Apple's Tax Case with EU Antitrust Regulators Ends in Loss

Apple Faces Setback in Tax Case with EU Antitrust Regulators

Apple has encountered a setback in its legal battle against an order to pay a €13 billion ($14 billion) tax bill in Ireland. The European Court of Justice's adviser has recommended setting aside a ruling in favor of the tech giant. This tax case dates back to 2014 when the European Commission initiated an investigation into two tax rulings in Ireland, suspecting that they had artificially reduced the tax amount owed by Apple since 1991. The commission concluded that these benefits amounted to illegal state aid and ordered Ireland to recover the money.

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This decision by the European Commission in 2016 stated that Apple had benefitted from tax rulings in Ireland over a span of 20 years, resulting in an artificially low tax burden, as low as 0.005% in 2014. Although both Apple and Dublin appealed against the tax order, Apple had to pay the full amount, which has been held in an escrow account by Ireland.

The EU's General Court Ruling

The European Union's General Court upheld Apple's challenge in 2020, ruling that regulators had not met the legal standard required to establish that Apple had received an unfair advantage. However, advocate General Giovanni Pitruzzella at the EU Court of Justice disagreed with this decision. Pitruzzella argued that the General Court had made errors in law and failed to address the core issues of the case. He recommended that the General Court ruling be set aside and the case be referred back to the lower tribunal.

Giovanni Pitruzzella stated that the General Court failed...

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"to correctly assess the substance and consequences of certain methodological errors that, according to the Commission decision, tainted the tax rulings... Therefore, it is necessary for the General Court to conduct a new assessment."

The CJEU's ruling, expected next year, will have significant implications for the granting of tax breaks to major firms by EU member states. If the Commission wins the case, the €13.1 billion held in the escrow account, along with interest, will be transferred to the Irish Exchequer. The CJEU's decision will be binding.

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Apple's and Ireland's Responses

Apple has refuted claims that it has deliberately avoided paying its taxes. Meanwhile, Ireland has consistently denied providing Apple with any hidden subsidies. Despite the advocate general's opinion, Ireland remains confident that it did not violate any EU laws.

"It has always been and remains Ireland's position that the correct amount of Irish tax was paid and that Ireland provided no state aid to Apple. We now await the judgment of the Court of Justice of the European Union on this matter," said Ireland's finance minister, Michael McGrath.

Let's recap

The European Court of Justice will issue its ruling in the coming months, with around 80% of such recommendations being followed. If the court rules against Apple, the company may have to pay the €13 billion tax bill, a significant setback. This case is part of the EU's ongoing efforts to address unfair state aid provided by EU countries to multinational corporations. If the European Commission prevails, the €13.1 billion held in the escrow account will be forfeited, but Apple will be refunded if it ultimately wins the case. The money, along with interest, will be transferred to the Irish Exchequer. Apple argues that it has paid taxes on the profits in question in the US.

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What are your thoughts on this latest ruling in the Apple tax case? Share your opinions in the comments section below.