After a long-running EU tax litigation, a recent decision strikes down an earlier ruling requiring that Apple pay almost $15 billion in taxes because of its preferential tax relationship with Ireland.
Recently valued at $2 trillion dollars, Apple has long contended that its tax arrangements with Ireland, through two Irish subsidiaries, were legal and did not confer Apple special aid or standing in the Irish state. The EU General Court essentially agreed, noting, “The General Court annuls the contested decision because the Commission did not succeed in showing to the requisite legal standard that there was an advantage for the purposes of Article 107(1) TFEU1.”
The decision is a big defeat for the European Competition Commission. With cases outstanding against Ikea, Nike, Google and Amazon, and a prior defeat to Starbucks, the General Court is essentially saying prosecutors did not show how the Apple subsidiaries were given a specific tax advantage by Irish regulators.
Upsetting the apple cart—one way or the other
The ruling by no means stifles this long-simmering controversy. The EU Competition Commission could appeal the matter to the EUs highest court, the EU Court of Justice, showing specifically how Apple is benefitting from artificially low tax laws in Ireland.
Ireland’s standing as a tax haven continues to be fodder for domestic politics. Ireland joined with Apple in appealing the decision to the General Court. By doing so, it fought against a judgment that would have given the country enough money to cover approximately half of its expected tax deficit in 2020.
On the other side of the coin, approximately one in ten Irish workers holds a job provided by multinational companies drawn to Ireland by the same rock-bottom tax rates. Ireland holds onto much-needed jobs by maintaining its budget-gutting tax policies, while its deficit widens.
As we have discussed before, Ireland is just one EU state providing exceptionally pleasing tax structures to multinational companies. These companies earn profit all over the EU, but pay very little for that privilege in taxes—due to offshore investments, and tax havens like Luxembourg, Ireland, and other secrecy jurisdictions. Money spent in the EU does not stay in the EU.
If the law in the EU does not provide for fair taxation of multinationals, especially American multinationals like Big Tech, the laws may very well change. Big Tech has repeatedly said it wants to be at the table—but the current US administration talks only tariffs.
Today a win for Apple, but what about tomorrow?
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