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Apple claims £11bn EU fine "defies reality and common sense" in landmark tax appeal

Natasha Bernal
Apple has argued against the European Commission's tax imposition in a high-profile appeal on Tuesday  - REUTERS

Apple has argued that the European Commission's order to pay £11.4bn (€13bn) in back taxes to Ireland "defies reality and common sense" in a court appeal on Tuesday.

The Silicon Valley giant has embarked on a two-day appeal to avoid paying taxes imposed by Europe's competition watchdog in a 2016 ruling, which it claims is an attempt to "retrofit" tax laws. 

Competition commissioner Margrethe Vestager had ruled that the tax it paid on its operations in Ireland was so low that it amounted to state aid.

Daniel Beard, the lawyer representing Apple, said: "The Commission contends that essentially all of Apple’s profits from all of its sales outside the Americas must be attributed to two branches in Ireland.

“The branches’ activities did not involve creating, developing or managing those rights. Based on the facts of this case, the primary line defies reality and common sense."

Apple said that the Commission was seeking headlines by "quoting tiny numbers" such as the 0.005% tax rate paid by the company in 2014, and argued that it pays 26pc tax on its global operations.

The Commission was also accused of ignoring invitations to visit the smartphone-maker's headquarters in Ireland, which Apple claims would demonstrate that none of the products that it sells are manufactured in the country and therefore are not taxable. 

Due to changes in US taxation laws, Apple is paying around €20bn to the US on the very same profits that the Commission claims should have been given to Ireland, the court heard.

Ireland’s Treasury, which is backing Apple's call for the case to be annulled, has so far reportedly paid over €7.1m in legal fees to help secure the country’s reputation as a hub for big technology companies in Europe.

Ireland has argued that the Commission interfered with its sovereignty, and that the Commission's decision is "fundamentally flawed". 

The country is home to the European headquarters of major technology businesses including Google, Facebook, LinkedIn, Microsoft and PayPal, but was labelled a “tax haven” by the European Parliament earlier this year.

This is the first of a series of high-profile appeals faced by the Commission since the Ms Vestager's re-appointment last week.

Lawyers for the Commission are also expected to make their case tomorrow before a panel of five judges, who are set to rule on the appeal in the coming months.