LUXEMBOURG: Europe’s second-top court on Wednesday rejected an EU order to iPhone maker Apple to pay €13 bil (RM63.16 bil) in Irish back taxes.
“The General Court annuls the contested decision because the Commission did not succeed in showing to the requisite legal standard that there was an advantage for the purposes of Article 107(1) TFEU1,” judges said, referring to EU competition rules.
The 2016 ruling and the record sum is part of the European Commission’s crackdown on sweetheart tax deals between multinationals and some EU countries.
In its order four years ago, the European Commission said Apple benefited from illegal state aid via two Irish tax rulings that artificially reduced its tax burden for over two decades – to as low as 0.005% in 2014.
Defeat for European Competition Commissioner Margrethe Vestager could weaken or delay pending cases against Ikea’s and Nike’s deals with the Netherlands, as well as Huhtamaki’s agreement with Luxembourg.
Vestager, who has made the tax crackdown a centrepiece of her time in office, saw the same court last year overturn her demand for Starbucks to pay up to €30 mil in Dutch back taxes. In another case, the court also threw out her ruling against a Belgian tax scheme for 39 multinationals.
The Apple dispute is seen by some analysts as a lose-lose situation for Ireland, which has appealed against the Commission’s order alongside the iPhone maker.
While €4 bil – including interest – would go a long way to plugging the coronavirus-shaped hole in the state’s finances, Dublin is seeking to protect a low tax regime that has attracted 250,000 multinational employers.
Even though Ireland’s appeal succeeded, the government is bound to be ridiculed by opposition parties for not taking the cash, which could cover at least half of a budget deficit forecast to balloon to as much as 10% of GDP this year.
Should it have lost, the government would have been castigated by the same politicians for launching the appeal. – July 15, 2020, Reuters
