Apple loses €13 billion lawsuit over illegal tax breaks in Ireland

The Court of Justice of the European Union (CJEU) has issued a final decision in the high-profile case regarding Apple’s tax incentives in Ireland. As a result, the tech giant is required to pay 13 billion euros in back taxes. The decision puts an end to a long-running dispute over the legality of tax treaties between multinational corporations and European Union (EU) countries, setting a precedent for future litigation.

Image source: WilliamCho / Pixabay

The roots of this dispute go back to 2016, when the European Commission, headed by Margrethe Vestager, brought charges against Apple. According to the commission, for more than two decades the company enjoyed preferential tax treatment in Ireland, which allowed it to significantly reduce its tax burden. The most egregious example of this practice was in 2014, when Apple’s effective tax rate in Ireland was a paltry 0.005%. This means that for every million euros of profit the company paid only 50 euros in taxes – an amount incommensurate with the actual income of the corporation.

The court’s decision clearly supported the position of the head of the EU antitrust authority, Vestager, who consistently fought against the so-called “sweetheart deals” between large international corporations and individual EU countries. The CJEU judges stated unequivocally: “The Court of Justice of the European Union gives its final judgment in the case and confirms the 2016 European Commission ruling: Ireland provided Apple with unlawful state aid, which Ireland is obliged to recover.” This decision is not subject to further appeal, which puts Apple in front of the need to fulfill its financial obligations in full.

Apple’s reaction to this decision was predictably negative. The company described this requirement as contrary to reality and common sense, emphasizing its confidence in the legality of the tax schemes applied: “The European Commission is trying to retroactively change the rules and ignores the fact that, according to international tax laws, our income was already taxed in the United States.” However, despite the company’s strong position, the CJEU’s final verdict leaves it little room for maneuver in the legal field.