LUXEMBOURG CITY/DUBLIN (The Thursday Times) — The European Court of Justice has ruled against Apple in its long-standing legal battle over a €13 billion tax bill, reinstating the European Commission’s decision that the tech giant benefited from unlawful state aid in Ireland.
This ruling overturns a 2020 decision by the EU’s General Court, which had annulled the Commission’s 2016 finding that Apple received unfair tax advantages. The Commission had initially determined that Apple had underpaid €13.1 billion in taxes to Ireland between 2003 and 2014. In compliance with that ruling, Apple had been required to deposit the full amount, plus €1.2 billion in interest, into an escrow account.
The Court of Justice sided with the Commission, stating that the General Court had made legal errors in its earlier judgment. Specifically, the court said that the lower court had incorrectly dismissed the Commission’s conclusion that intellectual property rights held by two Apple subsidiaries—Apple Sales International and Apple Operations Europe—should have been attributed to their Irish branches for tax purposes. These rights were central to Apple’s operations and generated significant profits from the sale of Apple products outside the United States.
The dispute dates back to 1991 and 2007, when Ireland’s Revenue issued tax rulings that effectively reduced Apple’s tax liabilities in the country. The European Commission’s investigation found that these rulings had “substantially and artificially” lowered Apple’s tax payments in Ireland, allowing the company to avoid paying billions in taxes.
Both Apple and the Irish government have consistently denied the Commission’s claims, arguing that Apple did not receive preferential treatment that would breach EU state aid rules. After the Commission’s 2016 decision, both parties appealed to the General Court, which ruled in their favor in 2020.
However, the European Commission chose to appeal the General Court’s ruling, which led to the latest judgment by the Court of Justice. In May 2023, the case was heard again, and the Advocate General issued a non-binding opinion in favor of the Commission, suggesting that the case be sent back to the General Court for reconsideration. The Court of Justice’s ruling has now affirmed that opinion, finding that the General Court’s analysis was flawed.
Apple, in a statement, expressed its disappointment, accusing the Commission of trying to retroactively alter tax rules and insisting that the company’s income had already been taxed in the United States in accordance with international tax laws.
The Irish government said it would carefully consider the full implications of the court’s decision once the formal judgment is published.
This decision marks a significant moment in the ongoing debate over corporate tax practices within the European Union and the enforcement of state aid rules.
