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Apple Irish tax case appeal heard by EU court

Apple's European headquarters in Cork city centre, southern Ireland

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Getty Images

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Apple’s European headquarters in Cork city centre, southern Ireland

A European Union court is due to hear appeals against a decision to order the Republic of Ireland to recover unpaid taxes of €13bn (£11.5bn) from Apple.

In 2016, the European Commission found an agreement between Dublin and the technology giant was against EU law.

It said the Irish government allowed the company to attribute nearly all its earnings from EU sales to a head office in Ireland that existed only on paper.

By doing so Apple avoided paying tax on EU revenues.

Both Ireland and Apple are appealing against the ruling.

Analysis: Message to business important for Ireland

By John Campbell, BBC News NI Economics and Business Editor

Why would any government want to turn down a 14bn tax windfall?

For Ireland the motivation is twofold: First there is the desire to disprove claims that it acts, or has acted, as a tax haven.

The country has faced increasing criticism of it corporate tax policies, with the American economist Gabriel Zucman leading the charge.

He has accused Ireland of being “the world’s number one tax haven”.

Secondly, Ireland want to demonstrate to multinational investors that the country is a safe and predictable place to do business.

Speaking on BBC Radio 4’s Today programme on Tuesday, Laura Treacy, a partner at Irish law firm McCann FitzGerald based in Brussels, said the European Commission argued Ireland allowed Apple to reduce substantially its tax bill in a way that gave the technology giant a selective advantage over other companies located in Ireland.

“The two companies in question were really the revenue generating companies for all of Europe. They happened to be located in Ireland,” she said.

“They were established in Ireland, but importantly, they were non-tax resident in Ireland and, as a result, they were not required to pay income or corporate tax on their worldwide profits but rather only on the profits that were attributable to the Irish operations.”

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REUTERS/Stephen Lam

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The iPhone has been one of Apple’s most successful products

The Irish state argues the EC has misunderstood the Irish tax rules and Irish tax arrangements, she said.

“Where the commission says a lot of the profits were being transferred to head offices which, according to the commission, had no employees and no staff, and carried on very little substance,” she said.

“Ireland and Apple are saying no actually, quite serious decision making was taking place in these head office entities and it was correct to allocate the vast proportions of the profits to the head offices, leaving only smaller amounts in Ireland because they are saying only routine tax decisions were taking place in Ireland.”

Ms Treacy said that they are also arguing that one of the key points that the commission relies on is incorrect and does not form part of state aid law up to this point, but is instead “a kind of novel rule” introduced by the commission.

Apple Irish tax case appeal heard by EU court

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