Apple Lead Counsel: EU Pushing Agenda With State Aid Probes

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By Ben Stupples

The European Union’s executive arm is “advancing a political agenda” through state aid probes, according to the lawyer fighting the bloc in Apple Inc.’s $14.8 billion unpaid taxes case.

“It’s very hard to avoid the conclusion that state aid is being used to advance a political agenda, with regards to national tax systems, both inside and outside the EU,” Philip Baker QC said June 30 at a tax conference at the University of Oxford.

Baker’s comments come as the European Commission seeks 13 billion euros from Apple in unpaid taxes to Ireland after a three-year investigation. The decision, announced in 2016, is now under appeal from Ireland’s government.

The commission has created “uncertainty” for businesses with its probes, according to Baker, who stressed he was expressing his personal views. Even if EU courts rule against the commission’s findings, certainty will not be restored “for some time,” he added.

Ireland’s government hired Baker, a London-based lawyer specializing in corporate taxation, to fight the commission’s August 2016 finding on Apple’s tax payments. The iPhone-maker has its European headquarters in Cork, southwest Ireland.

Illegal State Aid

The EU’s Competition Commissioner Margrethe Vestager has targeted countries’ special tax treatment for certain companies, arguing it amounts to illegal state aid.

In addition to Apple, McDonald’s Corp., Amazon.com Inc. and a subsidiary of carmaker Fiat Chrysler Automobiles NV have all faced state aid investigations over their taxes in Luxembourg. In October 2015, the Brussels-based commission also identified Starbucks Corp.’s tax structure in the Netherlands as illegal state aid.

In his conference presentation, Baker cited the McDonald’s case as an example of the commission challenging tax authorities’ interpretation of their own tax laws.

“If they follow their opening decision, they are saying Luxembourg’s tax authorities do not know what their own tax treaties mean, and the commission does,” he said.

Commission Responds

Responding to Baker’s comments, a commission spokesperson told Bloomberg BNA in a June 30 statement that EU member states “cannot give unfair tax benefits to selected companies.” This has been “long confirmed,” by EU courts, added.

The Apple decision is “firmly based on facts,” they said. Ireland allowed an effective tax rate on Apple’s profits as low as 0.005 percent. That amount is “substantially less than other companies subject to the same Irish tax rules,” added.

To contact the reporter on this story: Benjamin Stupples in London at bstupples@bna.com

To contact the editor responsible for this story: Penny Sukhraj at psukhraj@bna.com

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