Dublin is telling Brussels that tax policy is a national matter.
The Irish government said on Monday that the European Commission overstepped its mandate in a tax ruling against Apple in August, asking the American multinational to pay €13bn to Dublin for illegal state aid.
The former Danish economy minister and European Competition Commissioner, Margrethe Vestager, has argued that Apple’s Irish tax bill implied a tax rate of 0.005 percent in 2014.
Apple is one of many multinationals drawn to Ireland due to a favourable tax regime, as well as a highly trained workforce and the English language. Dublin is keen to maintain its competitive advantage that has generated 10% of its jobs, often the best paid.
Apple has its European Headquarters in Cork, Ireland.
On Monday, Apple and the Irish government on made their legal case against the European Commission, opposing the ruling in concert.
The standoff between Dublin, Apple, and the European Commission takes place against the backdrop of the election of President-elect Donald Trump. Trump has promised to slash corporate tax rates and to provide incentives for companies to repatriate global profits.
“The Commission has manifestly breached its duty to provide a clear and unequivocal statement of reasons for its decision,” said the Irish government in a statement.
Dublin denies Apple was granted a special tax regime neither in 1991 nor 2007. In addition, the Irish government considers that the Commission has overstated Apple’s corporate profits in Europe.
In effect, The European Commission is attributing to the Irish-based company all profits made outside the United States rather than Europe alone. The decision in August infuriated the White House.
For its part, Apple is also legally challenging the Commission’s ruling. The US multinational will argue that the Commission is mistaken when it claims that Apple Sales International (ASI) and Apple Operations Europe are phantom entities created for tax avoidance purposes.
The company’s General Counsel, Bruce Sewell, and Chief Financial Officer, Luca Maestri, told Reuters that Apple is a “convenient target” that Margrethe Vestager is aiming to soar her political capital and become “Dane of the year for 2016.”
They suggest that the case against Apple is weak and the complying with the ruling would require Ireland violating its own past tax laws, setting different rules for resident and non-resident companies.