On Tuesday, the European Court of Justice ruled that Apple must pay Ireland approximately $14 billion in back taxes, marking the end of a nearly decade-long legal battle that began in 2016. The court’s decision affirms the European Commission’s 2016 determination that Ireland had provided Apple with unlawful tax benefits, which must now be reclaimed.
The dispute originated in the 1990s when Apple’s subsidiaries in Ireland, Apple Sales International and Apple Operations Europe, entered into tax agreements with the Irish government. These agreements granted Apple significant tax advantages for its profits, which continued until 2014. However, in 2016, the European Commission declared these agreements illegal and ordered Ireland to recover up to 13 billion euros ($14.4 billion) in unpaid taxes from Apple.
Despite a 2020 ruling by the EU General Court in favour of Apple, which overturned the Commission’s decision on the grounds that the Commission had failed to prove selective advantage, the European Court of Justice has now upheld the Commission’s original ruling. This decision is final, leaving Apple without further avenues for appeal.
Apple expressed dissatisfaction with the ruling, stating that the European Commission is attempting to retroactively change tax rules and ignoring that the company’s revenues were already taxed in the U.S. In contrast, Margrethe Vestager, the European Commissioner for Competition, hailed the decision as “a great victory for European citizens and tax justice” on social media.
This case highlights ongoing tensions between U.S. tech firms and the EU, particularly regarding issues such as taxation, data privacy, and competition law. The ruling coincides with Apple’s recent product announcements, including new iPhone, Apple Watch, and AirPods models.
