The final appeal regarding the Apple Irish tax case has been decided by Europe’s highest court, and unfortunately, Apple has suffered a defeat. It now has to pay €13 billion in back taxes to the Irish government.
This ruling concludes an eight-year-long court battle between Apple and the Irish government on one side and the European Union on the other.
A Quick Recap
Apple routed the revenue from all its sales throughout the EU through its European headquarters in Ireland. The company likely chose this location as Ireland already had an extremely low corporate tax rate compared to other EU countries, at a mere 12.5%. Additionally, the Irish government offered special arrangements that further reduced the tax liability for the iPhone maker.
In 2016, the EU ruled that these arrangements were illegal. It was the Irish government, rather than Apple, that was found to have breached the law. However, since the arrangement was not legal, it meant that Apple owed the taxes that should have been collected.
As both Apple and the Irish government appealed, it was agreed that Apple would deposit the sum into an escrow account, which would be held until the outcome of the court battle.
Apple initially won the appeal. The judges told the EU that it had not demonstrated that Apple had been granted an economic advantage. Nevertheless, the EU appealed to a higher court in September of the previous year.
Apple Has Finally Lost
The European Court of Justice – the highest court in the bloc – has now reversed the previous appeal, ruling that the original finding was correct. This is in line with the prediction we made back in 2020.
According to reports from BBC News, the ECJ stated: “The Court of Justice gives final judgment in the matter and confirms the European Commission’s 2016 decision: Ireland granted Apple unlawful aid which Ireland is required to recover.”
Apple expressed disappointment with the result. In a statement, it said: “This case has never been about how much tax we pay but which government we are required to pay it to. We always pay all the taxes we owe wherever we operate and there has never been a special deal. The European Commission is attempting to retroactively change the rules and ignore that, as required by international tax law, our income was already subject to taxes in the US. We are disappointed with today’s decision as previously the General Court reviewed the facts and categorically annulled this case.”
The Irish government now plans to transfer the money from the escrow account into its own coffers.
It is hoped to avoid similar future cases by agreeing on global rules for the tax treatment of multinational companies. Back in 2019, some 137 governments began work on reaching common rules that would be applicable worldwide. Apple CEO Tim Cook has voiced his support for this approach.
(Photo by Ibrahim Boran on Unsplash)
