Apple suffers setback in fight against EU’s $14 billion tax order

LUXEMBOURG (Reuters) -An EU court made legal errors when it ruled in favor of Apple on a 13 billion euro ($14 billion) tax order and should review the case again, an adviser to the EU’s top court said on Thursday. Europe, in a potential setback for the iPhone maker.

The tax case against Apple was part of EU antitrust chief Margrethe Vestager’s crackdown on deals between multinationals and EU countries that regulators considered unfair state aid.

The European Commission in its 2016 decision said that Apple benefited from two Irish tax rulings over more than two decades that artificially reduced its tax burden to just 0.005% in 2014.

In 2020, the General Court of the European Union upheld Apple’s challenge, saying that regulators had not met the legal standard to show that Apple had enjoyed an unfair advantage.

But Advocate General Giovanni Pitruzzella of the Court of Justice of the EU (CJEU) disagreed and said CJEU judges should overturn the General Court’s ruling and send the case back to the lower court.

“The General Court’s ruling on Ireland’s ‘tax rulings’ in relation to Apple should be set aside,” he said in a non-binding ruling.

He said the General Court made a number of legal errors and also “failed to properly assess the substance and consequences of certain methodological errors which, according to the Commission’s decision, vitiated the tax rulings.”

“It is therefore necessary for the General Court to carry out a new assessment,” Pitruzzella said.

The CJEU, which will rule in the coming months, follows around four out of five recommendations of this type.

Ireland reiterated that it had not provided any state aid to Apple.

“It is important to note that this opinion does not form part of the judgment of the Court of Justice of the European Union, but is considered by the Court when reaching its final ruling,” Michael McGrath said in a statement.

“Ireland’s position has always been, and remains, that the correct amount of Irish tax was paid and that Ireland did not provide any state aid to Apple.”

Although Apple and Dublin appealed the tax order, Apple had to hand over the full amount, which Ireland had in an escrow account.

The Irish government has long said that even if it loses its appeal and manages to keep the money, other EU member states will claim they are owed some of the back taxes.

“We thank the court for its time and continued consideration of this case. The General Court’s ruling was very clear that Apple did not receive any selective advantage or state aid, and we believe that should stand,” an Apple spokesperson said.

Vestager has had a mixed record defending his tax cases in court, with judges backing challenges from automaker Stellantis, Amazon and Starbucks.

His biggest legal victory to date came in September, when the General Court upheld his ruling against a €700 million Belgian tax plan for 55 multinationals. His tax campaign has forced EU countries to scrap such favorable deals.

Vestager is currently investigating IKEA brand owner Inter IKEA’s Dutch tax deal in a case dating back to 2017, Nike’s Dutch tax rulings, and Finnish food and beverage packaging company Huhtamaki’s tax rulings granted by Luxembourg. .

The Apple case is Case C-465/20 P Commission v Ireland and Others.

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