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Apple going to court with the EU

10-1-2019

Rachel Craighead, Contributing Writer

Shortly after releasing their new iPhone 11 models, Apple is embroiled in legal trouble with the European Union. Apple stands accused of owing back taxes of over 13 billion euros, (14 billion USD), alleging that the company worked under the table with the Irish government in order to have a lower corporate tax rate in exchange for creating jobs in Ireland.  This issue was first brought up in 2016, when the European Union Commission investigated the corporate tax rate of 2014 that appeared on Apple’s tax returns.   

Apple has been fined over 14 billion USD in order to set an example for other tech companies hoping to expand their international footprint into the European Union, in direct competition with European tech companies. Apple recently announced that they will be going to court in order to fight these charges. The EU court in charge of undertaking these allegations went so far as to deny US officials interference in this legal battle. Apple’s tax practices in Ireland have been under fire since their adoption of the corporate tax rate in 2014. Both the Obama and Trump administration voiced their displeasure with the European Commission’s actions towards Apple, citing that these targeting practices are an unfair form of protectionism against American companies. The Trump Administration argued that Apple should be held accountable under American Tax laws rather than EU tax laws, as Apple is a mostly US based company. These fines are being brought up during a time of many US based tech companies being held under scrutiny by the EU. The EU’s competition Commissioner, Margrethe Vestager has been cracking down on international tech companies attempting to enter deeper into the European market in order to protect their own interests and companies. 

The European Commission has claimed that the whole reason they are bringing up the “back taxes” is because they believe that Apple owes more corporate tax on the profits they earned in the EU, as they claim the corporate tax rate in 2014 was too low, and was biased towards Apple in order to keep their business there. The Irish government has also been protesting the court case, saying that these practices are perfectly legal under Irish corporate tax law. The CEO of Apple, Tim Cook, has stated that these charges are mostly “political”, in the European Commission’s attempt to set an example for the rest of the international competitors.  Apple was quick to point out that the jobs created in Ireland were mostly focused on logistics and distribution, whereas most of their research and development takes place in the USA, in California, in an attempt to negate claims that Apple is being predatory towards other European Tech companies in research and development aspects. However, the EU claims that Apple is using Ireland as a tax haven by centering most of the global profits to their Irish office, with accusations that there is no real “head office” in Ireland, and that it is one that only exists on paper. 

These charges have also brought up inter-EU problems, as Ireland accuses the European Commission of being too powerful and involved in what they consider to be “domestic economics”. What we do know is that whatever side loses, there will be an appeal.