Apple loses Irish tax case on final appeal: Must pay €13B

The final appeal over the Apple Irish tax case has been decided by Europe’s highest court, and the Cupertino company has lost. It must now pay €13B in back tax to the Irish government.

The ruling ends an eight-year court battle between Apple and the Irish government on the one side, and the European Union on the other …

A quick recap

Apple funneled the revenue from all its sales throughout the EU through its European HQ in Ireland. Apple likely chose the location because the country already had an extremely low rate of corporate tax compared to other EU countries, at just 12.5% – and the Irish government further sweetened the deal with special arrangements that meant the iPhone maker paid even less.

In 2016, the EU ruled that these arrangements were illegal. It was the Irish government, rather than Apple, which was found to have broken the law, but because the arrangement was not lawful it meant that Apple owed the taxes that should have been collected.

As both Apple and the Irish government appealed, it was agreed that Apple would pay the sum into an escrow account, where it would be held pending the outcome of the court battle.

Apple won the initial appeal, the judges telling the EU it had not proven that Apple had been given an economic advantage, but the EU appealed to a higher court in September of last year.

Apple has now finally lost

The European Court of Justice – the highest court in the bloc – has now reversed the previous appeal, ruling that the original finding was correct. This was the result we predicted back in 2020.

BBC News reports.

The ECJ said: “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” […]

Apple said that it was disappointed by the result.

Apple said in a statement: “This case has never been about how much tax we pay, but which government we are required to pay it to. We always pay all the taxes we owe wherever we operate and there has never been a special deal. 

“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 US. 

“We are disappointed with today’s decision as previously the General Court reviewed the facts and categorically annulled this case,” Apple added.

The Irish government says that it will now transfer the money from the escrow account into its own coffers.

It’s hoped to avoid future cases like this by agreeing global rules for the tax treatment of multinational companies. Back in 2019, some 137 governments started work on agreeing common rules which would applied throughout the world. Apple CEO Tim Cook has voiced his support for this approach.

Photo by Ibrahim Boran on Unsplash