Apple accuses EU of ignoring 'decades of tax law' ahead of $14 billion court battle

Apple to lodge appeal against record €13B tax

The battle between the tech giant Apple and the European Commission is only just getting started.

In August, competition authorities in Europe accused the U.S. multinational of accepting illegal state aid with its tax arrangements in Ireland – where its European headquarters are located. The U.S. multinational is said to be launching this week a legal challenge against that decision.

The European Commission ruled in August that Apple should pay back 13 billion euros ($13.6 billion) – a decision contested by the Irish government, who argued that the EU was interfering with its sovereignty. Apple has previously argued that the commission's decision is "maddening" and "political" and was confident that the bill would be overturned.

The U.S. firm said in a statement on Monday that it was "the largest taxpayer in the world, in the U.S. and in Ireland."

"It's been clear since the start of this case there was a pre-determined outcome. The Commission took unilateral action and retroactively changed the rules, disregarding decades of Irish tax law, US tax law, as well as global consensus on tax policy, that everyone has relied on," Apple said.

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However, it doesn't seem like the European Commission will be softening its position. A spokesperson told CNBC on Monday that "the Commission would defend its decision in court."

The Commission also justified its decision arguing that Ireland has not provided any basis for its "special treatment" to the U.S. firm, according to a report Monday by the Irish Times.

One area of contention is the matter of Apple paying taxes on the profits it recorded in Ireland as well as sending money back to the US to pay for research and development. Such an arrangement can be seen as a "cost-sharing agreement," and could alter Apple's tax status in Ireland.

Brussels also said Monday that the two tax rulings issued by Ireland reduced significantly the tax paid by Apple since 1991, in a way that "did not correspond to economic reality," the newspaper reported.

Margrethe Vestager, the EU's commissioner for competition, argued shortly after presenting the decision in the summer that the ruling was "based on the facts," which showed that Apple was paying a corporate tax rate of just 0.05 percent in Ireland.

The standoff between the EU and Apple could risk relations between Brussels and one of its member states at a time of multiple crises across the region. The Irish government said it is joining Apple in the appeal, arguing that it had to protect the tax arrangement that has brought several multinationals into the country.

"Apple paid all the taxes that was due for their activities in Ireland," Michael Noonan, the Irish Finance minister told CNBC in September.

The Irish Finance ministry said in a statement on Monday that "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," the statement said.

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