Apple is doing a victory dance today. The second highest court in the European Union has reversed a decision that the Cupertino-based tech giant would have to pay $ 14.9 billion (€ 13 billion) in back taxes to Ireland.
It is a historic victory and a major blow to the European Commission’s attempts to crack down on multinational companies that cut illegal tax deals in Europe. in a Press release, the General Court of the European Union wrote that it was on Apple’s side because “the Commission failed to demonstrate the required legal standard” that the company’s tax treatment with Ireland gave it an unfair advantage.
This particular case has been in development for more than a decade. The background is that Apple created two European subsidiaries, Apple Sales International (ASI) and Apple Operations Europe (AOE), based in Ireland. Between 2003 and 2014, the Commission said Apple’s corporate tax rate fell from 1% to just 0.005% and that these offices could not have generated the claimed profits. After two-year investigation, the European Commission ruled in 2016 that the Irish government had given Apple illegal state aid. According to the IndependentApple CEO Tim Cook characterized the case as “total political crap.” Chef vehemently denied in a letter Apple had closed any deal with Ireland, saying the claim “had no factual or legal basis.” In 2017, the company launched a statement saying that “the Apple tax debate is not about how much we owe, but where we owe it.” By December of that year, Apple reluctantly accepted to pay what he owed, and in 2018, refunded the full amount in a guarantee fund before the appeal. Starting last year, Apple said the tax bill “challenges[d] reality and common sense, “indicating that ultimately I really would rather not have to return anything at all.
In a statement to BloombergApple reiterated its 2017 stance, saying “it wasn’t about how much tax we pay, but where we should pay it.” He added that Apple had paid more than $ 100 billion in corporate taxes worldwide and “tens of billions more in other taxes.”
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However, don’t feel bad about Ireland. The country has sided with Apple from the start, probably because it is considered a tax haven. in a statementThe Irish government said it was satisfied with the ruling. “Ireland has always been clear that no special treatment was provided to the two Apple companies: ASI and AOE,” the statement read. “The correct amount of Irish tax was collected in accordance with normal Irish tax rules.”
Obviously, the European Commission does not agree. European Commission Executive Vice President Margrethe Vestager, who also spearheaded the 2016 decision, said in a statement, “The Commission fully supports the goal of all companies paying their fair share of taxes. If Member States give multinational companies tax advantages that are not available to their rivals, this hurts fair competition in the EU. “
Going forward, Vestager said the EU will consider its next steps. You have 14 days to appeal the decision to the highest court in the EU, the Court of Justice of the European Union. So while Apple is likely celebrating its victory today, it could be a few more years before there is an absolute final decision about it. Until then, that $ 15 billion will be stay in the guarantee fund Apple configured.
This whole debacle has far-reaching implications. Vestager also has three cases against Google for a total of about $ 9.4 billion, while Amazon is also appealing a 2017 ruling that it owes Luxembourg approximately $ 300 million in back taxes. The outcome of those cases could affect the way giant tech companies (and non-tech multinationals) pay taxes internationally. That said, Vestager also lost a case last year in which Starbucks was alleged to owe the Netherlands $ 33 million in back taxes, claiming that the Commission had couldn’t prove The coffee company had an unfair advantage. Based on the Starbucks ruling and Apple’s ruling today, it would appear that the EU courts do not necessarily disagree with Vestager’s crusade against multinational tax evaders, but that does watch out about the Commission doing its homework to prove his case.
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