Landmark €13bn Apple tax appeal gets under way in Luxembourg

EU vice-president and competition and digital commissioner Margrethe Vestager. Photo: Adrian Weckler

Sarah Collins

The final chapter in a long-running tax dispute between the EU, Ireland and US tech giant Apple gets underway on Tuesday at the EU’s highest court.

It stems from a 2016 ruling by the European Commission, which claimed that Apple enjoyed sweetheart deals with successive Irish governments, allowing it to avoid paying €13bn in taxes on profits it earned across the EU.

Apple and Ireland fought that ruling and won, in 2020. The Commission appealed that decision, with the first and only hearing in the case taking place in Luxembourg this morning. It could take several months to a year before a judgment is handed down.

The case was one of many novel tax decisions taken by competition chief Margrethe Vestager under the bloc’s state aid rules, part of a bid to clamp down on large-scale tax avoidance by multinationals after a series of international scandals.

Many companies argued, successfully, that the Commission was wrong to retroactively apply modern tax principles to historic profits – dating back 25 years, in the Irish case.

The amount of contested tax in Ireland – now worth close to €14bn, including interest, and which is being held in an escrow account – was the largest penalty meted out, by far, to any company in the series of cases taken by Ms Vestager.

Apple, which has operated in Ireland for more than 40 years, says it is the largest taxpayer in the world and believes the original case was not about how much tax it paid but where it was paid. Representatives for the US company believe there are no legal issues left to clarify and hope the court will rule in their favour.

The Commission said it does not comment on court hearings. In filings for its 2020 appeal, it said the lower court had “misinterpreted” its arguments and “committed several errors of law”.

The Commission has lost other cases it launched around the same time, including one against coffee chain Starbucks in the Netherlands and another against carmaker Fiat Chrysler in Luxembourg.

A global deal to tackle multinational tax avoidance, including a 15pc minimum corporate rate, is due to take effect from next year. The deal was done as a result of revelations about tax loopholes in countries including Ireland, Luxembourg and the Netherlands.