Apple has accused the European Commission of unfair treatment in a high-profile $13.7 billion tax case.
The tech giant accused the European Union’s competition watchdog of breaching its “right to good administration,” according to the Financial Times, which obtained a copy of Apple’s complaint on Monday. The iPhone maker added that the European Commission, or EC, did not conduct “a diligent and impartial investigation” and that it had violated its “fundamental rights.”
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Apple’s (AAPL) tussle with the EC started last year when the agency accused Apple of using its European headquarters in Ireland as a tax haven to shield profits and ultimately avoid paying its fair share of taxes. The EC said Apple had received illegal state aid in its tax deal with Ireland and that it therefore owed that country 13 billion euros (approximately $13.7 billion) in unpaid taxes stretching back more than a decade.
Apple has called the decision baseless by saying that it had become an EC target because of its financial success. Additionally, Apple said that it is already among the world’s biggest corporate taxpayers and didn’t need to pay more.
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“Apple is not an outlier in any sense that matters to the law,” Apple general counsel Bruce Sewell told Danish newspaper Berlingske in December, according to Reuters. “Apple is a convenient target because it generates lots of headlines.”
For its part, Ireland broke sided with Apple—and against collecting any potential tax windfall.
The EC is focused on Apple’s 3.8% tax rate in Ireland on $200 billion in overseas profits over the past decade. Apple funnels those profits through an Irish unit in an effort to qualify for the low rate. But the loophole is only used in certain circumstances. At the same time, Apple tells Irish tax authorities that all of those same profits were generated outside of Ireland.
Along the way, Apple is able to pay tax on only a slice of its profits and circumvent much higher tax burdens in the U.S. And elsewhere, the EC argues.
The EC also believes that Apple’s Ireland-registered divisions, Apple Sales International (ASI) and Apple Operations Europe (AOE), are not real corporations, but instead shell units Apple uses to unfairly avoid taxes.
“So when Tim Cook, who is the CEO of our company, makes decisions that impact ASI, the Commission says we don’t care because he is not an ASI employee, he is an Apple Inc employee,” Sewell told Berlingske about Apple’s tax machinations. “But to say that somehow Tim Cook can’t make decisions for ASI is a complete misstatement of corporate law, it’s a misunderstanding of how corporations operate.”
Apple used a similar argument in its legal filing on Monday, and said that the EC did a poor job of trying to understand how Apple generates and assigns profits.
The EC has not publicly commented on Apple’s most recent reply. Apple did not immediately respond to a Coins2Day request for comment.
Barring delays, Apple, Ireland, and the EC are expected to fight it out in court this summer.
