Apple embarks on EU court battle over $14 billion tax bill

Apple CEO Tim Cook poses for a selfie during an Apple product launch event at Apple's headquarters in Cupertino, California on September 10, 2019. ( AFP / Josh Edelson)
Updated 17 September 2019

Apple embarks on EU court battle over $14 billion tax bill

  • The EU accuses Apple of parking untaxed revenue earned in Europe, Africa, the Middle East and India, in Ireland,
  • Apple fiercely denies the tax bill. The US government also insists the order by Brussels constitutes a major breach of international tax law

LUXEMBOURG: Apple embarks on an epic court battle with the EU on Tuesday, fighting the commission’s landmark order that the iPhone-maker reimburse Ireland €13 billion ($14 billion) in back taxes.
Lawyers for the world’s biggest company will face EU officials in a Luxembourg court, challenging a decision that CEO Tim Cook slammed at the time as “total political crap.”
The European Commission’s conclusion was delivered in August 2016 by Competition Commissioner Margrethe Vestager, a shock decision that put Europe at the forefront of an emerging effort to rein in the power of US big tech.
The two days of hearings on Tuesday and Wednesday will take place at the EU’s lower General Court, where judges will give their judgment no earlier than 2020.
Any appeal would then go the EU’s highest court, the European Court of Justice, for a final decision that could land as late as 2021.
The EU accuses Apple of parking untaxed revenue earned in Europe, Africa, the Middle East and India, in Ireland, which has emerged as a European hub for big tech and global pharma giants.
This privilege allegedly gave Apple an advantage over other companies, allowing it to avoid taxes between 2003 and 2014 of around 13 billion euros which, according to Brussels, constituted illegal “state aid” by Ireland.
Apple fiercely denies the tax bill. The US government also insists the order by Brussels constitutes a major breach of international tax law.
“The European Commission has tried to rewrite Apple’s history in Europe, to ignore Ireland’s tax laws and, in doing so, to disrupt the international tax system,” Tim Cook said in an open letter in 2016.
The group insists that it is in the United States, where the company invests in research and development and thus creates wealth, that it must pay taxes on the revenue in question.
This became possible after a major tax overhaul in the US at the end of 2017 that allowed Apple to repatriate profits made abroad. Apple has promised to pay Washington a tax bill of $37 billion, in addition to the taxes already paid in the United States.
The California-based giant is supported in its fight by Ireland which has also appealed, refusing to be singled out as a tax haven.
“We will present a very strong case,” promised Irish Finance Minister Paschal Donohoe on Friday.
The two days of hearings are taking place in a tense trade context between the EU and the United States where President Donald Trump accuses Europeans of deliberately attacking American technology giants.
The EU’s Competition supremo, Vestager, is in particular accused by the US president of “hating” the US. He has slammed her as the “tax lady” because of the investigations and heavy fines imposed on US groups such as Google.
Pending the conclusion of the case, Apple has blocked the funds in an escrow account: a total of 14.3 billion euros, after interest.
The group, which has been present in Ireland since the 1980s, employs around 6,000 people in Cork, the country’s second-largest city.
The first signs of how the Apple case may finish will come as early as September 24 when the General Court will rule on whether the EU was right to demand unpaid taxes from Starbucks and a unit of Fiat Chrysler.


Struggling WeWork mulls bailout deals with SoftBank, JP Morgan

Updated 37 min 36 sec ago

Struggling WeWork mulls bailout deals with SoftBank, JP Morgan

TOKYO: Under-pressure start-up WeWork is considering two huge bailout plans including a cash injection that could see Japanese investment titan SoftBank take control of the firm, according to reports.
The office-sharing giant had been on course for a massive initial public offering until last month when questions began to be asked over its governance and profit outlook.
The firm’s valuation plunged from $47 billion in January to less than $20 billion in September and the listing plans have been dropped, while co-founder Adam Neumann stepped down as chief executive.
With New York-based parent company We Co. not expected to push for the IPO this year, the cash-strapped firm is looking for a financial lifeline.
The Wall Street Journal, New York Times and Bloomberg News cited unnamed sources close to the talks as saying SoftBank — the US firm’s biggest shareholder — had drawn up a proposal that gives it full control of WeWork.
The move would dilute the voting power of Neumann, who remains as chairman of the company he started in 2010 and also currently maintains control a majority of voting shares.
They also reported that WeWork is looking at a deal with Wall Street giant JP Morgan to raise $5 billion in debt, with the Times saying directors of We would be meeting as soon as Monday afternoon to discuss that.
“WeWork has retained a major Wall Street financial institution to arrange financing,” the Journal reported a company spokesman as saying.
“Approximately 60 financing sources have signed confidentiality agreements and are meeting with the company’s management and its bankers over the course of this past week and this coming week.”
The New York-based startup that launched in 2010 has touted itself as revolutionizing commercial real estate by offering shared, flexible workspace arrangements, and has operations in 111 cities in 29 countries.
However, the company, which lost $1.9 billion last year, has faced skepticism over its ability to make money, especially if the global economy slows significantly.