Apple Wins EU Tax Battle, Court Annuls 2016 Order To Pay $15B Taxes

Apple won a landmark court case Wednesday, July15, against the European Commission over a dispute concerning 13 billion euros ($14.9 billion) in Irish taxes, reported the Wall Street Journal.

The EU’s general court decided that the European Commission did not prove that the Irish government had given the US tech giant a tax advantage.

The commission, the executive arm of the EU, had concluded in August 2016 that the Irish government granted illegal benefits to Apple and ordered it to recover 13 billion euros in unpaid taxes.

At the time, the commission said Ireland had enabled Apple to pay “substantially less tax than other businesses over many years,” which meant that the US firm was allowed to pay an effective corporate tax rate of 1% on its European profits in 2003, which fell to 0.005% in 2014.

The Irish government and Apple decided to appeal the commission’s decision, with the company arguing the order to repay taxes “defies reality and common sense.”

Ireland, Apple and the European Commission now have two months to decide if they want to appeal the latest ruling and potentially take it to the EU’s highest tribunal.

In reaction to the court ruling, the Irish government said it has always been clear “that there was no special treatment provided to the two Apple companies” and that “the correct amount of Irish tax was charged taxation in line with normal Irish taxation rules.”

The European Commission said in a statement it “will continue to look at aggressive tax planning measures under EU State aid rules to assess whether they result in illegal State aid.” It added that it “will carefully study the judgment and reflect on possible next steps.”

Separately, the commission on Wednesday laid out several plans on how to ensure fairer taxation across the bloc, including by increasing obligations for digital platforms to report where and what amounts of tax they are paying and by facilitating joint audits across jurisdictions in the EU. Legislative proposals under these plans will be put forward in autumn, pending approval of national governments and the European Parliament.

“On the issue of corporate taxation, this [Apple tax] ruling probably makes it more urgent and more clear, the need for corporate tax reform,” said commission vice-president in charge of economic affairs, Valdis Dombrovskis. “That will be something commission will come forward [with] in our autumn package,” he said.