EC Loses Court Case over Apple’s EUR 13 Billion Irish Back Taxes

EC Loses Court Case over Apple’s EUR 13 Billion Irish Back Taxes

Ireland has won the case while losing a payment of EUR 13 billion it would have otherwise gotten from Apple.

The Luxembourg-based General Court, the second highest court in the EU, has dealt a blow to the European Commission by overturning its 2016 order mandating that US corporation Apple pay EUR 13 billion to Ireland in back taxes.

Back in 2016, the European Commission, the executive of the European Union, had ordered Apple to pay to the government of Ireland a total of EUR 13 billion for gross underpayment of tax on profits made across the EU between 2003 and 2014.

The Commission concluded that Apple used two shell companies incorporated in Ireland allowing it to report its Europe-wide profits at effective rates below 1% in what has been described as an illegal “sweetheart tax deal” with the Irish authorities.

Ireland has one of the EU’s lowest corporate tax rates, and serves as Apple’s headquarters for Europe, the Middle East and Africa.

It was the EC which brought the case before the EU General Court in Luxembourg. The Commission now has 14 days to appeal the ruling at the European Court of Justice, the EU’s highest court.

“The Commission did not succeed in showing to the requisite legal standard that there was an advantage,” the General Court said in a statement on its ruling on Wednesday.

“The Commission was wrong to declare [that Apple] had been granted a selective economic advantage and, by extension, state aid,” the court added.

Both Apple and the Irish government – which technically won the case while paradoxically losing EUR 13 billion that it would have received otherwise – reacted to the GC ruling by reiterating its well-known positions that no violations had been committed.

“This case was not about how much tax we pay, but where we are required to pay it,” Apple said in a statement.

“We’re proud to be the largest taxpayer in the world as we know the important role tax payments play in society,” the corporation added.

“The correct amount of Irish tax was charged… in line with normal Irish taxation rules,” the Irish government said in turn in a statement insisting that it had “always been clear” Apple had received no special treatment.

EU Commissioner for Competition Margrethe Vestager, who brought the “Apple Irish Back Tax” case before the General Court in Luxembourg, vowed to “study the judgment and reflect on possible next steps”.

“[The Commission supports] fully the objective that all companies should pay their fair share of tax,” she said.

The EC has been trying to crack down on special taxation deals of EU member states with multinational corporations in order to create a level-playing field within the Union. Otherwise taxation remains the prerogative of individual member states.

In 2019, the Commission lost another similar case after it accused Starbucks of owing EUR 30 million in back taxes to the Netherlands. Similar cases against IKEA and Nike in the Netherlands are also being considered.

(Banner image: Wikipedia)

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