Apple returns to top EU court with billions at stake 

LUXEMBOURG (CN) — Brussels continued its campaign against multinational sweetheart tax deals on Tuesday, fighting in a day of hearings before the European Court of Justice to reinstate a billion-euro fine against Apple. 

“The case before you is of the utmost importance,” commission attorney Paul-John Loewenthal told the Luxembourg-based court in his opening remarks. A $15 billion payment in back taxes to Ireland hangs in the balance. 

Competition commissioner Margrethe Vestager set the fine in 2016 after investigating whether tax arrangements between the tech giant and Dublin amounted to illegal state aid. Ireland stood to collect what was then the largest fine in EU history, but it declined the billions and appealed to the European General Court. Among the country's 50 largest companies, 25 are U.S.-based multinationals like Apple, paying an estimated 80% of all Irish corporate tax.

Apple and Ireland prevailed in their initial appeal, persuading the General Court in 2020 that the Irish tax authorities did not give the iPhone maker favorable treatment. With the commission fighting now to reinstate the penalty, and Ireland backed by Poland and Luxembourg, Tuesday's hearing at the European Court of Justice in Luxembourg drew a full courtroom. 

Paul Gallagher, the former Irish attorney general who is leading the legal team defending the island nation, told the court there was no basis for the commission’s appeal. “You construct an imaginary world,” he said to his opposing counsel. 

Ireland's position is that Apple should pay taxes only based on profits created within the country, not on worldwide profits. The Cupertino, California-based company maintains that its research and development is conducted in the United States, thus the Irish tax authorities should overlook profits on the company's intellectual property.

Many of the arguments made Monday are ones that the court heard in 2019 over two days of hearings. 

Daniel Beard of Monckton Chambers, who represented Apple in the earlier hearings, stressed that the company's subsidiaries in Ireland merely provided support services and tht the company’s profits were taxed in the United States. In the early hearings, he claimed Apple was the world’s largest taxpayer. “There was no special treatment, there was no state aid,” he stressed to the 17 judges on Tuesday. 

Ireland wound up collecting the fine while the case has volleyed around. The full amount, 13.1 billion euros ($15 billion) in back taxes plus 1.2 billion euros ($1.4 billion) in interest, has been sitting in an escrow account since 2018. 

The commission has had mixed results before the Court of Justice. The same court threw out a $30 million tax penalty against Fiat Chrysler last year, finding Brussels overstepped its authority. 

In 2021 a lower court ruled Amazon doesn’t have to pay some $300 million back to Luxembourg, where the e-retail giant has its European headquarters, but it found that Belgian tax breaks for more than 50 large corporations violate European Union law. 

Brussels, meanwhile, has looked for new avenues to rein in Big Tech. Vestager has also gone after Apple’s strict rules on the App Store, which she claims restrict competition among music streaming services. 

Follow @mollyquell

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