Europe’s second highest court will deliver a verdict this week on Apple’s appeal against a €13 billion bill for back taxes, which has been a nagging sore in transatlantic relations.
The American technology giant has been fighting a 2016 ruling from the European Commission (EC) that the Irish government had given it an undue tax benefit in breach of state aid rules.
Brussels accused Ireland of striking a “sweetheart” deal with Apple, allowing the iPhone maker to pay substantially less corporation tax than other businesses. The EC ordered Ireland to recover the illegal aid, plus years of interest.
Apple, whose international headquarters are in Cork, and the Irish state challenged the ruling and have denied coming to an agreement to cap its tax liabilities. During its appeal hearing in September, lawyers for Apple argued that the order defied “reality and common sense”.
The EC’s lawyers argued that Ireland gave Apple a selective advantage over other companies based in the country.
Apple stands accused of having used two Irish-registered entities that were not resident in Ireland for tax purposes to avoid corporation tax on the bulk of its overseas earnings. It denies wrongdoing.
The ruling from the European General Court is scheduled for Wednesday. If it goes against the EC, it would be a second defeat in three months for Margrethe Vestager, the competition commissioner. In May, the court overturned her decision to block the merger of O2 and Three in the UK four years ago.
The Apple case has been a recurring source of discord between the EC and the US. President Trump has privately disparaged Ms Vestager as “the tax lady”, according to reports. Tim Cook, Apple’s chief executive, has previously described accusations of tax avoidance as “political bullshit”.
Wednesday’s ruling is unlikely to end the affair. Leo Varadkar, the Irish deputy prime minister, said last week that the case would “almost certainly be appealed by one party or another to the European Court of Justice,” raising the prospect of years more legal wrangling.
Apple employs 6,000 people in Ireland and Mr Cook recently said the company’s commitment to Ireland was “unshakable”.