The European Commission ordered Apple Inc. (NASDAQ:AAPL) this week to pay 13 billion euros ($14.5 billion) plus interest in back taxes after the EU accused Ireland of illegally slashing the tax. At 3:00 A.M. EST on Tuesday, August 30, 2016, Margrethe Vestager, European Commissioner for Competition, tweeted the following: Irish tax rulings to Apple are illegal state aid. Effective taxation as low as 0,005 pct. #Apple has to repay up to €13 billion unpaid tax. According to Vestager in the Bloomberg report, Ireland allowed Apple to pay an effective corporate tax rate of 1% on its European profits in 2003 down to 0.005% in 2014.

Apple CEO Tim Cook told the Irish Independent in an interview on Thursday that the EU's decision to force Apple to pay Ireland billions of dollars in back taxes is "total political crap" and a reflection of anti-U.S. sentiment. Apple General Counsel Bruce Sewell said the following on Friday, "We paid tax at the statutory rate of 12.5% tax on profits relating to our activities in Ireland, … To get to this meaningless 0.005%, the Commission completely ignores the fact that the vast majority of these profits were subject to U.S. taxation.", according to c|net. Apple is now appealing the Commission's ruling and the legal challenges in the European courts could take years to finalize. 

Meanwhile, U.S. Treasury Secretary Jack Lew jumped into the debate and said on Wednesday, "I have been concerned that it reflected an attempt (by the EU) to reach in to the U.S. tax base to tax income that ought to be taxed in the United States." Lew said making Apple pay higher taxes in Ireland could let the company deduct those payments from what it owes to the United States, reducing U.S. tax revenues.

From our technical viewpoint, Apple shares are now bumping into the $110 head resistance level. In April, the stock pulled back sharply from the $110 level after Carl Icahn disclosed that he sold out his entire position of Apple due to concerns about the company’s relationship with China. The stock, however, managed to break out the descending wedge chart pattern in July after the company reported quarterly earnings and revenue figures, that were down from a year ago, but still exceeded the low-end of analysts' expectations.

AAPL retested the $110 level in mid-August after Warren Buffett’s Berkshire Hathway (NYSE:BRK.A) disclosed in a regulatory filing that it had 15.2 million shares of Apple as of the end of June, a 55% increase from the 9.8 million shares Berkshire had in the first-quarter. Berkshire first disclosed purchasing $1 billion worth of Apple stock in a May filing. 

Apple shares just bounced off the trendline support at the $105 level this week, after investors realized that the EU back taxes issue could take years to resolve. The upward momentum surrounding the stock may continue amid the Apple Special Event on Wednesday, September 7, which could coincide with the launch of the new iPhone 7, and the recent Samsung recall of its Galaxy Note 7.

Disclosure: Long position in AAPL and no recommendation.