By Foo Yun Chee and Padraic Halpin
BRUSSELS/DUBLIN, July 15 (Reuters) - Apple&aposs clash with EU competition regulators comes to a head on Wednesday as Europe&aposs second-highest court rules on whether it has to pay 13 billion euros ($15 billion) in Irish back taxes, a key part of the EU&aposs crackdown against sweetheart tax deals.
In its order four years ago, the European Commission said Apple AAPL.O benefited from illegal state aid via two Irish tax rulings that artificially reduced its tax burden for over two decades - to as low as 0.005% in 2014.
Defeat for European Competition Commissioner Margrethe Vestager could weaken or delay pending cases against Ikea&aposs and Nike&aposs NKE.N deals with the Netherlands, as well as Huhtamaki&aposs HUH1V.HE agreement with Luxembourg.
Vestager, who has made the tax crackdown a centrepiece of her time in office, saw the same court last year overturn her demand for Starbucks SBUX.O to pay up to 30 million euros in Dutch back taxes. In another case, the court also threw out her ruling against a Belgian tax scheme for 39 multinationals.
The Apple dispute is seen by some analysts as a lose-lose situation for Ireland, which has appealed against the Commission&aposs order alongside the iPhone maker.
While 14 billion euros - including interest - would go a long way to plugging the coronavirus-shaped hole in the state&aposs finances, Dublin is seeking to protect a low tax regime that has attracted 250,000 multinational employers.
If Ireland&aposs appeal succeeds, the government will be ridiculed by opposition parties for not taking the cash, which could cover at least half of a budget deficit forecast to balloon to as much as 10% of GDP this year.
Should Ireland lose, the government will be castigated by the same politicians for launching the appeal. A ruling in favour of the Commission could also raise questions about the application of Ireland&aposs tax code at a sensitive time, when new global rules for taxing digital giants are being debated.
Defeat could also hurt Ireland&aposs ability to attract investment, although the promotional blitz undertaken after the Commission&aposs 2016 decision appears to have worked. The numbers employed by multinationals like Apple, Facebook and Google have grown by 25%, accounting for one in ten Irish workers.
For Apple, defeat would be a blow, but manageable given its cash holdings topped $190 billion at the end of its fiscal second quarter.
The cases are T-778/16 Ireland v Commission and T-892/16 Apple Sales International and Apple Operations Europe v Commission. The defeated side can appeal on points of law to the EU Court of Justice, Europe&aposs highest court.
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