Apple takes on EU’s antitrust chief in record $14b tax fight

Bloomberg

Apple Inc fights the world’s biggest tax case in a quiet courtroom, trying to rein in the European Union’s powerful antitrust chief ahead of a potential new crackdown on internet giants.
The iPhone maker can tell the EU General Court in Luxembourg that it’s the world’s biggest taxpayer. But that’s not enough for EU Competition Commissioner Margrethe Vestager who said in a 2016 ruling that Apple’s tax deals with Ireland allowed the company to pay far less than other businesses. The court must now weigh whether regulators were right to levy a record $14.4 billion tax bill.
Apple’s haggling over tax comes after its market valuation hit $1.02 trillion on the back of a new aggressive pricing strategy that may stoke demand for some smartphones and watches. The
company’s huge revenue — and those of other technology firms — have attracted close scrutiny in Europe, focussing on complicated company structures for transferring profits generated from intellectual property.
A court ruling, likely to take months, could empower or halt Vestager’s tax probes, which are now centering on fiscal deals done by Amazon.com and Alphabet. She’s also been tasked with coming up with a “fair European tax” by the end of 2020 if global efforts to reform digital taxation don’t make progress.
“Politically, this will have very big consequences,” said Sven Giegold, a Green member of the European Parliament. “If Apple wins this case, the calls for tax harmonisation in Europe will take on a different dynamic, you can count on that.”
Vestager showed her determination to fight the tax cases to the end by opening new probes into 39 companies’ tax deals with Belgium. The move addresses criticism by the same court handling the Apple challenge. A February judgment threw out her 2016 order for them to pay back about 800 million euros.
Apple’s fury at the EU’s 2016 order saw CEO Tim Cook blasting the EU move as “total political crap.” The company’s legal challenge claims the EU wrongly targeted profits that should be taxed in the US and “retroactively changed the rules” on how global authorities calculate what’s owed to them.
The US Treasury weighed in too, saying the EU was making itself a “supra-national tax authority” that could threaten global tax reform efforts. President Donald Trump hasn’t been silent either, saying Vestager “hates the United States” because “she’s suing all our companies.”
The legal battles may go on for a few years more. The General Court rulings can be appealed once more to the EU’s highest tribunal, the EU Court of Justice. Meanwhile, Apple’s back taxes — 14.3 billion euros including interest — sit in an escrow account and can’t be paid to Ireland until the final legal challenges are exhausted.