Apple will commence arguments on Tuesday in the European Union General Court in its effort to reverse a ruling by the European Commission that required it to pay Ireland 13 billion euros ($14.4 billion) in back taxes.
The showdown between the regulator, Ireland, and Apple is scheduled to take place on Tuesday and Wednesday. While the final ruling on the matter could take months to be finalized, initial rulings are set for publication for September 24, which would be the first indication of Apple’ final fate.
A 2016 ruling by the European Commission claimed Apple was given preferential treatment, via tax breaks by Ireland, including one rate that was as low as 1% on European profits in 2003, and as low as 0.005% in 2014. Apple funneled its European income through Ireland in order to take advantage of the low rates.
The European Commission ordered Apple to pay 13.1 billion euro to Ireland, along with 1.2 billion extra in interest. Apple and Ireland both opposed the ruling, leading to tomorrow’s arguments.
EU rules forbid preferential tax treatment, such as that given to Apple by Ireland, including cases in which individual member states offer companies benefits not available elsewhere in the European Union.
The 14.3 billion euros in question has been kept in escrow during the appeals process, and will remain in escrow until the matter has been decided. So far, the escrow account has lost 16 million euro in value. (It is invested in what is considered safe sovereign and quasi-sovereign bonds.)
No matter what the result of the hearing, the tax battle could go on for years longer, and it could potentially be brought in front of the EU Court of Justice, the continent’s highest tribunal.
If the European Commission wins, it could be emboldened to conduct similar investigations into other multinational companies, leading to additional fines to be paid.