Apple and EU Corporate Tax Dispute... Facing a 20 Trillion Won Fine Bomb?

Impact on Other Antitrust Lawsuits as Well

The EU Court ruling on the European Union's (EU) action to impose an astronomical fine on Apple for tax evasion is approaching. Depending on the verdict, Apple could be fined over 20 trillion won.

According to major foreign media on the 23rd (local time), the EU competition authority, the European Commission, argued at the appeal hearing held at the EU's highest court, the European Court of Justice (ECJ), to annul the lower court's ruling. The European Commission's lawyer claimed that the decision by the General Court of the EU in 2020 had legal flaws and that the ruling should be overturned.

The Commission ordered Ireland to collect 13 billion euros in back taxes and interest, totaling 14.3 billion euros (approximately 20.4 trillion won), stating that the tax benefits Apple received in Ireland, an EU member state, in 2016 were unfair and violated EU state aid rules.

Ireland, which has attracted multinational investment through low tax rates, opposed the Commission's decision and filed a lawsuit against the Commission along with Apple. In July 2020, the lower court ruled that there was no legal basis to consider Apple had received unfair tax benefits in Ireland and ordered the Commission to cancel the collection order, siding with Ireland and Apple.

In response, the Commission appealed to the ECJ, the highest court, in September of the same year, and the dispute between the two parties continues. Especially from the EU's perspective, if it loses even the appeal, it could affect other similar cases where interventions have been made citing antitrust reasons.

Margrethe Vestager, EU Commissioner for Competition.
[Image source=EPA Yonhap News]

In fact, the EU strictly prohibits excessive tax benefits or unfair subsidies by specific member states to maintain the single market. If the case is lost, it is also expected to deal a significant blow to Margrethe Vestager, the EU Competition Commissioner who led the 2016 collection order.

The Commission's lawyer appealed to the court on this day, saying, "The outcome of this appeal will determine whether member states continue to provide massive tax benefits in exchange for jobs or investments from multinational companies," which is interpreted in the same context.

In response, Apple's lawyer rebutted, stating, "Regarding the profits that the Commission uses as grounds for demanding tax payments from the Irish authorities, Apple is already paying about 20 billion euros in taxes on those profits to the United States."

The ECJ Advocate General assigned to this appeal case plans to submit an opinion to the court on November 9. Although the Advocate General's opinion has no legal binding force under EU regulations, judges usually consider it when making their final decision. The final ruling is expected as early as the first half of next year.