An adviser to the top court in Europe has asserted that the EU tribunal committed legal mistakes in its ruling favoring Apple in a 13-billion-euro ($14 billion) tax dispute and should reconsider the case. This development could pose a challenge for the iPhone manufacturer.

The logo of Apple is displayed on the facade of an Apple store at a shopping mall in La Jolla, California, United States, on December 17, 2019.

The tax dispute involving Apple was a component of the European Union’s antitrust chief Margrethe Vestager’s efforts to address what regulators viewed as unfair state aid resulting from agreements between multinational corporations and EU member states.

In 2016, the European Commission asserted that Apple had derived benefits from two Irish tax rulings spanning over 20 years, resulting in an artificial reduction of its tax liability to as little as 0.005% in 2014.

The European Union’s General Court, in 2020, upheld Apple’s objection, contending that regulators had not met the legal criteria for demonstrating that Apple had received an unfair advantage.

However, Advocate General Giovanni Pitruzzella, at the European Court of Justice (CJEU), held a contrary opinion. He proposed that CJEU judges should invalidate the General Court’s decision and remand the case back to the lower tribunal for reconsideration.

In a non-binding opinion, he stated that the General Court’s decision concerning the ‘tax rulings’ provided by Ireland to Apple should be annulled. He argued that the General Court had made several legal mistakes and had failed to properly evaluate the essence and implications of specific methodological errors that, according to the Commission’s decision, had marred the tax rulings. Consequently, Pitruzzella recommended that the General Court should conduct a fresh evaluation of the case.

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The Court of Justice of the European Union (CJEU) is expected to make a ruling in the coming months, and typically, it follows roughly four out of five such recommendations.

Despite Apple and Dublin lodging appeals against the decision, Apple had to transfer the entire sum, which Ireland had been holding in an escrow account.

The Irish government has consistently maintained that even if it loses its appeal and retains the funds, other EU member states may assert claims for a share of the back taxes.

An Apple spokesperson expressed gratitude to the court for its time and ongoing consideration of the case. The spokesperson referred to the General Court’s ruling, which stated that Apple had not received any selective advantage or state aid and asserted that this judgment should be upheld.

Margrethe Vestager has had a mixed record in defending her tax cases in court, with judges upholding challenges by companies like automaker Stellantis, Amazon, and Starbucks. Her most significant legal victory came in September when the General Court supported her decision against a 700-million-euro Belgian tax scheme for 55 multinationals. Her efforts to crack down on tax practices have led EU countries to eliminate such preferential arrangements.

Vestager is currently investigating the Dutch tax arrangement of Inter IKEA, the owner of the IKEA brand, in a case dating back to 2017. She is also examining Nike’s Dutch tax rulings and the tax rulings granted by Luxembourg to the Finnish food and beverage packaging company Huhtamaki.

The Apple case is designated as C-465/20 P Commission v Ireland and Others.

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($1 = 0.9346 euros)

Reporting by Foo Yun Chee and Bart Meijer Additional reporting by Padraic Halpin in Dublin Editing by Jason Neely and Mark Potter

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