Apple files 14-point appeal against European Commission's $14 billion tax edict

Posted:
in AAPL Investors edited February 20
Apple has filed its appeal with the European court of appeals, all declaring that the European Commission's decision to levy $14 billion in taxes on Apple on behalf of the EU is erroneous, against the rule of law, and should be stricken.




The 14 points of appeal introduced by Apple on Monday, and subsequently reported by FOSS Patents, challenge the European Commission (EC) on several fronts. Primarily, Apple contests that the Cork, Ireland, headquarters of Apple's European wing was properly set up, in accordance with all regulations and laws.

Additionally, other apparent accounting blunders by the EC while making its decision were brought up as well. Apple points out that the taxable income attributed to the Ireland branch was controlled was misapplied, giving more weight to the Irish operation than it should, and that back taxes were being applied to worldwide profits.

Apple also points out that drawing comparisons to other tax arrangements in the EU with other multi-national companies is improper, as the facts and laws differ from agreement to agreement. As such, Apple argues that their use in a legal battle about taxes is inappropriate and unfairly prejudicial to Apple.

Several appeal points also allege that Apple was not given the opportunity for a proper defense, was not allowed to present sufficient evidence to defend itself, and the small amount of expert opinions that Apple was allowed to bring to bear prior to the decision were ignored and rejected by the European Commission out of hand while making the decision.

Apple is seeking a complete annulment of the decision mandating the $14 billion payout, and is demanding costs of defending itself be reimbursed by the EC.

The investigation into Apple's tax affairs in Ireland ended in August 2016, with the Commission claiming tax rates on Apple's European profits were illegally low, down to 0.005 percent in 2014 and 1 percent in 2003. Ireland was accused of granting "illegal tax benefits" to Apple, and had been "reverse engineered" on the fly to guarantee a minimal tax bill as time progressed.

Both Apple and Ireland are contesting the ruling, with the Irish government "fundamentally disagreeing" with the findings and resisting the back tax repayments. Apple claims the European Union "took unilateral action and changed the rules, disregarding decades of Irish tax law, U.S. Tax law, as well as global consensus on tax policy."

In December, Apple CEO Tim Cook and other high-level executives were invited to Ireland to discuss the ruling and future action. Cook declined to attend, with Apple citing the legal complexity of the case behind his refusal, a move that Irish politicians considered to be a "snub to Irish people."

Earlier this month, it was revealed Ireland had spent 1.8 million euros ($1.9 million) on legal costs for the case so far, including the ?1 million ($1.06 million) in costs reported in early October. The majority has gone towards lawyers representing Ireland in the case, with PwC Belgium receiving a total of 595,400 euros ($632,200) in fees.

It is thought the full appeals process could take four to five years to complete, with Irish PwC tax advisor Feargal O'Rourke confident the ruling could be overturned.

Comments

  • Reply 1 of 18
    One point of contention for every billion extorted.
    slprescottwatto_cobra
  • Reply 2 of 18
    Slow plea. On deaf ears. Judge jury and executioner all on the arm.
  • Reply 3 of 18
    They need to challenge the way this is levied. 

    Its not Apple the EU can charge. It's Ireland. 

    Apple let complies with Irelands law. Period. Zero wrongdoing. 

    Thats a fact. And it's a fact already agreed upon. 

    They dont owe money for what the past would have been based on a new law. 

    If the EU wants to pick a fight with the law, it's a fight with Ireland. And Ireland alone, since it was Ireland's laws that outside businesses abode by. 

    The EU is only going after apple because that's a lot of money they can steal in broad daylight. How else can you earn the money needed to fund entire countries without doing anything to earn it?

    its illegal and very concerning that this is what we run into with a global economy. Strong arm bully extortion. Pure evil. 

    Apple did did what wrong exactly? Oh that's right. Nothing. 

    The he beef is with Irelands law. Therefore it with Ireland.

    And Ireland did what wrong exactly? Create a tax law? Which is in their right as a country?

    the EU is seriously overreaching. And there should be an investigation into those making up these things. Firing isn't enough. This is theft. Extortion. Blackmail. Really need to see some jail time here. 
    anantksundaramchasmDan Andersen
  • Reply 4 of 18
    The EC is out of control. 1 in 10 rulings have any logic or sense at all and many are just making things up as they go. From the Right Whitewash History to this one, I have to wonder who runs the EC.
    watto_cobra
  • Reply 5 of 18
    crowleycrowley Posts: 5,177member
    Not very convincing arguments.
  • Reply 6 of 18
    crowley said:
    Not very convincing arguments.
    Why not?

