Apple appeals against $14 billion European tax bill with 14-point legal plea

Last year Apple was hit with $14 billion tax bill after the European Commission decided the company had enjoyed "illegal tax benefits" in Ireland. Apple said that it would appeal against the ruling which Tim Cook described as "maddening", but Europe is showing increased interest in cracking down on technology companies taking advantage of tax loopholes.

The appeal has now been placed, and Apple is asking the appeal court to either partly overturn the Commission's ruling and pay its legal fees, or completely overturn the ruling. The fact that Apple is setting forth two possible outcomes would indicate that it feels a full annulment of the original ruling is unlikely, but it has submitted a 14-point appeal.

Apple starts off by saying that it believes the European Commission is mistaken in its interpretation of the company's financial arrangements., and applied Irish law incorrectly as a result. "The applicants consider that as non-resident Irish companies, they were only liable to Irish corporation tax under Section 25 of the Taxes Consolidation Act 1997 on 'chargeable profits' attributable to activities performed by their Irish branches. The Opinions properly reflected the branches' 'chargeable profits' and did not therefore confer an advantage. The Commission also erred by finding that profit allocation under Section 25 must be under the 'arm's length principle' (the 'ALP')."

The plea goes on to say that "the Commission made fundamental errors relating to the applicants’ activities outside of Ireland."

Moreover, Apple says that the Commission is acting unfairly in comparing its European tax arrangements with other companies operating in the region. The company also suggests that the investigation was not properly conducted: "The Commission presumed that all of the applicants’ critical profit-making activities were attributable to the Irish branches without properly assessing the evidence, including extensive expert evidence showing that the profits were not attributable to activities in Ireland."

Some of the points are rather more tenuous, with Apple seeming to seek out even the slimmest charge of wriggling out of paying the tax bill: "The decision does not contain any explanation of how much is to be recovered under the subsidiary or alternative lines, contrary to State aid rules and the principle of legal certainty."

The appeal process could take a number of years to reach a conclusion, and the full 14-point appeal document can be found over on Eur-Lex.

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