percent on $200 billion (192 billion euros) of overseas profits, filings show.
The low rate is achieved by Apple telling US tax authorities that the profits are earned by Irish units. Meanwhile it tells Ireland the profits are not earned in Ireland.
Apple’s General Counsel Bruce Sewell said in its appeal the company will tell judges at the EU’s General Court in Luxembourg that the Commission was not diligent in its investigation because it disregarded tax experts brought in by Irish authorities.
“Now the Irish have put in an expert opinion from an incredibly well-respected Irish tax lawyer. The Commission not only didn’t attack that – didn’t argue with it, as far as we know – they probably didn’t even read it. Because there is no reference (in the EU decision) whatsoever,” Sewell said.
“EU exceeded its powers”
At the same time, Ireland accused the European Commission of exceeding its powers and interfering with the EU member’s national sovereignty over tax affairs in ruling that Apple owes Dublin billions of euros in taxes, saying it had failed to give proper reasons for its decision.
“The Commission has manifestly breached its duty to provide a clear and unequivocal statement of reasons in its decision, in relying simultaneously on grossly divergent factual scenarios, in contradicting itself as to the source of the rule that Ireland is said to have breached, and in suggesting that Ireland granted aid in relation to profits taxable in other jurisdictions,” the Irish government said in a statement.
Dublin is rejecting the 13 billion euros it would receive and seeking to protect a tax regime that has helped attract multinational companies that employ around 10 percent of the country’s workforce.