Apple has a fight on its hands this week as it goes to court to battle the world’s biggest tax case. The company will protest its 2016 European Union tax bill of 13 billion euros ($14.4 billion).
The EU charged Apple the money after saying it had an unfair tax arrangement with Ireland. Apple has always protested its innocence. This week, a court will start the process of deciding whether the regulators were right.
The court ruling is likely to take months. Either way, it will be a significant verdict concerning the future of tax investigations into tech giants.
The EU handed Apple its giant tax bill in August 2016. It claimed that the company took advantage of illegal state aid that allowed it to route profits through Ireland. The investigation alleged that Apple paid the equivalent of as little as 0.005 percent on all European profits in 2014. A Bloomberg report quotes Paul Tang, a socialist lawmaker at the European Parliament:
“It’s very clear that the largest companies in the world — the frightful five I call them — are hardly paying taxes. Cases like these, Amazon in Luxembourg or Apple in Ireland, started to build public and political pressure [for tax reform].”
Apple has paid the tax already
Apple has always argued that it pays the money that it owes. In 2016, Tim Cook blasted the move against Apple as “total political crap.” Apple’s argument is that the EU has “retroactively changed the rules” on how global authorities work out how much tax is owed to them.
Both Ireland and the U.S. have seemingly supported Apple. The U.S. Treasury has described the EU as a “supra-national tax authority” which could hurt global tax reform efforts. President Trump has also said that the the EU Commissioner Margrethe Vestager “hates the United States.”
Apple has already paid the $14.4 billion tax bill. This was paid into an escrow fund, where it will be stored until the case reaches its conclusion. (The fund actually lost money last year, bringing its total value down by $18 million.)
The appeal is due to take place on September 17 and 18 at Europe’s General Court.