    Your bald assertion is not exactly convincing either. 
    bestkeptsecretwatto_cobraDan Andersen
  • Reply 7 of 18
    The problem is that Ireland violated the tax rules they agreed to as members of the EU in order to give Apple a special deal in order to gain advantage over the other EU countries - the very reason the tax rules were implemented.

    While it's not Apple's fault - technically - their lawyers should have spotted this and called it out before agreeing to the deal with Ireland. It's like arguing that it's not your fault the goods you bought at a pawn shop are stolen. Whether it is your fault or isn't, it's still illegal. You'll get those goods confiscated without compensation. You can go to the seller and sue them, of course.

    "Irish tax law, U.S. Tax law, as well as global consensus on tax policy." The thing is, Ireland is a party to the Lisbon Treaty and other related treaties with the EU. They can't now complain that they have to comply with those treaties, even if they have decades of Irish tax law on the books. US tax law is completely irrelevant... the EU isn't the US and aren't obligated to pay any attention to them, same with global concensus - which isn't a 'thing' legally.

    To me, both parties - Ireland and Apple - have to take some responsibility here.
    edited February 21 hydrogenadm1singularity
  • Reply 8 of 18
    Apple let complies with Irelands law. Period. Zero wrongdoing. 

    Thats a fact. And it's a fact already agreed upon.
    Ok... I walk up to you and say.. "I have a 10 oz bar of gold, but I need the money right now, so I'll sell it to you for $100." Guess what happens when you find out that the gold bar was stolen? They take the bar away and they don't give you back the $100.

    In the same way, Apple's lawyers should have flagged this entire deal as suspect or at the very least, written in protections in case the EU decided to do something just like this.

    The EU rules changed after Apple agreed to the deal, but Ireland and Apple didn't change the terms of the agreement AFTER the rule changes. Apple was aware of it. So no, they're not 'innocent'. They're 'complicit'.
    edited February 21 singularitySpamSandwich
  • Reply 9 of 18
    crowley said:
    Not very convincing arguments.
    Not very convincing comment.
    watto_cobra
  • Reply 10 of 18
    adm1adm1 Posts: 332member
    They need to challenge the way this is levied. 

    Its not Apple the EU can charge. It's Ireland. 

    Apple let complies with Irelands law. Period. Zero wrongdoing. 

    Thats a fact. And it's a fact already agreed upon. 

    They dont owe money for what the past would have been based on a new law. 

    If the EU wants to pick a fight with the law, it's a fight with Ireland. And Ireland alone, since it was Ireland's laws that outside businesses abode by. 

    The EU is only going after apple because that's a lot of money they can steal in broad daylight. How else can you earn the money needed to fund entire countries without doing anything to earn it?

    its illegal and very concerning that this is what we run into with a global economy. Strong arm bully extortion. Pure evil. 

    Apple did did what wrong exactly? Oh that's right. Nothing. 

    The he beef is with Irelands law. Therefore it with Ireland.

    And Ireland did what wrong exactly? Create a tax law? Which is in their right as a country?

    the EU is seriously overreaching. And there should be an investigation into those making up these things. Firing isn't enough. This is theft. Extortion. Blackmail. Really need to see some jail time here. 
    Said as a person who truly does not understand the European Union. There is no "new law", the laws were in place and applicable to Ireland the day they joined the EU. Any company doing business in Europe must adhere to EU law > individual country laws, similar to Federal Law > State Law. Apple is simply one of many targets, it gets the most reporting and articles because it is likely the biggest fish to fry among the targets but they are by no means singled out.
  • Reply 11 of 18
    crowleycrowley Posts: 5,177member
    crowley said:
    Not very convincing arguments.
    Why not?

    Your bald assertion is not exactly convincing either. 
    Was my statement of opinion more or less convincing than the far bolder assertion one post earlier?
    steven n. said:

    The EC is out of control. 1 in 10 rulings have any logic or sense at all and many are just making things up as they go. From the Right Whitewash History to this one, I have to wonder who runs the EC.
    Really, you call me out over that?

    I suppose I could post a detailed 14 point rebuttal, but I fail to see why I would waste my time. There are courts to decide these things.
    edited February 21
  • Reply 12 of 18
    gatorguygatorguy Posts: 15,943member
    They need to challenge the way this is levied. 

