European commission to appeal against €13bn Apple tax ruling

The European commission is appealing against a court ruling that said Apple did not have to pay €13bn (£11.9bn) in alleged back taxes to the Irish government, reopening a landmark battle in the EU’s campaign to stop sweetheart deals for multinationals.

The bloc’s competition chief, Margrethe Vestager, said on Friday she would appeal to the EU court of justice to try to oblige Ireland to collect the alleged unpaid taxes and interest from the tech giant.

“The commission … respectfully considers that in its judgment the general court has made a number of errors of law,” her office said in a statement.

The commission needed to use all available tools to ensure companies paid their fair share of tax, it said. “Otherwise, the public purse and citizens are deprived of funds for much needed investments – the need for which is even more acute now to support Europe’s economic recovery. We need to continue our efforts to put in place the right legislation to address loopholes and ensure transparency.”

In 2016 the commission ordered Apple to pay for gross underpayment of tax on profits across the European bloc between 2003 and 2014. It said the iPhone maker had used two shell companies incorporated in Ireland, with the agreement of tax authorities in Dublin, to report Europe-wide profits at effective rates well under 1%.

Apple and the Irish government rejected the claim, saying no state aid had been paid, and successfully challenged the order in the bloc’s Luxembourg-based general court. It ruled in July that the EU’s executive body had failed to prove Apple benefited from an allegedly illegal arrangement. The decision had wider repercussions for the commission’s plans to clamp down on tax avoidance in member states.

The deadline to appeal was midnight on Friday.

Vestager said the case raised important issues for state aid rules in tax planning cases and would be pursued, saying the commission believed the general court had made errors of law.

“Making sure that all companies, big and small, pay their fair share of tax remains a top priority for the commission,” said her statement. “If member states give certain multinational companies tax advantages not available to their rivals, this harms fair competition in the European Union in breach of state aid rules.”

The appeal means the €13bn – plus €1.3bn in interest – stays in an escrow account until the court of justice ruling, which could take two years.

Apple played down the appeal’s chance of success and said it had abided by Irish law. “The general court categorically annulled the commission’s case in July and the facts have not changed since then.”

Ireland’s finance minister, Paschal Donohoe, said in a statement the appeal had been expected and that Ireland would study it in detail before responding.

Some opposition politicians want Ireland to tap the escrow account to fund pandemic-related spending. The government has refused, saying the money is contested and that Ireland must protect its foreign investment strategy.