In 2020, the European Union’s General Court reversed the Commission’s decision, as it found that the Commission had not sufficiently established that Apple had received preferential treatment in Ireland. On appeal, the Court of Justice has now set aside the General Court’s judgment, meaning that the Commission’s decision is now upheld.
Ireland’s government had sided with Apple in its attempt to appeal the decision, but today it said it will “respect” the Court of Justice’s findings and recover the €13 billion from Apple that is considered to be illegal state aid.
“We are disappointed with today’s decision as previously the General Court reviewed the facts and categorically annulled this case,” said Apple, in response to the Court of Justice’s ruling. “There has never been a special deal,” added Apple.
“Today is a big win for European citizens and for tax justice,” said the European Union’s competition chief Margrethe Vestager.
The 2016 Decision
Following a three-year inquiry, the European Commission in 2016 found that Apple paid between 0.005% and 1% in taxes in Ireland between 2003 and 2014, compared to the country’s headline 12.5% corporate tax rate during that period.
Here is how Vestager explained the scheme in her remarks today:
These tax rulings attributed the bulk of taxable profits – of two Irish subsidiaries of Apple – to stateless “head offices”. These head offices existed only on paper. No tables, no chairs, no activities. The profits were thus not taxed anywhere. As an example, in 2011, one of Apple’s Irish subsidiaries recorded profits of approximately 16 billion euros. Of these, thanks to the tax rulings, only around 50 million euros were taxable in Ireland. So, this subsidiary paid less than 10 million euros of taxes in Ireland in 2011 – an effective tax rate of about 0.05% of these overall annual profits.
At the time, Apple CEO Tim Cook described the accusations as “total political crap,” and he said the 0.005% tax rate was a “false number.”
Ireland’s government today said it has already changed its laws regarding the attribution of profits to branches of non-resident companies operating in the country. It said the laws that applied to Apple are no longer in force.
This article, “Apple Loses Major Tax Dispute in Europe, Must Pay Ireland €13 Billion” first appeared on MacRumors.com
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