    Its not Apple the EU can charge. It's Ireland. 

    Apple let complies with Irelands law. Period. Zero wrongdoing. 

    Thats a fact. And it's a fact already agreed upon. 

    They dont owe money for what the past would have been based on a new law. 

    If the EU wants to pick a fight with the law, it's a fight with Ireland. And Ireland alone, since it was Ireland's laws that outside businesses abode by. 

    The EU is only going after apple because that's a lot of money they can steal in broad daylight. How else can you earn the money needed to fund entire countries without doing anything to earn it?
    To save some confusion it's not the EU or their commission that gets any recovered taxes. It all goes to Ireland, less any that countries such as Germany/France/other can legitimately argue and prove came from Apple's profit-shifting policies of moving revenues from higher tax countries to the Irish safe-haven entities. The EU itself will not be enriched by any taxes that Apple might end up paying. BTW, Apple isn't charged with any crime in the first place, nor do I think there was there Irish law broken. It wasn't Irish tax law that allowed various foreign companies to avoid standard 12.5% corporate taxes. It was exceptions to the law that according to the EU Commission were unfairly and unequally applied. Maybe they were, maybe they weren't. That's still being argued. it's plain tho that those exceptions were not available to all, requiring two very special agreements arrived at in private meetings with Irish tax authorities in 1991 and again in 2007 when the iPhone profits started rolling in. .Yes the Irish admit to those special agreements too so no use arguing that Apple didn't get special treatment. They did. But it still might not rise to the level of needing to pay taxes they should have had they been most any other company but received "special permission" not to. They might get off with a free pass, not that it helps anyone who doesn't own part of Apple. As usual the entitled might yet again benefit off the backs of the lesser (aka the Matthew Effect or the rich get richer and the poor get poorer) but that's a discussion for a different place. 

    In any event Apple cannot continue avoiding any corporate tax whatsoever on their European profits without coming up with some other creative solution. The Irish legislators made sure last year to close the hole in tax laws that made it possible from their country. Still Irish standard corporate tax rates are the lowest in Europe AFAIK so there's no danger in Apple looking elsewhere for a base to operate from. There's no place cheaper to go. 
    edited February 21 avon b7
  • Reply 13 of 18
    Apple let complies with Irelands law. Period. Zero wrongdoing. 

    Thats a fact. And it's a fact already agreed upon.
    Ok... I walk up to you and say.. "I have a 10 oz bar of gold, but I need the money right now, so I'll sell it to you for $100." Guess what happens when you find out that the gold bar was stolen? They take the bar away and they don't give you back the $100.

    In the same way, Apple's lawyers should have flagged this entire deal as suspect or at the very least, written in protections in case the EU decided to do something just like this.

    The EU rules changed after Apple agreed to the deal, but Ireland and Apple didn't change the terms of the agreement AFTER the rule changes. Apple was aware of it. So no, they're not 'innocent'. They're 'complicit'.
    Since when regulations apply restrospecively? Updating regulations should be followed by proper steps by uthorities towards agreements in place. They are not void at times some comoissions or governments decide to. Otherwise it is free for all - not the best method to build stable trade market and governance. As European I agree that EC acts recklessly. Since I have been living in the USA for long time I also do not give damn what European authorities might think about my opinion at this point. That is why EU is flaky creatures these days.
  • Reply 14 of 18
    gatorguy said:
    They need to challenge the way this is levied. 

    Its not Apple the EU can charge. It's Ireland. 

    Apple let complies with Irelands law. Period. Zero wrongdoing. 

    Thats a fact. And it's a fact already agreed upon. 

    They dont owe money for what the past would have been based on a new law. 

    If the EU wants to pick a fight with the law, it's a fight with Ireland. And Ireland alone, since it was Ireland's laws that outside businesses abode by. 

