Apple faces €13 billion tax blow

In a striking win for the European Commission, Apple has lost a major tax case that could see the tech giant pay up to €13 billion in back taxes to Ireland.

This ruling, handed down by the EU Court of Justice, represents a significant victory in the ongoing battle against corporate tax avoidance – an issue that resonates with many expatriates living and working across Europe.

What is the backstory of Apple and Ireland?

At the heart of the case is Apple’s long-standing tax arrangement in Ireland, which allowed the company to pay effective corporate tax rates as low as 0.005%. According to the EU Commission, these rates constituted illegal state aid, giving Apple an unfair advantage over other companies operating in the union.

Margrethe Vestager, the EU’s formidable Competition Commissioner, led the charge against Apple. Known by some – including former US President Donald Trump – as the “tax lady” for her relentless pursuit of big tech firms, Vestager has targeted several multinational companies, particularly those headquartered in the US. This ruling, which follows a previous defeat at the lower-tier General Court, marks the culmination of years of legal battles.

The outcome of Apple vs Ireland in court

The EU Court of Justice agreed with the Commission’s stance that Ireland’s tax deal with Apple was, in fact, an unlawful subsidy. As the court explained in its statement, “Ireland granted Apple unlawful aid which Ireland is required to recover”. The ruling is now final, meaning Apple must repay the full €13 billion, plus potential interest and legal costs, to the Irish Treasury.

Apple expressed its disappointment, with a spokesperson saying, “We always pay all the taxes we owe wherever we operate and there has never been a special deal.” The company maintained that the European Commission was attempting to retroactively change tax rules.

This ruling is a major win for the European Commission and Margrethe Vestager, capping her tenure as one of the most influential competition regulators in the world. The decision also signals a growing trend in Europe towards tightening tax regulations, particularly for large, multinational corporations.