European Union wants Apple to pay $14 billion in back taxes

European Union competition regulators appealed to the bloc’s highest court on Tuesday to override a lower tribunal and make Apple pay a record 13 billion euros ($14.3 billion) in Irish back taxes, reports Reuters.

“Its outcome will determine whether member states may continue to grant multinational substantial tax breaks in return for jobs and investments,” Commission lawyer Paul-John Loewenthal told the Court of Justice of the European Union (CJEU).

The EU, Europe’s anti-trust and consumer investigation agency, ruled in 2016 that Ireland, Luxembourg and the Netherlands have attracted investment and jobs by helping big companies avoid tax in other countries, including EU members. The commission said Ireland was too lenient in rulings it gave to Apple and which helped the company shield tens of billions of dollars in profit from taxation. 

At 12.5%, Ireland’s corporate tax rate beats the U.S. rate of 35%. However, participating companies don’t pay that 12.5% under the double Irish structure.

In July 2020, the EU’s second-highest court found in favor of Apple and Ireland, ruling that the Irish government did not unlawfully aid Apple in reducing its tax bill. However, Lowenthal insisted to the court that the ruling was “legally flawed.”

In response, Daniel Beard representing Apple said it had paid its fair share of taxes, since the profits were “subject to the U.S. tax regime.” Apple had built up reserves for those taxes, and “is paying around 20 billion euros in tax in the U.S. on those very same profits that the Commission says should have been taxed by Ireland.”

“Apple has paid the taxes that were due under the Irish tax code,” Beard continued.