Apple files legal challenge to European Union ruling on Irish tax breaks

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Ireland and Apple are pushing back against the European Union’s order requiring Apple to pay $14 billion in back taxes that the EU contends are owed by the iPhone maker.

The order came after the European Commission found that Ireland gave Apple tax breaks — and that the country has extended the practice to various multinational employers that arrived seeking similar treatment. The EU calls this “illegal state aid,” and is asking Apple pay back taxes up to $14.5 billion to Ireland — the largest state-aid payback demand in history.

Apple has filed a legal appeal. In an August 2016 customer letter, CEO Tim Cook said much of Apple’s work is done in the U.S. and it is taxed appropriately, but the EU is trying to change the rules.

“Beyond the obvious targeting of Apple, the most profound and harmful effect of this ruling will be on investment and job creation in Europe,” Cook said. “Using the Commission’s theory, every company in Ireland and across Europe is suddenly at risk of being subjected to taxes under laws that never existed.”

Ireland’s Department of Finance has also published a report condemning the EU’s decision, saying the Commission has “misunderstood the relevant facts and Irish law.”

“The Commission has manifestly breached its duty to provide a clear and unequivocal statement of reasons in its decision, in relying simultaneously on grossly divergent factual scenarios, in contradicting itself as to the source of the rule that Ireland is said to have breached, and in suggesting that Ireland granted aid in relation to profits taxable in other jurisdictions,” according to the report.

Apple’s General Counsel Bruce Sewell told Reuters that the Commission “probably didn’t even read” an Irish tax lawyer’s expert opinion, as there was no reference to it in the EU decision.

“Apple is not an outlier in any sense that matters to the law,” Sewell said. “Apple is a convenient target because it generates lots of headlines. It allows the commissioner to become Dane of the Year for 2016,” referring to a title given to European Competition Commissioner Margrethe Vestager last month by Danish newspaper Berlingske.