Irish Government and Apple Lose €13bn EU Tax Case After Court Ruling

The Irish government and Apple have lost their appeal in the long-standing €13bn tax dispute with the European Commission.

Europe’s highest court, the European Court of Justice (ECJ), ruled that the funds, which have been held in an escrow account for six years, must be collected from the tech giant.

The €13bn represents back taxes that the European Commission concluded in 2016 Apple should have paid. After an investigation, the Commission determined that Apple benefited from “selective” tax advantages in Ireland for decades, a deal deemed a violation of EU state aid rules.

Both Apple and the Irish government consistently denied any special tax arrangement existed, challenging the ruling through several legal battles in higher courts.

However, the ECJ’s decision overturns a previous ruling in Apple’s favor by a lower court.

The case stems from an investigation launched by EU competition chief Margrethe Vestager as part of a broader effort to combat profit-shifting by large multinationals, particularly in the tech sector.

At the heart of the dispute was a series of tax rulings by Irish tax authorities between 1991 and 2007, which the Commission claimed allowed Apple to pay a tax rate as low as 0.005% in one year.

Apple has maintained that it paid all taxes in full, but argued that the EU’s interpretation of where taxes were owed was incorrect.

The Irish government also defended the tax rulings, arguing they provided legal clarity for corporations and did not alter the actual amount of tax due.

In 2020, the EU’s General Court sided with Apple and Ireland, ruling that the Commission had not provided sufficient evidence to prove Apple’s tax arrangements breached EU law.

However, the Commission appealed the decision, leading to the ECJ’s latest ruling in favor of the EU’s original case.

The ECJ ruled that the General Court had erred in its 2020 judgment, particularly concerning the allocation of profits generated by Apple Sales International (ASI) and Apple Operations Europe (AOE), which manage sales of Apple products outside the U.S. The court found that these profits should have been attributed to the companies’ Irish branches for tax purposes.

This ruling has significant implications, both because of the size of the tax bill and the broader issue of how intellectual property-related profits are taxed.

Apple expressed disappointment with the decision, stating, “This case has never been about how much tax we pay, but which government we are required to pay it to.” The company argued that the EU is retroactively changing the rules, emphasizing that its income was already taxed in the U.S. as required by international tax laws.

Despite the setback, the ruling reinforces the European Commission’s efforts to crack down on favorable tax deals for multinational corporations, a key part of its wider strategy to ensure a fairer tax landscape across the EU.