    The EU is only going after apple because that's a lot of money they can steal in broad daylight. How else can you earn the money needed to fund entire countries without doing anything to earn it?
    To save some confusion it's not the EU or their commission that gets any recovered taxes. It all goes to Ireland, less any that countries such as Germany/France/other can legitimately argue and prove came from Apple's profit-shifting policies of moving revenues from higher tax countries to the Irish safe-haven entities. The EU itself will not be enriched by any taxes that Apple might end up paying. BTW, Apple isn't charged with any crime in the first place, nor do I think there was there Irish law broken. It wasn't Irish tax law that allowed various foreign companies to avoid standard 12.5% corporate taxes. It was exceptions to the law that according to the EU Commission were unfairly and unequally applied. Maybe they were, maybe they weren't. That's still being argued. it's plain tho that those exceptions were not available to all, requiring two very special agreements arrived at in private meetings with Irish tax authorities in 1991 and again in 2007 when the iPhone profits started rolling in. .Yes the Irish admit to those special agreements too so no use arguing that Apple didn't get special treatment. They did. But it still might not rise to the level of needing to pay taxes they should have had they been most any other company but received "special permission" not to. They might get off with a free pass, not that it helps anyone who doesn't own part of Apple. As usual the entitled might yet again benefit off the backs of the lesser (aka the Matthew Effect or the rich get richer and the poor get poorer) but that's a discussion for a different place. 

    In any event Apple cannot continue avoiding any corporate tax whatsoever on their European profits without coming up with some other creative solution. The Irish legislators made sure last year to close the hole in tax laws that made it possible from their country. Still Irish standard corporate tax rates are the lowest in Europe AFAIK so there's no danger in Apple looking elsewhere for a base to operate from. There's no place cheaper to go. 
    There may be no cheaper place to go yet. I can imagine post-Brexit Britain being far more flexible and willing to wheel and deal.
    edited February 21
  • Reply 15 of 18
    gatorguy said:
    They need to challenge the way this is levied. 

    Its not Apple the EU can charge. It's Ireland. 

    Apple let complies with Irelands law. Period. Zero wrongdoing. 

    Thats a fact. And it's a fact already agreed upon. 

    They dont owe money for what the past would have been based on a new law. 

    If the EU wants to pick a fight with the law, it's a fight with Ireland. And Ireland alone, since it was Ireland's laws that outside businesses abode by. 

    The EU is only going after apple because that's a lot of money they can steal in broad daylight. How else can you earn the money needed to fund entire countries without doing anything to earn it?
    To save some confusion it's not the EU or their commission that gets any recovered taxes. It all goes to Ireland, less any that countries such as Germany/France/other can legitimately argue and prove came from Apple's profit-shifting policies of moving revenues from higher tax countries to the Irish safe-haven entities. The EU itself will not be enriched by any taxes that Apple might end up paying. BTW, Apple isn't charged with any crime in the first place, nor do I think there was there Irish law broken. It wasn't Irish tax law that allowed various foreign companies to avoid standard 12.5% corporate taxes. It was exceptions to the law that according to the EU Commission were unfairly and unequally applied. Maybe they were, maybe they weren't. That's still being argued. it's plain tho that those exceptions were not available to all, requiring two very special agreements arrived at in private meetings with Irish tax authorities in 1991 and again in 2007 when the iPhone profits started rolling in. .Yes the Irish admit to those special agreements too so no use arguing that Apple didn't get special treatment. They did. But it still might not rise to the level of needing to pay taxes they should have had they been most any other company but received "special permission" not to. They might get off with a free pass, not that it helps anyone who doesn't own part of Apple. As usual the entitled might yet again benefit off the backs of the lesser (aka the Matthew Effect or the rich get richer and the poor get poorer) but that's a discussion for a different place. 

    In any event Apple cannot continue avoiding any corporate tax whatsoever on their European profits without coming up with some other creative solution. The Irish legislators made sure last year to close the hole in tax laws that made it possible from their country. Still Irish standard corporate tax rates are the lowest in Europe AFAIK so there's no danger in Apple looking elsewhere for a base to operate from. There's no place cheaper to go. 
    There may be no cheaper place to go yet. I can imagine post-Brexit Britain being far more flexible and willing to wheel and deal.
    Post brexit it won't matter. The UK won't be in the EU thus Apple can't use it as a basis for eurozone tax.
  • Reply 16 of 18
    gatorguy said:
    They need to challenge the way this is levied. 

    Its not Apple the EU can charge. It's Ireland. 

    Apple let complies with Irelands law. Period. Zero wrongdoing. 

    Thats a fact. And it's a fact already agreed upon. 

    They dont owe money for what the past would have been based on a new law. 

    If the EU wants to pick a fight with the law, it's a fight with Ireland. And Ireland alone, since it was Ireland's laws that outside businesses abode by. 

