Apple, Inc. (NASDAQ: AAPL) will send a team of delegates to a two-day court hearing at the General Court in Luxembourg, one of EU’s largest courts. Apple is expected to pay a USD 14.4 Billion settlement in Irish back taxes as part of EU’s increased scrutiny on large companies that have taken advantage of a tax loop hole in Europe.
Lawmakers have claimed that tax rulings in Ireland from 1991 and 2007 have reduced Apple’s taxes for over two decades. One example that Margrethe Vestager, European Competition Commissioner displayed that 0.005% tax rate was paid by Apple’s main Irish branch in 2014. Although Apple may argue that this was following the tax rulings by the EU at the time.
Most of the products regarding development, engineering and design are created within the United States. The company may argue that the majority of taxes are owed to the U.S.A. Ireland has also voiced their dismay by condemning the Commission of abusing its influence and being meddlesome with the EU member’s national sovereignty on tax issues.
Earlier in February, the General Court dismissed the ruling against a Belgian tax break that benefitted over 30 multinational companies, explaining that it was not a scheme. EU executive’s tax crackdown was hindered.
“Politically, this will have very big consequences,” said Sven Giegold, a Green member of the European Parliament. “If Apple wins this case, the calls for tax harmonization in Europe will take on a different dynamic, you can count on that.”