Apple Inc. fights the world’s biggest tax case in a quiet courtroom this week, trying to rein in the European Union’s powerful antitrust chief ahead of a potential new crackdown on internet giants.
The iPhone maker will tell the EU General Court in Luxembourg that it’s the world’s biggest taxpayer. But that’s not enough for EU Competition Commissioner Margrethe Vestager who said in a 2016 ruling that Apple’s tax deals with Ireland allowed the company to pay far less than other businesses. The court must now weigh whether regulators were right to levy a record 13 billion-euro ($14.4 billion) tax bill.
Apple’s haggling over tax comes after its market valuation hit $1.02 trillion last week on the back of a new aggressive pricing strategy that may stoke demand for some smartphones and watches. The company’s huge revenue — and those of other technology firms — have attracted close scrutiny in Europe, focusing on complicated company structures for transferring profits generated from intellectual property.
A court ruling, likely to take months, could empower or halt Vestager’s tax probes, which are now centering on fiscal deals done by Amazon.com Inc. and Alphabet Inc. She’s also been tasked with coming up with a “fair European tax” by the end of 2020 if global efforts to reform digital taxation don’t make progress.
The legal battles may go on for a few years more. The General Court rulings can be appealed once more to the EU’s highest tribunal, the EU Court of Justice. Meanwhile, Apple’s back taxes — 14.3 billion euros including interest — sit in an escrow account and can’t be paid to Ireland until the final legal challenges are exhausted.
The cases are: T-892/16, Apple Sales International and Apple Operations Europe v. Commission, T-778/16, Ireland v. Commission.