Technology giant Apple is exempted from paying the government of Ireland $15 billion worth of back taxes according to a European Union High Court ruling. It is a victory for Apple after the company’s reputation was marred in Europe over unpaid taxes last 2016.
The EU Commission had claimed in 2016 that Apple had an illegal tax deal with Irish authorities. According to the claims, the unauthorized deal has allowed Apple to pay extremely low rates. This Wednesday, the EU’s General Court ruled that ”the commission did not succeed in showing to the requisite legal standard that there was an advantage.” According to the EU court, the commission was wrong to declare that Apple was given a selective economic advantage.
The decision was made by the Luxembourg-based court, which is the second-highest in the EU. The ruling can only be appealed on points of law.
Apple and the ‘Illegal Tax Deal’
The EU Commission had previously ordered Apple to pay for gross underpayment of tax on profits across the European bloc covering the years 2003 to 2014. European Competition Commissioner Margrethe Vestager made the complaint. According to the EU Commission, Apple used two shell companies in Ireland to report its Europe-wide profits at effective rates well under 1%.
For Apple and big technological companies, payment of taxes and bulk of their revenue is to be given to Ireland. Small EU countries such as Ireland will economically benefit from those taxes paid by multimillion-dollar owned companies. Aside from that, the circumstance is also an instant attraction for international business investors. Because Ireland is a small country with a small economy, big companies such as Apple also end up paying very low taxes.
The Irish government accepted the ruling. Its government clarified that there was never a special treatment provided to Apple. In a statement to all international media personnel, the Irish government said that Ireland appealed to the Commission Decision because it has granted no state aid. According to their statement, the court’s decision supports that view.
The result of the ruling is not going to be beneficial for Vestager, which also has pending tax-related cases against Ikea and Nike over deals with the Netherlands. Other deals involved are between Huhtamaki’s agreement with Luxembourg.
Here my first comments on the Apple judgement today. Bit too long for a Tweet: https://t.co/glqu9MfilI
— Margrethe Vestager (@vestager) July 15, 2020
Last year, the same court overturned Vestager’s demand for Starbucks to pay up to 30 million euros in Dutch back taxes.
In a statement, Vestager said that the commission stands fully behind the objective that all companies should pay their rightful share of tax. According to her, if member States give certain multinational companies tax advantages not available to their rivals, it would then harm fair competition in the EU. She said not paying the fair share of taxes also deprives the public purse and the citizens of funds for needed investments.
Apple CEO Tim Cook said that the EU’s demand for back taxes is “total political crap.” In his interviews last 2016, Cook expressed his disappointment over the EU Commissions demand.
The Eurodad network, which comprises 49 civil society organizations, said the ruling is evidence of “how tough any tax policy remains.” According to the organization, such long court cases could have been avoided is there is a proper corporate tax system in place. Edurodad’s Tove Maria said there wouldn’t be a need for long court hearings to find out if it is legal for multinational corporations to pay less than 1% in taxes if there is a proper tax system in place.
More about Europe here: Europe toughens stance on Iran, the US over Tehran nuclear dispute
Back read news files on 2016 here: Tim Crook’s 2016 interview
