Apple’s £11.8 Billion Irish Tax Bill Overturned

Apple is celebrating good news for its bank balance, after Europe’s second-top court on Wednesday rejected an EU order that Apple has to pay 13 billion euros ($11.8bn) in Irish back taxes.

The ruling by the General Court of the European Union (GCEU) is a blow for the European Commission (EC), after its officials had successfully argued the iPad maker took 13bn euros in illegal state aid from Ireland.

The EC had begun its investigation of Apple’s Irish tax arrangements in 2014, and two years later in 2016 concluded that Apple had been able to avoid taxation on almost all profits generated in the EU single market.

Tax ruling

Then in August 2016, the EC ordered the Irish government to recover up to 13 billion euros (£11.8bn) plus interest in “illegal tax benefits”.

But both Apple and the Irish government decided to appeal the mammoth fine by the Commission, and that appeal began in September 2019.

Apple’s delegation last September told the EU’s General Court that the EC penalty “defies reality and common sense”.

And it seems that the GCEU has sided with the Irish government and Apple on the matter.

“The General Court annuls the contested decision because the Commission did not succeed in showing to the requisite legal standard that there was an advantage for the purposes of Article 107(1) TFEU1,” judges were quoted by Reuters as saying, referring to EU competition rules.

Appeals likely

Yet despite this ruling, this is unlikely to be the end of the matter.

Deputy Prime Minister Leo Varadkar said last week the judgement was likely to be appealed by one of the parties.

“I think that no matter what the judgement is, this case will almost certainly be appealed by one party or another to the European Court of Justice,” Varadkar told journalists at the time.

With an appeal on the cards then, the matter is likely to go before the European Court of Justice, where it could take a further three or four years to conclude.

It should be noted that Apple has already paid the fine in 2018, but the monies have been placed in escrow.

Essentially, the European Commission alleged that Apple and Ireland entered into an “artificial” profit arrangement that allowed it to pay a tax rate of less than 1 percent on its sales from across Europe.

Ireland meanwhile has accused the Commission of infringing upon national sovereignty and undermining the country’s low corporate tax regime.

The country argues it did not grant Apple any selective advantage, and cannot tax Apple on profits that are not taking place in the country.

Apple, for its part, has previously said it has abided by Irish and US tax laws, and that the tax rate it pays in Europe is low because key work such as design, engineering and development takes place in California.

Apple CEO Tim Cook has previously said the EC penalty has no basis in fact or in law, and that the Commission was ordering Apple to retroactively pay additional taxes to a government, that says Apple don’t owe it any more than Apple had already paid.

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