Quora Question: Can Apple Avoid $14.5B in Taxes in Ireland?

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The Apple logo displayed on the back of an iPhone, London, August 3, 2016. Carl Court/Getty Images

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Answer from Jobst von Steinsdorff, European:

Do Apple and the Irish government have a strong legal case against the EU against ordering Apple to pay back taxes? This is a very interesting question, unfortunately without an easy answer. There are two considerations from the top of my head and please take them with a few grains of salt as neither tax nor EU competition law are my particular areas of expertise:

Procedurally so far, only the Republic of Ireland has a case at all. The EU Commissions decision is directed to the Republic of Ireland and Apple will formally enter the game only once Ireland issues new tax assessments for Apple. In the current state, Ireland can file a complaint against the EU Commission's decision with the General Court of the European Union with a potential appeal to the European Court of Justice. Apple would presumably be involved in the proceedings but as far as I am currently aware, has no rights to appeal the decision on its own, but I'm not 100 percent sure here.

Once the Irish authorities issue new tax assessments for Apple, the company may appeal that in the Irish national courts and the respective Irish national court would have to refer the legal question to the European Court of Justice (directly) for consideration and take the ECJ's ruling into account when issuing its own ruling.

Depending on how Ireland wants to deal with the issue and whether they will try to delay action or not, this could lead to various lines of action and be quite interesting to follow. Also, Ireland may try to delay execution of the decision which in turn could lead the Commission to sue Ireland for breach of the Treaty, also paving the way for a direct involvement of the European Court of Justice instead of the General Court. In any case, it will take a few more years until this will be settled finally.

Regarding material law, it will be very interesting. It is very clear that income and corporate taxation is entirely up to the member states and the Commission has already declared that it does not criticize the corporate tax system and its rates in Ireland in general. On the other hand, it is accepted that member states must align their national policies so as not to contradict the general principles of the EU. Here the Commission generally adresses transfer pricing methods and while the ECJ has ruled on compatibility of transfer pricing arrangements in the view of freedom of movement in the single market, I am not aware that there is anything that adresses transfer pricing as a means of unduly influencing competition. The Commission's decision has not yet been published, but you can get a feeling for their reasoning from their 2014 letter to Ireland and their view is certainly not unfounded. On the other hand, the EU corporate tax is generally member states domain.

I would think that there is a slightly better chance that the Commission's decision will be upheld, but I think it is not a clear case in either direction.

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Quora Question: Can Apple Avoid $14.5B in Taxes in Ireland? | Business