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Dublin claims Brussels exceeded powers over Apple tax

Ireland has laid out the grounds for its appeal against the European Commission’s demand that it claw back €13bn of state aid from Apple, accusing Brussels of interfering with national sovereignty.

The Irish finance ministry said the EU’s executive arm had misunderstood both Irish law and the relevant facts of the case, and also that the commission had exceeded its powers.

“Ireland does not do deals with taxpayers,” the ministry said in a statement on Monday.

Ireland decided to appeal soon after the decision at the end of August, which found that Dublin had given the iPhone-maker illegal tax breaks for a quarter of a century.

The size of the demand — the biggest ever in an EU state-aid case — took many observers by surprise and triggered a vitriolic response in Dublin, Silicon Valley and even Washington, which accused Brussels of trampling on international tax norms.

The commission is expected to release publicly a full version of its decision later this week, although commercially sensitive information will be redacted.

Brussels said Apple had avoided taxes by channelling the bulk of its non-US sales and profits through corporate entities that did not have to pay tax anywhere. Margrethe Vestager, the EU’s competition chief, said at the time: “If my tax bill was 0.05 per cent, falling to 0.005 per cent, I would think I need to have a second look.”

Enda Kenny, the Irish prime minister, said he made “no apology whatsoever” when deciding to launch the appeal. Michael Noonan, the country’s finance minister, argued that the case was politically motivated and aimed at undermining Ireland’s low corporate-tax regime, which has helped the island become the home to the European operations of nearly all big US tech companies.

In its appeal, Ireland will argue that the commission wrongly applied EU state-aid rules, which render individual sweetheart tax deals within the bloc illegal.

“Ireland does not accept the commission’s analysis, which is why we have lodged an application with the General Court of the European Union to annul the whole decision,” said the finance ministry in a statement. “Ireland did not give favourable tax treatment to Apple — the full amount of tax was paid in this case and no state aid was provided.”

Ireland also hit at the commission’s handling of the case, saying it “never clearly explained its state-aid theory during the investigation” and “failed to provide proper reasons for its decision” when it was published.

By reaching its decision, the commission had attempted to “rewrite the Irish corporation-tax rules” according to the statement.

Apple did not respond to requests for comment, although the Silicon Valley group reacted angrily to the initial August ruling. Tim Cook, Apple’s chief executive, said the decision was “total political crap” and accused the commission of unfairly targeting Apple.

“The European Commission has launched an effort to rewrite Apple’s history in Europe, ignore Ireland’s tax laws and upend the international tax system in the process,” Mr Cook wrote in an open letter published on Apple’s website. “This claim has no basis in fact or in law. We never asked for, nor did we receive, any special deals.”

A spokesperson for the commission said: “The commission will defend its decision in court.”

Via FT