Apple: Europe doesn’t understand how we make money

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Tim Cook has always insisted that Apple is no tax dodger.
Photo: Ste Smith/Cult of Mac

Apple has filed a defense against its massive European Commission tax bill, arguing that it shouldn’t have to pay its $14 billion tax bill, and that the request should be either totally or partially annulled.

The argument, essentially, is a 14-point extension of Tim Cook’s previous assertion that existing tax codes are designed for an industrial, rather than a digital age.

Apple asserts that the European Commission misunderstands Apple’s business dealings, and says the reason it shouldn’t have to pay massive taxes in Ireland is because the actual profit-driving work Apple does is carried out elsewhere.

As it phrases one part of the argument, Apple Ireland “carried out only routine functions and were not involved in the development and commercialisation of Apple IP which drove profits.”

In another part of the plea, Apple lawyers suggest that the European Commission is overextending itself:

“The Commission has violated legal certainty by ordering recovery under an unforeseeable interpretation of State aid law; failed to examine all relevant evidence contrary to its obligation of due diligence; failed to reason the decision adequately; and exceeded its competence under Article 107 TFEU by attempting to redesign Ireland’s corporate tax system.”

Apple was handed its sizeable EU tax bill last summer. According to the EC probe, Apple paid a tax rate of as little as 0.005 percent on its European profits in 2014. To put that number in perspective, it’s around $50 tax for every $1 million brought in.

Apple, for its part, has always argued that it pays its taxes correctly. During an “Inside Apple” episode of 60 Minutes, Tim Cook labeled reports that Apple doesn’t pay its taxes “total political crap.” Apple’s Chief Financial Officer Luca Maestri meanwhile said that “if there is a fair outcome of the [European Commission] investigation, [Apple should pay] zero” extra tax.

The European Commission deadline set for Apple’s payment to Ireland passed last month without Apple making the payment. Somewhat confusingly, despite the money being owed to Ireland, the Irish government has been very clear that it stands with Apple on this issue.

At present, there’s no court date set for this clash between Apple and the European Commission, although it is likely that there will be far more filings and counter-filings before anything is decided for good.

Source: Eur-lex

Via: The Register