The European Court of Justice (ECJ) has ordered Apple to pay €13bn (£11bn; $14bn) in unpaid taxes to Ireland.
The European Commission has accused Ireland of granting Apple illegal tax advantages for eight years. However, the Irish government has consistently maintained its stance, arguing against the necessity of paying the tax.
In a definitive ruling, the European Court of Justice declared that Ireland had provided Apple with illegal aid, which Ireland is now obligated to recover.
Expressing their disappointment, Apple criticized the European Commission for attempting to alter the rules retroactively.
The European Court of Justice (ECJ) recently delivered a ruling that concluded a protracted case involving Google. The tech giant has been directed to pay a substantial fine of €2.4bn (£2bn) for engaging in anti-competitive practices and abusing its market dominance.
Movement in both directions
The ECJ’s ruling on Apple’s tax arrangements is a significant development, as it upholds the European Commission’s decision from 2016 after a lengthy legal process.
The recent decision, focusing on the period from 1991 to 2014, specifically addresses the tax treatment of profits generated by two Apple subsidiaries in Ireland.
The tax arrangements were considered illegal due to their unequal advantages compared to other companies.
In a significant turn of events, the initial ruling, which was delivered during a period when the Commission was striving to crack down on multinational corporations accused of employing intricate financial strategies to minimize their tax obligations, was ultimately overturned by the lower court of the ECJ in 2020. This decision came about after Ireland appealed.
The higher court has overturned the verdict, citing legal errors in its decision.
According to a statement from Apple, the focus of this case is not the amount of tax they pay but rather the government to which they are obligated to pay it. Our company consistently fulfills its tax obligations in all the regions where we conduct business without any exceptions or preferential treatment.
The European Commission is attempting to alter the rules to disregard the fact that our income has already been taxed in the US, as mandated by international tax law.
“Today’s decision has left Apple feeling disappointed. According to Apple, the General Court had thoroughly reviewed the facts and completely annulled this case in the past,” the company stated.
In an unfortunate turn of events, Apple faces some challenging news just one day after the highly anticipated release of its latest iPhone 16 lineup.
Why is Ireland not interested in the money?
Ireland will now be required to recover the lost taxes from Apple, a task that Dublin has been attempting to avoid through years of legal wrangling. The recent ruling by the ECJ has made this inevitable.
According to the Irish government, Apple’s repayment of back taxes is not necessary. They believe the benefits of making Ireland an appealing destination for major corporations outweigh any financial losses.
Ireland serves as Apple’s base for Europe, the Middle East, and Africa, thanks to its low corporate tax rates compared to other EU countries.
The trade bloc has extensive powers to regulate state aid, and in this case, it argued that Ireland was granting Apple an unfair subsidy by applying meager tax rates. Although corporation tax rates for businesses are set nationally and not subject to the EU’s jurisdiction, this issue falls under the EU’s purview.
The recent decision, a significant victory for the European Commission, underscores its commitment to preventing large corporations from evading regulations. This ruling sets a strong precedent for future cases.
A costly day for the biggest IT companies
In a significant ruling, Europe’s highest court ordered Google to pay a €2.4 billion fine for allegedly abusing market dominance through its shopping comparison service.
The tech giant had been challenging the fine initially imposed by the European Commission in 2017.
Google expressed disappointment with the ruling and highlighted that it had implemented changes in 2017 to adhere to the Commission’s decision.
In a significant move, the Commission imposed its largest penalty to date, only to surpass it a year later by issuing Google an even more substantial fine of €4.3bn. The allegations centered around Google’s alleged unfair promotion of its apps through Android software.