EU competition chief Margrethe Vestager seems to have no intention of letting go of her €13 billion Apple case, but a potential appeal of the July court verdict against her is fraught with risk, both legal and political.
Vestager — dubbed the “tax lady” by U.S. President Donald Trump — is seriously considering appealing the EU General Court’s annulment of her 2016 decision ordering Ireland to recover €13 billion in unpaid taxes from Apple, according to senior EU officials.
The European Commission has a rapidly closing window to decide whether to take the high-profile case to the bloc’s top court, with many experts believing Brussels would be well advised not to appeal. But Vestager does not seem to be giving up on the case, which has become a symbol of her push for fairness in global corporate taxation.
EU officials told POLITICO that she is leaning toward filing an appeal, though the decision has yet to be finalized. The matter is officially still under discussion, one of the officials said, “but I think it will be a Yes.”
Legal experts say the Commission has limited possibilities to win an appeal and that political considerations may trump legal ones in a decision to appeal. The Apple-Ireland decision was a flagship case in a broader crackdown on tax avoidance that involved probes against Amazon, Fiat and Engie in Luxembourg, and against Starbucks, Ikea and Nike in the Netherlands.
“At best, the Commission has one chance out of three to win an appeal,” said Raymond Luja, a tax law professor at the University of Maastricht, judging by the publicly available case info. “But this is a prestige case and the Commission may want to make sure the highest legal authority had its say.”
Showing she is willing to put up a fight, Vestager would underline her dedication to corporate tax reform ahead of a new digital tax proposal the Commission said it would table in the first half of next year in the absence of a global consensus on the issue.
But Vestager’s legal chances of prevailing in an appeal don’t look great, lawyers say, partly because the high court — the European Court of Justice in Luxembourg — only hears points of law, and a large part of the General Court’s reasoning on Apple was based on facts.
The General Court established that the iPhone maker conducted only limited activities in Ireland, and that the Commission could not substantiate its claim that the bulk of the company’s worldwide profits — which were funneled through Ireland — could also be taxed there.
The Commission’s options in potentially filing an appeal are “in principle limited to points of law,” according to François-Charles Laprévote, a state aid lawyer with Cleary Gottlieb, “unless there has been a manifest distortion of the facts.”
One possible line of attack for the Commission, according to tax professors Ruth Mason at the University of Virginia and Stephen Daly at King’s College London, concerns an alleged misinterpretation by the General Court of a 1985 tax ruling by the Irish High Court. In that case, involving an enterprise called Dataproducts, the court held that interests from a Swiss bank account flowing to an Irish branch of a company registered in the Netherlands could not be considered as taxable profits in Ireland because the Irish branch did not control the related property.
“Dataproducts is not an exact, and arguably not even an analogous, precedent [for Apple],” they wrote, because passive income from a bank account could not be compared to active income from a company’s sales.
According to Luja, this could be a grounds for appeal, under the condition that the Commission had already raised this point during the General Court proceeding — information that is not public. More information about the Commission’s counteroffensive may become available when a summary of its pleas is published a few weeks or months after the appeal is filed.
Vestager could decide, however, to communicate those arguments as soon as she appeals, underlining her combativity and belief in a positive outcome.
If the General Court’s judgment was notified on the same day it was announced, which usually happens, then Vestager has until Friday at 11:59 p.m. to lodge an appeal.
Another question is whether the Commission would start another tax case against Apple over the same facts. That might enable the officials to gather additional information that could shed light over the elements the court procedure indicated were not sufficiently investigated.
Experts previously said such a redo would stand a better chance of success but would result in a much smaller recovery amount.
Luja stressed that an appeal did not exclude a simultaneous redo of the case, as the Commission has done in a case concerning favorable tax rulings that Belgium had granted to 39 multinationals including BASF, AB InBev and Belgacom.
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