Apple Might Have To Pay That €13B EU Tax Bill After All

Apple managed to escape a whopping €13 billion ($13.9 billion) tax bill in the European Union a few years ago, though now the advocate general of the Court of Justice of the EU (CJEU) is asking judges to take another look. 

According [PDF] to the CJEU's Advocate General Giovanni Pitruzzella, a 2020 ruling that absolved Apple of the expense should be set aside due to "a series of errors in law" when it made the ruling.

"The General Court failed to assess correctly the substance and consequences of certain methodological errors," the AG's office said.

For those having trouble recalling the nature of the disagreement, it reaches back a few years, beginning with a decision in 2018 that told Apple to hand over the aforementioned €13 billion to Irish tax officials after the European Commission decided Apple and Irish authorities had together broken state aid rules.

Ireland, where Apple has its European headquarters, is known for its favorable tax rules that have attracted a number of large US-based tech companies to set up shop on the Emerald Isle. Apple, EU officials report, split itself into two entities – Apple Sales International (ASI) and Apple Operations International (AOE) – after obtaining permission from Irish tax authorities. 

Those officials gave that permission in two rulings issued in 1991 and 2007, the AG's office said. In 2016, the European Commission figured those two rulings allowed Apple to exclude profits derived from intellectual property licenses held by ASI and AOE. That meant Apple didn't have to pay as much tax in Europe as one might expect, and the EC was OK with that at the time.

Then, as we said, in 2018, the commission had a change of heart, felt rules had been broken, and wanted that €13 billion in tax from Apple.

Fast-forward to 2020, and the General Court of the European Union decided Apple didn't actually need to pay the tax due to the arrangement the iPhone maker had in Ireland seemingly being above board. We got a hint of how the EC planned to appeal against that general court decision, and extract billions from Apple, in 2021, and the filing by Pitruzzella's office makes largely the same argument.

Whether Apple will end up having to cough up the cash again (a considerable amount - the iGiant's calendar Q3 profit this year amounted to $23 billion) is unknown. As the AG's office notes, its opinions aren't binding on the CJEU, and will require the court to review the case and issue a new decision. 

US hiring discrimination charges mean pocket-change payout for Apple

The iMaker will also cough up $25 million (with an M) the US Department of Justice announced this week, settling claims the tech titan "illegally discriminated in hiring and recruitment against US citizens and certain non-US citizens whose permission to live in and work in the United States does not expire."

According to the DoJ, Apple violated the Immigration and Nationality Act (INA) when recruiting for jobs that fell under the permanent labor certification program (PERM), a US Department of Labor scheme that allows employers to sponsor workers for permanent residence status, provided program requirements are met. Among those requirements are rules that employers can't illegally discriminate in hiring or recruitment based on citizenship or immigration status. 

According to the DoJ, that's just what Apple did. 

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"The department's investigation found that Apple did not advertise positions Apple sought to fill through the PERM program on its external job website … [and] required all PERM position applicants to mail paper applications," the DoJ said. 

"These less effective recruitment procedures nearly always resulted in few or no applications to PERM positions from applicants whose permission to work does not expire." 

Basically, if a US company wants to sponsor an employee's green card, so that the staffer can get permanent residency in America, the biz usually (but not always) has to apply for a PERM certificate from the Dept of Labor so that the foreign worker's immigration process can be completed. To get that PERM cert, the business has to demonstrate that no US citizen or someone already with a green card is available and qualified to do that employee's role in America and thus the foreigner needs permanent status in the country to fill the position.

By demonstrate, we mean that the employer is expected to re-advertise that foreign staffer's job widely so that US persons have a chance to come forward to show they ought to have it instead; if you put barriers up, such as only accepting mailed applications or hiding the job ads in little-seen corners of the internet, it's not a fair situation, and that makes Uncle Sam unhappy. And the government is upset at the iPhone giant doing stuff like that, allegedly.

We reached out to Apple for comment, and haven't heard back. Cook and Co did tell the Wall Street Journal that its violation of government standards was an accident. 

"When we realized we had unintentionally not been following the DOJ standard, we agreed to a settlement addressing their concerns," an Apple spokesperson said. "We have implemented a robust remediation plan to comply with the requirements of various government agencies as we continue to hire American workers and grow in the US."

Apple's payout will be split between $6.75 million in civil penalties and an $18.25 million back pay fund for discrimination victims. As noted above, Apple made $23 billion in profit in one quarter alone. That $25 million fine amounts to a tenth of one percent of its Q3 net income. ®