(CN) — Tech giant Apple once again faces paying a $14 billion tax penalty after a legal adviser to the European Union's highest court said on Thursday that a lower court ruling exempting the company from paying taxes in Ireland on worldwide profits was flawed.
The European General Court erred in 2020 when it determined Ireland had not given the iPhone maker illegal tax breaks in violation of the EU's rules governing fair competition, according to a legal opinion by Giovanni Pitruzzella, an advocate general for the European Court of Justice.
His finding comes amid legal fights between Brussels regulators and multinational tech giants that chose to set up European branches in Ireland to take advantage of the country's favorable regulatory and tax regimes.
Ireland has one of the EU's lowest corporate tax rates and 25 of the country's 50 largest companies are U.S.-based multinationals like Apple, paying an estimated 80% of all Irish corporate tax.
Advocates general provide legal guidance on cases pending before the Court of Justice and their advice is often followed by the Luxembourg-based court.
In 2016, the European Commission, the EU's executive branch, ruled that Apple had enjoyed illegal sweetheart tax arrangements going back to 1991; it ordered the company to pay 13 billion euros ($14 billion) in back taxes and interest. The commission is seeking back taxes between 2004 and 2014, a period in which it says Apple paid virtually no corporate tax. At the time, it was the largest tax penalty ever imposed.
But the General Court sided with Ireland and Apple, prompting the commission to appeal to the Court of Justice. In his non-binding opinion, Pitruzzella said the General Court should be ordered to reexamine the tax deals.
The advocate general said the General Court “committed a series of errors in law” in making its assessment about whether Ireland's tax arrangements with Apple gave the company an unfair advantage over other companies.
Apple and Irish regulators argue the company should only pay taxes based on profits generated within Ireland, not on worldwide profits. In particular, the Cupertino, California-based company maintains that its research and development is conducted in the United States and therefore profits on its intellectual property should not be paid to Irish tax authorities.
“It has always been, and remains, Ireland’s position that the correct amount of Irish tax was paid and that Ireland provided no state aid to Apple,” said Irish Finance Minister Michael McGrath, as reported by the Irish Times.
The Court of Justice is expected to issue a ruling in the coming months.
Courthouse News reporter Cain Burdeau is based in the European Union.Follow @cainburdeau
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