European Commission to appeal decision that reversed Apple’s $15B State Aid tax bill in Ireland

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Apple logo on the side of a building
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It’s not over until it’s over for Apple and its ongoing tax headache in Europe. Today the European Commission announced that it plans to appeal the July 2020 ruling that overturned the original $15 billion fine that it leveled against Apple and Ireland over State Aid and taxes, as it believes the General Court “made a number of errors of law” when it decided to overturn the original August 2016 ruling.

It is, in other words, appealing the appeal.

In a statement, Margrethe Vestager, the competition commissioner, noted that the Commission is making the move because it believes that offering tax breaks to one company and not its rivals “harms fair competition in the European Union in breach of State aid rules.”

The case, if it proceeds, will be heard in the European Court Of Justice, Europe’s equivalent of the Supreme Court. (Appeals of the General Court, which used to be called the “Court of First Instance”, are heard there.)

The full statement is below.

Apple has already responded with its own statement, saying it will review the appeal but also that it (unsurprisingly) sees the July 2020 decision as final.

“The General Court categorically annulled the Commission’s case in July and the facts have not changed since then. This case has never been about how much tax we pay, rather where we are required to pay it,” a spokesperson said. “We will review the Commission’s appeal when we receive it, however it will not alter the factual conclusions of the General Court, which prove that we have always abided by the law in Ireland, as we do everywhere we operate.”

The announcement means that a tax saga, concerning one of the world’s most profitable and biggest companies, and which has been years in the making, is set to continue.

It comes at a time when global economies are contracting due to the coronavirus pandemic. That has hit European countries especially hard, with countries in the region scrambling to provide public assistance to individuals and businesses who have been put out of work through furlough schemes and other efforts. In that context, collecting tax revenues and ensuring fair competition take on particularly acute profiles.

The original ruling that struck down the State Aid case was seen as a major blow to Europe’s efforts to recoup taxes from large multinationals that have built highly profitable operations in the region under big tax breaks.

In that ruling, the court determined that “the Commission did not succeed in showing to the requisite legal standard that there was an advantage for the purposes of Article 107(1) TFEU [Treaty of the Functioning of the European Union].”

Apple’s basic contention has always been that the offices in Europe are not where the profits are really made and this is why it shouldn’t have to pay taxes on those earnings there.

Apple had started to amass the funding needed to pay the fine in an escrow account after the original ruling in 2016 but hadn’t commenced in doing so.

We have contacted Apple for its response and will update this post as we learn more.

More to come. Refresh for updates. Memo below.

“The Commission has decided to appeal before the European Court of Justice the General Court’s judgment of July 2020 on the Apple State aid case in Ireland, which annulled the Commission’s decision of August 2016 finding that Ireland granted illegal State aid to Apple through selective tax breaks.

The General Court judgment raises important legal issues that are of relevance to the Commission in its application of State aid rules to tax planning cases. The Commission also respectfully considers that in its judgment the General Court has made a number of errors of law. For this reason, the Commission is bringing this matter before the European Court of Justice.

Making sure that all companies, big and small, pay their fair share of tax remains a top priority for the Commission. The General Court has repeatedly confirmed the principle that, while Member States have competence in determining their taxation laws taxation, they must do so in respect of EU law, including State aid rules. If Member States give certain multinational companies tax advantages not available to their rivals, this harms fair competition in the European Union in breach of State aid rules.

We have to continue to use all tools at our disposal to ensure companies pay their fair share of tax. Otherwise, the public purse and citizens are deprived of funds for much needed investments – the need for which is even more acute now to support Europe’s economic recovery. We need to continue our efforts to put in place the right legislation to address loopholes and ensure transparency. So, there’s more work ahead – including to make sure that all businesses, including digital ones, pay their fair share of tax where it is rightfully due.”

 

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