Apple files 14-point appeal against European Commission's $14 billion tax edict
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.
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
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.
Your bald assertion is not exactly convincing either.
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.
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'.
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.
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.
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.
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.'