Apple Faces Prolonged $15 Billion Tax Battle as EU Appeals

EU competition chief Margrethe Vestager appeals July ruling on Irish tax policy

Apple Inc.’s legal battle in Europe over a $15.2 billion tax bill will continue, potentially for years, after the European Union appealed a court ruling that sided with the tech giant.

EU officials doubled down Friday on their ruling from 2016, which alleged that Ireland had granted illegal tax breaks to Apple. This followed the company’s unexpected win in July at the bloc’s second-highest court, where judges said the European Commission—the EU’s competition enforcement arm—didn’t bring enough evidence that Ireland had granted illegal tax breaks to Apple between 2003 and 2014.

The commission’s competition chief, Margrethe Vestager, said the court had “made a number of errors,” prompting the appeal.

“Making sure that all companies, big and small, pay their fair share of tax remains a top priority for the commission,” she said.

Apple said it would review the commission’s appeal, adding that the “facts have not changed” since the court’s July decision.

The total sum of 14.3 billion euros, equivalent to $16.7 billion, which includes interest, will remain parked in escrow until the European Court of Justice, the bloc’s highest court, renders its judgment.

The Apple case was the largest in a series of decisions that used the EU’s laws against selective state aid to companies to annul preferential tax deals struck by multinational corporations, notably in Ireland, Luxembourg and the Netherlands.

The case earned Ms. Vestager, the nickname “tax lady” from President Trump. But July’s ruling was a rebuke to Ms. Vestager, who is leading the charge to rein in alleged abuses by Big Tech with regards to both state aid and antitrust concerns.

With Friday’s appeal, Ms. Vestager is seeking clarity on the limits of competition law regarding taxation, which is a national prerogative in the EU.

At issue is whether Irish tax rulings in 1991 and 2007 gave Apple special treatment, or whether they just reiterated a generally used interpretation of Irish law.

Those rulings allowed two Irishregistered Apple units to attribute only a small sliver of $130 billion in profit to Ireland over an 11-year period. The July ruling said that despite the gaps in Ireland’s tax rulings, the commission hadn’t proven that the country granted a special advantage to Apple that was unavailable to other companies.

Irish Finance Minister Paschal Donohoe said the process could take up to two years to complete. “Ireland has always been clear that the correct amount of Irish tax was paid and that Ireland provided no state aid to Apple,” he said.

The commission’s appeal comes at a crunchtime for international talks on digital taxation, with the Organization for Economic Cooperation and Development expected to table proposals in October on how to tax digital companies across borders.

Several countries, including France, have introduced taxes at a national level. The EU has said it would push for a bloc-wide tax if the global efforts fail, after the Trump administration this summer said OECD talks had reached an impasse.