European Commission Made ‘Fundamental Errors’ in Irish Tax Ruling, Says Apple

Apple has claimed that the European Commission made “fundamental errors” when it ruled last year that the company owed Ireland 13 billion euros ($13.7 billion) in unpaid taxes plus interest.

Apple appealed the commission’s decision in December, but on Monday the company published a piece in the Official Journal of the European Union detailing 14 pleas in law to support its action, according to The Irish Times.

The European Commission argues that Irish revenue commissioners gave Apple unfair advantage between 1991 and 2007 by allowing the company to move income from the European market through two “non-resident” head office subsidiaries based in Ireland.

Apple and the Irish government, which has also appealed the commission’s decision, argue that the bulk of those profits are due in the U.S.

“The Commission made fundamental errors by failing to recognize that the applicants’ profit-driving activities, in particular the development and commercialization of the intellectual property (Apple IP), were controlled and managed in the United States,” Apple said, according to the Official Journal. “The profits from those activities are attributable to the United States, not Ireland.”

Apple maintained that the commission had “failed to recognize that the Irish branches carried out only routine functions and were not involved in the development and commercialization of Apple IP, which drove profits”.

Cupertino also said that the commission failed to conduct a diligent and impartial investigation, and “exceeded its competence” as it relates to the Treaty on the Functioning of the European Union, by “attempting to redesign Ireland’s corporate tax system”.

Apple CEO Tim Cook has called the EC’s ruling “total political crap” and described the lower end 0.005% tax rate Apple is accused of paying as a “false number”. The Apple CEO believes that the decision will be reversed.

Appeals by Apple and the Irish government have been made to the European Union’s General Court, where proceedings may take up to two years to complete, after which the case is likely to go all the way to the European Court of Justice.

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