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The European Commission is appealing the ruling of Apple’s tax court in favor of Ireland, which determined that the technology giant did not need to pay 14,300 million euros to the state before the Court of Justice of the European Union.
Commenting on the ruling Finance Minister Paschal Donohoe, he said that the decisions of the European Commission were awaited, but that the state would continue to ensure that their interests were protected.
“The current phase of this problem has taken four years to get to this point. I would say that it will take several more years before this matter is further determined, ”he said.
“The commission … respectfully considers that in its ruling the General Court has made a number of errors of law,” said Margrethe Vestager of the European Commission in a statement.
“The General Court has repeatedly upheld the principle that while Member States have competence to determine their tax laws, they must do so in compliance with EU law, including state aid rules,” he added.
“If Member States give certain multinational companies tax advantages that are not available to their rivals, this damages fair competition in the European Union in violation of state aid rules.”
Decision
In July, the EU General Court ruled that the commission “failed to demonstrate the required legal standard” that Apple’s agreements in Ireland amounted to illegal state benefits. This overturned an earlier order that the company had to pay € 14.3 billion to the Republic.
The ruling in favor of Ireland and Apple was seen as a blow to Ms Vestager’s efforts to curb the tech giants and clamp down on deals that are seen as tax-friendly deals.
The Irish government has always maintained that Apple did not receive any state aid.
“Ireland has not yet received a formal notification of the appeal,” Finance Minister Paschal Donohoe said in a statement.
“When received, the Government should take time to consider, in detail, the legal grounds established in the appeal and consult with the Government’s legal advisers to respond to this appeal.”
An Apple spokesperson said it had always paid its tax obligations.
Determination
“The General Court categorically annulled the Commission’s case in July and the facts have not changed since then. This case has never been about how much tax we pay, but where we are obliged to pay it, ”the spokesman said.
“We will review the Commission’s appeal when we receive it, however it will not alter the factual findings of the General Court, which show that we have always followed the law in Ireland, as we do everywhere we operate.”
The appeal process can take two years to complete. Until there is a final determination, funds amounting to € 14.3 billion when interest is included will remain in an escrow account as they have since 2018, primarily in the form of bonds.
The commission wanted to appeal, as it believes the July ruling sets a high bar for what constitutes the “required legal standard,” which could have implications for other cases taken by the commission.
The commission argues that Ireland allowed Apple to allocate almost all of its European profits to “headquarters” that were not headquartered in any country and were tax-free. His appeal is based on the argument that the General Court ignored the arm’s length principle and the separate entity approach when determining tax liabilities.
Transcendence
His lawyers will argue that the General Court should only have assessed how Apple allocated its European profits internally and that very little profits were allocated to taxable branches in Ireland, giving Apple an economic advantage in the state.
Peter Vale, a tax partner at Grant Thornton Ireland, described the commission’s decision as a “surprise”, as the previous ruling had been a “total defeat” of his case.
“From Ireland’s perspective, the EU Commission’s appeal keeps the matter in the limelight for a few more years, which could have adverse implications for Ireland’s reputation, regardless of the end result,” Vale said.
“The Commission’s decision to appeal creates further uncertainty for investors looking to Ireland or the EU regarding the EU tax outlook,” he added. “Ultimately, I think the ECJ will rule in favor of both Ireland and Apple.”
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