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Apple appeals EU tax ruling, claims Commission 'retroactively changed the rules'

Fulfilling a promise, Apple on Monday formally appealed a tax ruling by the European Commission ordering Ireland to collect at least $13.6 billion in back taxes.




The European Union "took unilateral action and retroactively changed the rules, disregarding decades of Irish tax law, U.S. tax law, as well as global consensus on tax policy, that everyone has relied on," Apple claimed in a statement to Bloomberg. The company has made similar statements in the past, insisting that it follows the law and pays everything it owes.

In a filing of its own, however, the Commission published more details of its two-year investigation, reiterating its stance that Ireland offered preferential tax treatment to Apple, something illegal under E.U. law. The Commission elaborated that Irish tax practices were "too inconsistent" to establish solid rules for profit allocation, and that the means used to produce taxable profit for Apple units didn't follow the arms-length principle for transfers between different parts of a company.

The Commission also defended itself against accusations leveled by Apple and Ireland, insisting that it respected both parties' procedural rights, and gave Ireland "ample opportunity" to make its positions known —something that happened "on multiple occasions." Apple was only able to offer observations, but took advantage of that several times. The investigation never took its focus off of profit allocation methods, the Commission continued.

Apple's appeal joins an earlier one filed by Ireland, which nevertheless put out a new statement on Monday, attacking the E.U.'s charge that Apple shifted nearly all of its European profits to two "head offices" in Ireland —Apple Sales International, and Apple Operations Europe —so they couldn't be taxed.

"These branches carried out routine functions, but all important decisions within ASI and AOE were made in the U.S., and the profits deriving from these decisions were not properly attributable to the Irish branches of ASI and AOE," the Irish finance ministry said.

Apple has claimed that those units were never fully exempt from taxes, and are in fact subject to deferred U.S. taxation, though that would only apply if the company decided to repatriate the money —something it has refused to do unless U.S. politicians grant it a tax holiday.

Officially Apple will have to pay the back taxes within a matter of weeks, Bloomberg said. That money will be held in escrow however, and the appeals process could take several years to resolve.