EU takes Apple to court, escalating dispute to recoup Apple taxes

European Commission
EU Competition Commissioner Margrethe Vestager

The European Commission is taking Ireland to court to force the country to collect as much as $15.3 billion in taxes from Apple.

The EC last year ordered Apple to pay taxes and interest after ruling that a deal with the Irish government illegally granted undue tax benefits to the iPhone vendor. The figure is reportedly 40 times bigger than any previous demand under EU rules prohibiting countries from helping companies gain advantages over their competitors. The decision by the EC follows an investigation launched in June 2014.

The EU’s executive arm claimed in a 130-page document Irish tax authorities have been “inconsistent” in their treatment of Apple and other companies, as The Wall Street Journal and other outlets reported. Apple generated $130 billion in profits over more than a decade that should have been taxed at Ireland’s 12.5% corporate rate, according to the EC, but the money was largely untaxed.

Apple has appealed the case to Europe’s second-highest court, and Reuters reported in July that the U.S. filed an application with that court to intervene in the case. The court is expected to hear the case late next year, Reuters said. The Trump administration has yet to publicly weigh in on the matter.

The EC isn’t content to wait for that decision, however, which could take as long as five years. It announced this morning that it has opted to refer the case to the European Court of Justice, saying that the sum must be collected “as quickly as possible” because Apple is benefiting from “an illegal advantage.”

“Ireland has to recover up to €13 billion in illegal state aid from Apple,” Commissioner Margrethe Vestager said in a press release. “However, more than one year after the Commission adopted this decision, Ireland has still not recovered the money, also not in part. We of course understand that recovery in certain cases may be more complex than in others, and we are always ready to assist. But member states need to make sufficient progress to restore competition. That is why we have today decided to refer Ireland to the EU court for failing to implement our decision.”

Ireland’s Department of Finance called the move “extremely disappointing.”

“It is extremely regrettable that the Commission has taken this action, especially in relation to a case with such a large-scale recovery amount,” that agency said in response to the EC’s announcement. “Ireland has made significant progress on this complex issue and is close to the establishment of an escrow fund, in compliance with all relevant Irish constitutional and European Union law.”

Apple is one of a handful of companies the EU is eyeing as it looks to crack down on what it sees as unfair tax advantages, Bloomberg reported this morning. The group is also expected to rule soon on cases against Amazon and McDonald’s, the news outlet reported, and competition watchdog groups are also pushing for a more aggressive stance from the EU over “special tax deals” for major companies.