In brief: After six years, the General Court of the European Union sided with Apple in a case where the European Commission accused the company of abusing Ireland’s permissive tax system. The Commission will likely appeal this ruling in the EU’s supreme court in the coming months.
Apple recently won an appeal over a tax bill of $15 billion (€13 billion) that was ordered to pay back to Ireland. Back in 2014, the European Commission started looking into Ireland’s tax system and found that tech giants like Apple had been abusing it to pay lower rates and get additional tax breaks and benefits that aren’t available in many other countries. In 2016, the EU’s antitrust enforcer told Ireland to recoup the illegal subsidies given to the Cupertino company between 2003 and 2014, when the country began reforming its tax system.
In 2016, Apple caved in and handed Ireland $16.7 billion (the original amount plus interest), and both entities appealed the decision in the EU’s General Court, who has concluded “the Commission was wrong to declare that ASI (Apple Sales International) and AOE (Apple Operations Europe) had been granted a selective economic advantage and, by extension, State aid.”
The new ruling represents a massive blow to Margrethe Vestager, as this was seen as her crown achievement as antitrust commissioner, earning her the reputation of the “tax lady” that was going to punish American tech giants. Vestager, who is now in charge of EU digital policy, said the European Commission “will carefully study the judgment and reflect on possible next steps.”
As for Apple, the company applauded the General Court’s ruling and noted that it “has paid more than $100 billion in corporate income taxes around the world in the last decade and tens of billions more in other taxes.”
The Cupertino company also believes this case was “not about how much tax we pay, but where we are required to pay it.” Countries like France and Italy have been working to introduce a new digital services tax, which has led the Trump administration to vow 100 percent tariffs on imported products from those countries.
The OECD is scrambling to rewrite international tax rules by the end of this year to make it harder for tech giants to practice tax avoidance and to force them into paying their fair share in every country they operate in. Earlier this year, Apple CEO Tim Cook affirmed his support for the efforts.