Starbucks’ tax hearing in Europe gives hope for Apple’s own tax battle

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Apple Pay finally overtakes Starbucks in mobile payments
Starbucks case could offer a clue concerning Apple's own $14.4 billion tax battle.
Photo: Nicky Colman/Flickr

Apple has received a glimpse of hope in its giant $14.4 billion tax battle against the EU. On Tuesday, the European Commission’s similar tax case against Starbucks collapsed. The EC claimed that Starbucks had received an unfair sweetheart tax deal in the Netherlands. The European Commission’s General Court overturned this earlier 2015 decision.

But another case against Fiat Chrysler concluded with the European court saying that it had enjoyed preferential tax treatment in Luxembourg.

As RTE reports:

“Both cases will be closely watched for any bearing they might have on the Apple case, which is currently being appealed by both the tech company and the Irish Government.”

The European Commission’s case against Starbucks collapsed after the EU’s General Court said that the EC had not been able to clearly establish that Starbucks received an economic advantage due to its Netherlands tax arrangement.

Starbucks wins, Fiat loses. Apple next?

Apple was in court regarding its own European tax case last week. The European Commission handed Apple its big tax bill in August 2016. It claimed Apple 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.

In court, Apple attorney Daniel Beard said that the EC ignores all the taxes Apple already pays across the world. Tim Cook has previously called the European Commission’s claims “total political crap.”

Apple has paid its European tax bill. The money has been placed 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.)

A 1-1 score (Starbucks win, Fiat loses) certainly counts as mixed news for Apple. However, it’s also something that is going to give Apple’s lawyers hope. I’m no tax lawyer, but there seem to be a lot of similarities between the complaints regarding Apple and Starbucks. No doubt every aspect of Starbucks’ legal case will be being combed over in Cupertino.