EU Court Rules Against Apple’s €13 Billion Sweetheart Deal with Ireland in Major Tax Case
In a major legal development, Apple has lost its €13 billion tax case against the European Commission. The EU’s highest court confirmed the commission’s 2016 decision, finding that Ireland had provided the internet behemoth with illegal state aid. This outcome has been hailed as a significant victory for European tax justice.
(Also read Apple’s €13 Billion Tax Defeat Rocks EU Tax Haven Debate.)
The Apple Tax Case – A High-Stakes Legal Battle
The Apple tax case has been closely watched for years, with billions at stake. The European Commission came to the conclusion in 2016 that Apple had received unlawful tax incentives from Ireland, enabling the company to pay significantly less tax than other companies. Apple, with its European headquarters in Cork, had benefited from Ireland’s lenient tax rulings between 2003 and 2014.
The commission’s investigation found that Apple’s tax rate in Ireland fell to as low as 0.005% in some years. This raised eyebrows across Europe and triggered the legal battle that culminated in this week’s ruling.
The EU Victory in Apple’s Tax Case is being Hailed as a Win for Tax Justice
A 2020 lower court decision that had benefited Apple was overturned by the European Court of Justice (ECJ). The commission’s ruling had previously been overturned by the general court due to inadequate proof that Apple had benefited from preferential tax treatment. However, the ECJ sided with the commission, marking an EU victory in Apple’s tax case and a pivotal moment for tax fairness in Europe.
Apple €13 Billion Tax Deal Case in Europe
The Apple €13 billion tax deal case in Europe started back in 2016 when the commission ordered Apple to repay Ireland the amount in unpaid taxes. The commission argued that Ireland had granted Apple selective advantages through its tax rulings, effectively allowing the tech giant to bypass standard tax obligations.
For Ireland, the sweetheart deal was an attempt to attract investment from a major multinational corporation. But the commission found this Ireland sweetheart tax deal with Apple violated EU competition laws, as no other companies were offered the same arrangement.
Implications of the Ruling
Interestingly, Ireland had sided with Apple throughout the litigation, defending the tax deal. Ireland insisted that it did not offer preferential tax treatment to any specific company and argued that Apple had complied with all tax laws. However, with the ECJ ruling, Ireland is now obligated to recover the unpaid taxes from Apple.
The Irish government has maintained that the applicable legislation has changed since then. They’ve pointed out that the ruling relates to outdated tax arrangements no longer in effect. Still, Ireland stands to receive a substantial financial windfall—€13 billion that will likely be reinvested into the country’s economy.
What Apple Says About the Case
Apple has expressed disappointment with the ECJ’s decision. In a statement following the ruling, the company said it had always followed the law and paid the taxes it owed. Apple’s main point of contention is that the issue was never about the amount of taxes Apple owed, but rather about which government it should have paid.
Apple has consistently maintained that its income was already subject to taxation in the United States, and the company denies receiving any “sweetheart” deals from Ireland. Despite the ruling, Apple remains one of the largest taxpayers globally, and it repatriated billions of foreign profits to the U.S. after tax reforms in 2017.
A Landmark Decision for the European Union
For the European Commission, this ruling is a resounding success. Commission Margrethe Vestager of the European Union praised it as a “huge win for European citizens and tax justice”. For a considerable amount of time, Vestager has led the EU’s initiatives to curb advantageous tax policies for corporations.
There could be significant ramifications to the choice. Other multinational corporations operating in Europe might now face similar scrutiny, as the EU seeks to close tax loopholes and ensure fair competition across its member states.
End of the Ireland Sweetheart Deal
The Ireland sweetheart deal with Apple is officially over, and the tech giant is now required to pay back billions in taxes. This decision underscores the EU’s commitment to combating tax avoidance and promoting fair competition. For Apple, the ruling marks the end of an eight-year legal battle, though the company continues to defend its tax practices.
