Apple has been ordered by the European Court of Justice to pay 13 billion euros ($14.4 billion) in back taxes to Ireland, concluding a long legal battle. The directive follows claims that the corporation received unauthorized tax breaks from Ireland over a span of 20 years.
Background and Initial Ruling
The European Commission initiated an investigation in 2014 into Apple's tax practices in Ireland, where its European headquarters are based. By 2016, the Commission instructed Ireland to recover the disputed taxes, arguing that Apple received preferential tax treatment. Both Apple and the Irish government disputed this, denying any special tax deals.
In 2019, Apple and Ireland mounted an appeal against the Commission's decision, resulting in a 2020 EU General Court ruling in Apple's favor. ThE ruling annulled the Commission's 2016 order, citing a lack of concrete evidence for preferential treatment. The European Commission then took the case to the European Court of Justice.
Current Decision and Implications
The European Court of Justice has now reversed the General Court's decision, reaffirming the Commission's stance. Apple announced an anticipated one-time income tax charge of around $10 billion for its fiscal quarter ending September 28, 2024. The Irish government indicated it would start the process of transferring the funds from the escrow account to Ireland.
The decision underscores the ongoing confrontations between U.S. tech companies and the European Union concerning taxes, data privacy, and antitrust laws. Initiated by Margrethe Vestager, the outgoing competition chief, the case is part of a larger strategy to regulate tech giants. Apple has also faced other regulatory hurdles in the EU, including a 1.8 billion euro antitrust fine for its activities in the music streaming sector and compliance issues under the EU's Digital Markets Act.
Additional Information
The European Court of Justice confirmed that Ireland provided Apple with unlawful aid, requiring recovery. It relates back to the 2016 case where Margrethe Vestager suggested that Ireland had been giving Apple illegal tax benefits, leading to a tax rate under 1 percent.
CEO Tim Cook has criticized the Commission's stance as “total political crap.” On Tuesday, Apple argued that the EU was attempting to retroactively change laws and overlook that its income was already taxed in the US as per international tax regulations. The Irish finance ministry said it would consider the ruling though Ireland has consistently denied providing preferential tax treatment to any entity.
Related Developments
On the same day, Brussels triumphed in an antitrust case against Google with the ECJ ruling that the company abused its market dominance by prioritizing its shopping services over competitors, warranting a 2.4 billion-euro fine.
The European Commission initiated proceedings against Google in 2017, alleging that the company had abused its dominant position in the online search market by favoring its own products over competitors. The General Court of the European Union upheld the Commission's decision, finding that Google's actions had restricted competition and harmed consumers.
