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Apple says EU's $14 billion tax demand 'defies reality'

The company says the European Commission is trying to "retrofit changes to national law."

Apple took on the European Union in court on Tuesday.
Connie Guglielmo/CNET

Days before the iPhone 11 hits stores, Apple is fighting the European Union's 13 billion euro ($14.4 billion) tax bill in court. The company says the tax bill "defies reality and common sense," Reuters reported Tuesday. A panel of five judges is hearing arguments in Luxembourg's General Court over two days.

The European Commission wants Apple to pay back taxes to Ireland, where the company's European headquarters are located. The country's tax system attracts many US tech companies, and Ireland is standing behind Apple in court.

Now playing: Watch this: EU: Apple, you owe $14.5 billion in taxes

In its appeal, Apple accused the European Commission of trying to "retrofit changes to national law" and creating legal uncertainty for companies. Apple lawyer Daniel Beard said the Commission's order suggests that all of Apple's sales outside the US must be linked to its Irish branches, even though its products are developed in the US. 

However, 9to5Mac noted that Apple choose to funnel all the revenue it earned from EU countries to two companies based in Ireland.

Richard Lyal, the Commission's lawyer, said Ireland didn't examine the functions of the company's Irish units, the risks it assumed nor the assets used by its subsidiaries, according to Reuters.

The court's ruling will likely come in the next few months, but the losing party is expected to appeal and a final judgment may not come for years.

The European Commission declined comment and Apple didn't respond to a request for comment.

First published Sept. 17, 6:32 a.m. PT.
Updated Sept. 18, 1:27 a.m. PT: Notes that the European Commission declined comment.