The EU's highest court orders Apple to pay 13 billion euros in back taxes.
In the tech giant's ten-year legal battle over its tax problems in Ireland, the European Court of Justice rendered a decision against Apple on Tuesday. The dispute dates back to 2016, when Ireland was ordered by the European Commission to retrieve up to $14.4 billion in unpaid taxes from Apple, totaling up to 13 billion euros.
The ruling by the European Court of Justice was made just hours after the business introduced new items to breathe new life into its AirPod, Apple Watch, and iPhone product lines. Apple's stock dropped by almost 1%. The Irish government stated in an announcement that it "does not give tax advantages to any corporations or the taxpayers," and that the Apple case "engaged a problem that is now of historical relevance only."
In an application on Tuesday, Apple disclosed that during its fourth fiscal quarter, which ends on September 28, 2024, it will pay an approximate one-time income tax charge of $10 billion. The government announced that it will immediately start the procedure of moving the escrow fund's assets to Ireland. The question in this case has never been how much tax we must pay; rather, it has always been to which government. A representative for Apple stated, "We constantly pay all the taxes that we owe everywhere we trade and there has never been a special deal." "The European Commission is attempting to modify the rules retroactively and is ignoring the fact that our income had previously been subject to taxes in the US, as required by international tax law."
The current case
The European Union's executive branch, the European Commission, launched an inquiry into Apple's tax payments in Ireland, the location of the tech giant's EU headquarters, in 2014.
The commission declared in 2016 that Apple had obtained "illegal" tax benefits from Ireland for a period of 20 years, and it directed Dublin to pay up to 13 billion euros ($14.4 billion) in unpaid taxes from the tech giant. 2019 saw Apple and Ireland file an appeal against the commission's ruling, and the EU General Court took the American tech giant's side in 2020.
According to the EU's second-highest court, the executive branch failed to provide evidence that the Irish government had granted Apple a tax benefit, overturning the commission's 2016 ruling. The commission then appealed the General Court's ruling, taking the case all the way to the European Court of Justice. On Tuesday, the European Court of Justice (ECJ) upheld the commission's initial 2016 decision and overturned the General Court's finding.
The action, which was initiated by outgoing Competition Commissioner Margrethe Vestager, underscores the ongoing dispute between U.S. tech companies and the EU, which has attempted to address matters ranging from taxation and antitrust to data protection.
Apple has been targeted by the EU on multiple occasions before. The EU most recently fined Apple 1.8 billion euros in March for violating antitrust laws by exploiting its monopoly status in the music streaming app distributing market. Separately, businesses in Europe have been obliged to modify many of their procedures due to the EU's comprehensive Digital Markets Act. Under the DMA, the agency has launched a number of probes targeting digital behemoths including Apple, Alphabet, and Meta.
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