Apple must pay Ireland more than $14 billion in back taxes, court rules

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The European Union’s top court on Tuesday rejected Apple’s final legal challenge against an order from the bloc’s executive commission to repay 13 billion euros, or the equivalent of more than $14 billion, in back taxes to Ireland, bringing an end to the long-running dispute.

The European Court of Justice overruled a lower court’s earlier decision in the case, saying it “confirms the European Commission’s 2016 decision: Ireland granted Apple unlawful aid which Ireland is required to recover.”

The case drew outrage from Apple when it was opened in 2016, with CEO Tim Cook calling it “total political crap.” Then-U.S. President Donald Trump slammed European Commissioner Margrethe Vestager, who spearheaded the campaign to root out special tax deals and crack down on big U.S. tech companies, as the “tax lady” who “really hates the U.S.”

The European Commission, the bloc’s executive branch, had accused Apple of striking an illegal tax deal with Irish authorities so that it could pay extremely low rates. The European Union’s General Court disagreed with that in its 2020 ruling, which has now been overturned.

“We are disappointed with today’s decision as previously the General Court reviewed the facts and categorically annulled this case,” Apple said in a statement.

“There has never been a special deal,” the company said.

Closing loopholes

Eight years ago, the ruling that found Ireland had granted a sweetheart deal that let Apple pay almost no taxes across the European bloc for 11 years dramatically escalated the fight over whether America’s biggest corporations are paying their fair share around the world.

The EU head office said that Ireland granted such lavish tax breaks to Apple that the company’s effective corporate tax rate on its European profits dropped from 1 percent in 2003 to a mere 0.005 percent in 2014. Apple has disputed such figures.

The ruling that has now been upheld was one of a number of aggressive moves by European officials to hold U.S. businesses, particularly big tech companies, accountable under the EU’s rules on taxation, competition and privacy.

Google also lost its final legal challenge on Tuesday against a European Union penalty for giving its own shopping recommendations an illegal advantage over rivals in search results, ending a long-running antitrust case that came with a whopping fine.

The European Union’s Court of Justice upheld a lower court’s decision, rejecting the company’s appeal against the 2.4 billion euro ($2.7 billion) penalty from the European Commission, the 27-nation bloc’s top antitrust enforcer.

Both companies have now exhausted their appeals in the cases that date to the previous decade. Together, the court decisions are a victory for European Commissioner Margrethe Vestager, who’s expected to step down next month after 10 years as the commission’s top official overseeing competition.

Experts said the rulings illustrate how watchdogs have been emboldened in the years since the cases were first opened.

One of the takeaways from the Apple decision “is the sense that, again, the EU authorities and courts are prepared to flex their (collective) muscles to bring Big Tech to heel where necessary,” Alex Haffner, a competition partner at law firm Fladgate, said by email.

Small dent in finances

The Google ruling “reflects the growing confidence with which competition regulators worldwide are tackling the perceived excesses of the Big Tech companies,” said Gareth Mills, partner at law firm Charles Russell Speechlys. The court’s willingness “to back the legal rationale and the level of fine will undoubtedly embolden the competition regulators further.”

Despite the amounts of money involved, the adverse rulings will leave a small financial dent in tow of the world’s richest and most profitable companies. The combined bill of 15.4 billion euro ($17 billion) facing Apple and Alphabet, Google’s parent company, represents 0.3% of their combined market value of 4.73 trillion euro ($5.2 trillion).

Apple’s stock price dipped slightly in Tuesday’s late afternoon trading while Alphabet shares rose 1%, signaling investors were unfazed by the developments in Europe.

    In:

  • Technology
  • Donald Trump
  • Politics
  • Taxes
  • Tim Cook
  • European Union
  • Ireland

Source: CBS News

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