The battle between the EU Commission, Apple and the U.S. Treasury has been heating up since the beginning of the year. Apple's CEO met with the EU's antitrust chief back in late January and by early February we learned that the meeting mustn't have gone well because the EU Commissioner Margrethe Vestager made it absolutely clear that that they were determined to pursue their tax case with Apple. Vestager made it clear at that time that "Just as it is an obvious right for U.S. tax authorities to tax revenues when they are repatriated, it is also for European tax authorities to tax money that is made in the member states." Then in March we posted a story titled "U.S. Treasury Investigates Retaliatory Measures against the EU's Aggressive Investigation of Apple & Others." At that time the war was escalating in the press based on letters and media coverage. The two sides decided to meet face to face last week to clear things up.
After the meeting took place, Vestager stated that having face-to-face meetings with her US counterparts was preferable to what the two sides had been doing: exchanging letters and waging war in the media. "One of the things that I would like to do is engage even more in order not to leave questions unanswered. We may disagree, but that shouldn't be on the basis of things not being clear," she said.
And they certainly disagree. The Financial Times reports the repeated position of the EU Commission which is "its probe into Apple's tax deals with Ireland would continue even if the company moved some of its $200bn overseas cash pile back to the US."
The report further noted that "Apple's stated intention to repatriate a substantial portion of its overseas cash could prove crucial as it tries to fend off the EU's long-running investigation into its alleged sweetheart tax deals with the Irish government.
Support has been growing in Washington for proposals to overhaul the taxation of American companies' overseas profits, with presidential candidates including Donald Trump advocating a one-off mandatory levy at a reduced rate to encourage executives to bring the money home.
However, on a visit to Washington last week, Margrethe Vestager, the EU competition commissioner overseeing a probe into Apple's Irish tax arrangements, said that moving its offshore cash around now would change nothing.
"Whether or not Apple wants to repatriate part of their unrepatriated profits is purely up to Apple and is of no concern [to] our case work," she told reporters after meetings with the Obama administration and lawmakers in the US capital.
Apple's accounts show that it has earmarked about half of its overseas cash for repatriation to the US. In October's annual report, Apple estimated a deferred tax liability of $30bn related to a cumulative total of $91.5bn in foreign earnings. As a result, Apple's advocates in Washington argue that European governments have no rights to those funds.
The EU commissioner insisted that she was not targeting American businesses but indicated that her meetings with Mr. Lew and senior senators had not resolved the fundamental points of disagreement. "I think it's very much the same," she said.
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