In a ruling on two joined cases, the European Court of Justice has ruled against an order by the EU Commission forcing the Republic of Ireland to recoup €13 billion in what it said was unpaid tax from the tech giant Apple.
The battle dates back to August 2016, when the Commission issued its judgement on a case of illegal state aid to industry, which is illegal under EU law except under very strict conditions.
Ireland, the ruling said, had allowed Apple a more advantageous tax regime than that enjoyed by other companies based in the republic. The Commission estimated that two Apple subsidiaries had underpaid by €13 billion, and the Irish government was ordered to seek repayment of that sum plus interest – a total of €14.3 billion – from the company.
Both Ireland and Apple took their cases to the European Court of Justice in Luxembourg, seeking to overturn the Commission’s ruling.
Apple claimed that the Commission’s calculations were based on faulty figures, which included sums that were subject to US taxation and should not be counted towards Irish tax. Ireland, meanwhile, denied illegal state aid, and sought to overturn the order to make Apple pay the €13 billion.
Then, in October 2018, Ireland announced it had successfully recovered the missing money from Apple, and the full sum of over €14 billion had been placed in an escrow account while the actions against the ruling proceeded.
The General Court of the EU, formerly known as the Court of First Instance, has now overturned the Commission’s initial ruling, arguing that the Commission had failed to show that Apple received preferential treatment which amounted to illegal state aid.
Meanwhile Apple issued its own reaction: “This case was not about how much tax we pay, but where we are required to pay it,” the company said.
“We’re proud to be the largest taxpayer in the world as we know the important role tax payments play in society. Apple 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 finance ministry in Dublin also published a reaction.
“Ireland has always been clear that there was no special treatment provided to the two Apple companies. The correct amount of Irish tax was charged, in line with normal Irish taxation rules. Ireland appealed the commission decision on the basis that Ireland granted no state aid, and the decision today from the court supports that view.”
The lower court’s decision can be appealed to the full Court of Justice. The Commission has not yet made a statement on the ruling, but is expected to appeal. If it does, the full court’s ruling will be final.