Brussels - Apple has set up a court battle with European Union
competition watchdogs who ordered Ireland to claw back a record 13 billion euro
($13.6 billion) in unpaid taxes from the iPhone maker.
The US tech giant said Monday it formally appealed the
EU’s August decision to the EU’s General Court in Luxembourg, as the European
Commission and Ireland separately published details of their own arguments in
the case.
In an order that reverberated across the Atlantic, the EU
slapped Apple with the multi-billion euro bill, saying Ireland granted unfair
deals that reduced the company’s effective corporate tax rate. The US Treasury said the EU was making itself a "supra-national tax
authority" that could threaten global tax reform efforts.
The EU "took unilateral action and retroactively
changed the rules, disregarding decades of Irish tax law, US tax law, as well
as global consensus on tax policy, that everyone has relied on," Apple
said in a statement after filing its court appeal.
Ireland has already asked the court to strike down the EU’s
decision from August. In a separate filing on Monday, the Brussels-based
commission published details of its two-year probe, attacking the way Irish
authorities taxed profits attributed to two of Apple’s Irish units.
The EU also took aim at Irish tax practices, saying they
were "too inconsistent" to set firm rules for profit allocation.
Read also: Apple to move London headquarters
The Apple investigation - and others probing arrangements
for Amazon.com and McDonald’s in Luxembourg - are the cornerstone of
an EU attack on national practices it claims help multinational companies avoid
tax.
EU Competition Commissioner Margrethe Vestager has
repeatedly argued that special tax treatment harms companies that don’t get
such advantages.
According to Monday’s EU filing, regulators shrugged off
claims that they weren’t fair to Ireland and Apple during the probe. They
argued they always respected their procedural rights and the subject matter of
the investigation -- profit allocation methods used in tax rulings -- never changed.
Ireland had "ample opportunity" to express its
views and "made use of that opportunity on multiple occasions," the
EU said. While Apple only had the right to submit observations, it "was
given and has effectively made use of the opportunity to submit" views to
regulators on numerous occasions, according to the text of the EU decision.
The EU’s competition arm said it doubted that the methods
used to produce taxable profit for Apple units complied with the so-called
arms-length principle for transfers between parts of a company.
Read also: Is the Apple Store queue dying a slow death?
Ireland said the EU exceeded its powers by ruling on its tax
jurisdiction, according to an Irish finance ministry statement on Monday.
Ireland also challenges the EU’s determination that Apple
allocated almost all its European sales profits to what the EU said were “head
offices” not subject to tax by virtue of their tax status in Ireland. Apple
argues the units, Apple Sales International and Apple Operations Europe, were
never exempt from tax -and that under the law they are subject to deferred
US tax.
“These branches carried out routine functions, but all
important decisions within ASI and AOE were made in the U.S., and the profits
deriving from these decisions were not properly attributable to the Irish
branches of ASI and AOE,” the Irish finance ministry said.
The court appeals filed by Apple and Ireland follow those
already pending by Luxembourg, the Netherlands and Belgium concerning tax
arrangements the nations granted to units of other multinationals, including
Starbucks Corp.
Though Apple will have to pay its tax bill within weeks, the
money will be held in escrow, a final ruling from the EU courts may take
several years.