Update: This story has been updated with confirmation of the EU’s appeal, and a statement from Executive VP of the European Commission, Margrethe Vestager, as well as reaction from the Irish government.
The European Commission is set to lodge an appeal against a court ruling which quashed a demand that Apple pay Ireland nearly $15 billion in taxes, over claims that Apple had an unfair tax arrangement in company tantamount to state aid.
In a statement, Friday, Executive Vice-President Margrethe Vestager stated:
“The Commission has decided to appeal before the European Court of Justice the General Court’s judgment of July 2020 on the Apple State aid case in Ireland, which annulled the Commission’s decision of August 2016 finding that Ireland granted illegal State aid to Apple through selective tax breaks.
In July, a court ruled that an EU bill for $14.9 billion was not appropriate, and overturned the decision. The Commission had previously argued that Apple’s tax arrangements in Ireland basically amounted to state aid and that Apple in fact owed Ireland a huge sum of money. In its previous ruling the court stated:
The General Court considers that the Commission incorrectly concluded, in its primary line of reasoning, that the Irish tax authorities had granted ASI and AOE an advantage as a result of not having allocated the Apple Group intellectual property licenses held by ASI and AOE and, consequently, all of ASI and AOE’s trading income, obtained from the Apple Group’s sales outside North and South America to their Irish branches. According to the General Court, the Commission should have shown that that income represented the value of the activities actually carried out by the Irish branches themselves…
Friday was the last day that the European Commission could appeal the ruling. According to reports, Vestager has been fervently pushing for an appeal in internal meetings. The statement continues:
The General Court judgment raises important legal issues that are of relevance to the Commission in its application of State aid rules to tax planning cases. The Commission also respectfully considers that in its judgment the General Court has made a number of errors of law. For this reason, the Commission is bringing this matter before the European Court of Justice.
In a response to the appeal, the Irish government stated:
The facts of the case, as established by the GCEU, demonstrate, as Ireland has always contended, that no State aid was given and that the Irish branches of the relevant Apple companies paid the full amount of tax due in accordance with the law. An appeal to the CJEU must be on a point, or points, of law. This appeal 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. Ireland appealed the Commission Decision on that basis and the judgement from the General Court of the European Union vindicates this stance.
It won’t be an easy task for the Commission to get a court to overturn the ruling. The appeal will be limited to points of law, rather than any facts that took place in the case. As noted by mobile litigation expert Florian Mueller:
The final decision will be made by the Court of Justice of the EU (CJEU), which is based in Luxembourg like the EU General Court (which was previously called Court of First Instance) and focuses exclusively on questions of law, not fact–which is a huge problem for the Commission given that the factual findings didn’t support its decision in the first place.
A ruling in the case is likely years away. The money in question is currently held in an escrow account whilst the case is decided, which means Apple won’t have to write a massive check if the ruling was to go against the company. You can read the full statement here.