The European Court of Justice (ECJ) on Tuesday upheld a decision requiring Apple to pay 13 billion euros ($14.4 billion) in back taxes to Ireland. The ruling marks the culmination of a decade-long legal battle that has placed the tech giant at the center of a broader conflict between the European Union and major U.S. technology companies over tax practices.
The case dates back to 2016 when the European Commission, the EU's executive arm, ordered Ireland to recover the substantial sum from Apple, citing "illegal" tax benefits that the company allegedly received over two decades. The commission argued that Apple's tax arrangements in Ireland allowed the company to significantly reduce its tax liabilities, at times paying an effective rate as low as 0.005% in 2014. This, the commission said, constituted unlawful state aid.
"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," the court stated. This ruling overturns a 2020 decision by the EU's General Court, which had sided with Apple and annulled the commission's initial order.
Apple expressed disappointment with the ruling, maintaining its stance that the company has always adhered to international tax laws. "The European Commission is trying to retroactively change the rules and ignore that, as required by international tax law, our income was already subject to taxes in the U.S.," an Apple spokesperson said. The company also noted that it would incur a one-time tax charge of approximately $10 billion in its fourth fiscal quarter, ending September 28, 2024.
The Irish government, which has consistently defended its tax arrangements, downplayed the significance of the ruling, describing the issue as one of "historical relevance only." Ireland has long been known for its favorable corporate tax rates, which have attracted numerous multinational companies to set up their European headquarters in the country. However, the ruling could compel Ireland to reassess its tax policies, particularly in light of ongoing global efforts to overhaul corporate tax regulations.
Margrethe Vestager, the EU's antitrust chief, hailed the ruling as a victory for tax justice. "Today is a huge win for European citizens and tax justice," Vestager said on social media. She has built a reputation for taking on Big Tech during her tenure, and this ruling adds to her legacy as she prepares to step down in November.
The case against Apple is part of a broader EU effort to ensure that multinational companies pay their fair share of taxes within the union. The decision comes at a time when the EU is also grappling with other tax-related cases involving major corporations, including IKEA, Nike, and Google. The latter recently lost an appeal against a 2.42 billion euro fine for anti-competitive practices, further cementing Vestager's success in challenging the world's largest tech companies.
Despite the ruling, Apple's tax liabilities in Ireland are not expected to have a significant impact on its overall financial health. The company remains one of the most profitable in the world, with a market capitalization exceeding $2 trillion. However, the ruling could set a precedent for how the EU approaches similar cases in the future, potentially leading to increased scrutiny of corporate tax practices across the continent.
