Apple could get an early indication about the likely outcome of its giant European Union (EU) tax case early this week.
Apple was in court last week protesting its 13 billion ($14.4 billion) tax bill from the EU. Although the case is likely to drag on for months, two related cases will be ruled on this week. They may offer Apple some clues about its chances of success.
The two cases relate to Starbucks Corp. and a Fiat Chrysler Automobiles NV unit. These are the first examples of cases being decided upon as part of EU Competition chief Margrethe Vestager’s crackdown on allegedly unfair tax deals. The court will announce its verdicts Tuesday.
Howard Liebman, a tax partner at law firm Jones Day in Brussels, told Bloomberg that the results will, “presumably establish some precedent as to how far the court is willing to allow the commission to extend its approach of judging tax regimes -– and individual tax rulings –- in the context of a state-aids analysis.” Liebman is not involved in the disputes.
A preview of what the EU has planned
The Starbucks and Fiat cases are not directly comparable with Apple. Both are multinational corporations targeted by the EU, but the sums involved are much smaller. Starbucks and Fiat were ordered in 2015 to pay back “just” 30 million euros each. Apple’s case is significantly larger than that. There are also differences in the way that the companies are structured.
However, the verdict will give some indication of what Apple might expect. It will also be of interest to Amazon and Google parent company Alphabet. Both are currently being probed as part of the investigation.
The Starbucks and Fiat hearings will reveal whether the European Commission’s argument that tax rulings giving these companies an unfavorable advantage will stand up in court.
Tax wars: Apple vs. EU
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.
However, Apple has hit back at these claims. Tim Cook called it “total political crap.” Last week, Apple attorney Daniel Beard said that the EU chooses to ignore all the taxes Apple already pays across the world.
Apple has already paid the EU tax bill, although it hopes to get this money back. 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.)