Apple News: iPhone Maker To Launch Legal Challenge Against EU Order To Pay $14 Billion Irish Tax Bill

Apple Inc. will appear Tuesday at the EU General Court In Luxembourg facing an EU tax order forcing the company to pay the equivalent of $14.4 billion in back taxes it owes in Ireland. The European Commission ruled in August 2016 that the company's tax deals in Ireland allowed the tech giant to pay far less than other firms in the country.

EU Competition Commissioner Margrethe Vestager said that Apple's Irish subsidiaries paid a 0.005% tax rate in 2014, an artificially low tax burden which would amount to illegal state aid.

Multinational companies such as Apple often move their European headquarters to Ireland in order to pay low corporate tax rates. In addition to Apple, companies such as Google, Facebook and Microsoft also have a presence in the country.

Apple will argue that it did nothing wrong with its tax scheme in Ireland, with Apple CEO Tim Cook calling the EU ruling in 2016 "total political crap."

"Politically this could have big consequences," Sven Giegold, a Green member of European parliament said about the Apple case. "If Apple wins this case, the calls for tax harmonization in Europe will take on a different dynamic, you can count on that."

Tony Foley, an economics professor at Dublin City University Business School, has said that multinationals are a crucial part of the Irish economy and that these firms helped the country avoid the 2008 European debt crisis.

"Without the multinationals, we would be much closer to Greece or Portugal than you think," Foley said.

Belgium also has an attractive tax regime for multinational corporations, with the EU launching probes into 39 multinational companies doing business there. The European Commission also asked the Belgian government to recover some $774 million from multinational companies in 2016, with the order shot down by an EU court in February.

The EU may be looking at trying to make corporate tax rules across the bloc more harmonized, but Ireland, along with Hungary, could be against such reforms.

Hungarian Prime Minister Viktor Orban has said that "we do not consider tax harmonization a desired direction," as the country relies heavily on foreign investment.

Countries with attractive corporate tax schemes are against harmonization as they believe that it harms competition between European countries to attract businesses. Some EU authorities believe that harmonization would reduce bureaucracy and combat tax avoidance.