Apple Inc. fights the biggest tax case in European Union (EU) General Court

Apple Inc. is battling the world’s biggest tax case in a European Union (EU) General Court in Luxembourg, trying to rein in the European Union’s powerful antitrust chief ahead of a potential new crackdown on internet giants. The Court shall weigh whether regulators were right to levy a record €13 billion ($14.4 billion) tax bill.

According to the iPhone maker, it is the world’s biggest taxpayer. However, EU competition commissioner Margrethe Vestager has said in a 2016 ruling that Apple’s tax deals with Ireland allowed the company to pay far less than other businesses. Apple’s negotiations over tax comes after its market valuation hit $1.02 trillion last week on the back of a new aggressive pricing strategy that may stoke demand for some smartphones and watches.

The company’s huge revenue and those of other technology firms have attracted close scrutiny in Europe, focusing on complicated company structures for transferring profits generated from intellectual property (IP).

A court ruling, likely to take months, could empower or halt Vestager’s tax probes, which are now centering on fiscal deals done by Amazon.com Inc. and Alphabet Inc. She’s also been tasked with coming up with a “fair European tax" by the end of 2020 if global efforts to reform digital taxation don’t make progress.

A February judgment threw out her 2016 order for them to pay back about 800 million Euros. Apple’s Chief Executive Officer Tim Cook blasted at the EU move terming it as totally political. The company’s legal challenge claimed that the EU wrongly targeted profits that should be taxed in the United States (US) and “retroactively changed the rules" on how global authorities calculate what’s owed to them.

The US Treasury too considered that the EU was making itself a “supra-national tax authority” that could threaten global tax reform efforts.

Vestager had also fined Google approximately $9 billion. She had also ordered Amazon to pay back taxes and is probing Nike Inc.’s tax affairs and looking into Google’s taxation in Ireland.

The Apple case rulings is scheduled for 24 September 2019. The General Court will rule on whether the EU was right to demand unpaid taxes from Starbucks Corp. and a Fiat Chrysler Automobiles NV unit.

Those judgments could set an important precedent on how far the EU can question tax decisions national governments make on how companies should be treated.

The General Court rulings can be appealed once more to the EU’s highest tribunal, the EU Court of Justice. Meanwhile, Apple’s back taxes—€14.3 billion including interest—sit in an escrow account and can’t be paid to Ireland until the final legal challenges are exhausted.