    The EU is only going after apple because that's a lot of money they can steal in broad daylight. How else can you earn the money needed to fund entire countries without doing anything to earn it?
    To save some confusion it's not the EU or their commission that gets any recovered taxes. It all goes to Ireland, less any that countries such as Germany/France/other can legitimately argue and prove came from Apple's profit-shifting policies of moving revenues from higher tax countries to the Irish safe-haven entities. The EU itself will not be enriched by any taxes that Apple might end up paying. BTW, Apple isn't charged with any crime in the first place, nor do I think there was there Irish law broken. It wasn't Irish tax law that allowed various foreign companies to avoid standard 12.5% corporate taxes. It was exceptions to the law that according to the EU Commission were unfairly and unequally applied. Maybe they were, maybe they weren't. That's still being argued. it's plain tho that those exceptions were not available to all, requiring two very special agreements arrived at in private meetings with Irish tax authorities in 1991 and again in 2007 when the iPhone profits started rolling in. .Yes the Irish admit to those special agreements too so no use arguing that Apple didn't get special treatment. They did. But it still might not rise to the level of needing to pay taxes they should have had they been most any other company but received "special permission" not to. They might get off with a free pass, not that it helps anyone who doesn't own part of Apple. As usual the entitled might yet again benefit off the backs of the lesser (aka the Matthew Effect or the rich get richer and the poor get poorer) but that's a discussion for a different place. 

    In any event Apple cannot continue avoiding any corporate tax whatsoever on their European profits without coming up with some other creative solution. The Irish legislators made sure last year to close the hole in tax laws that made it possible from their country. Still Irish standard corporate tax rates are the lowest in Europe AFAIK so there's no danger in Apple looking elsewhere for a base to operate from. There's no place cheaper to go. 
    There may be no cheaper place to go yet. I can imagine post-Brexit Britain being far more flexible and willing to wheel and deal.
    The problem with post Brexit Britain is that it won't be in the EU, which is where most multinationals would like (or have) to be.

    Theresa May will be pushed hard on negotiations as she has little to negotiate with and the EU will want to make it clear that leaving will be painful so that everyone knows what it entails.
  • Reply 17 of 18
    nhtnht Posts: 3,420member
    avon b7 said:
    SpamSandwich said: 
    There may be no cheaper place to go yet. I can imagine post-Brexit Britain being far more flexible and willing to wheel and deal.
    The problem with post Brexit Britain is that it won't be in the EU, which is where most multinationals would like (or have) to be.

    Theresa May will be pushed hard on negotiations as she has little to negotiate with and the EU will want to make it clear that leaving will be painful so that everyone knows what it entails.
    If the EU is dumb enough to punish the Brits I hope we retaliate in a big way as the UK has been a steady US partner.  The EU can go pound sand as far as I am concerned.  This is nothing more but a money grab on US tax income and another attack on the US tech industry.  They tried unfair taxation on US tech products until the WTO bitch slapped them in 2010 for violating the ITA.  This is simply round 2.
  • Reply 18 of 18
    nht said:
    avon b7 said:
    SpamSandwich said: 
    There may be no cheaper place to go yet. I can imagine post-Brexit Britain being far more flexible and willing to wheel and deal.
    The problem with post Brexit Britain is that it won't be in the EU, which is where most multinationals would like (or have) to be.

    Theresa May will be pushed hard on negotiations as she has little to negotiate with and the EU will want to make it clear that leaving will be painful so that everyone knows what it entails.
    If the EU is dumb enough to punish the Brits I hope we retaliate in a big way as the UK has been a steady US partner.  The EU can go pound sand as far as I am concerned.  This is nothing more but a money grab on US tax income and another attack on the US tech industry.  They tried unfair taxation on US tech products until the WTO bitch slapped them in 2010 for violating the ITA.  This is simply round 2.
    The UK hasn't been a steady US trade partner though, as everything has been through the deals struck with the EU. Politically it's another story though.

    Ironically the UK will probably be punished by the US after Brexit as it will have to negotiate one-on-one with the US and there is no way it will get an even deal. The US will put some very strong demands on the table and the UK will have no muscle change anything.

    It could be a double whammy as Brexit negotiations will be tough and then new deals will have to be struck and nobody in their right mind could expect to get a better deal out than in.

    I'd say right off the bat we will see major steps back on consumer rights, data protection and pharmaceutical influence.

    It seems Apple has committed to the Battersea Power Station development but I can't think of a single good reason for any multinational to stay. The same for international banks, underwriting etc.

    They will be out of the open skies agreement and a host of other deals.

    They will lose on environmental issues, science and technology.

    The only phrase that comes to mind is 'woe is me.'


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