Apple Ordered to Pay €13 Billion Tax Bill by EU
Apple has been ordered to pay back €13 billion ($14.4 billion) worth of tax to Ireland by the European Court of Justice. The court ruled that two of Apple’s subsidiaries, Apple Sales International and Apple Operations Europe, received illegal tax benefits between 1991 and 2014. These benefits were not available to other companies operating in Ireland.
The tax rulings in favor of Apple subsidiaries in 1991 and 2007 allowed them to calculate their taxable profits in Ireland based only on the activities of the Irish branches. This excluded profits generated by the companies’ intellectual property licenses as their head offices and decision-making processes were outside of Ireland.
While Apple paid a corporation tax rate of 0.0005% in 2014, Ireland’s standard corporate tax rate has been 12.5% since 2003. The European Commission’s press release stated that Ireland granted Apple unlawful aid, which it is now required to recover.
Vestager, Apple React to News
European Commissioner for Competition, Margrethe Vestager, first ordered Apple to pay back the taxes linked to their IP licenses in 2016, but the decision was overturned by the General Court of the European Union in 2020. However, on Tuesday, the ECJ set aside the General Court’s ruling, stating that Apple had indeed received an advantage through the tax rulings and that the General Court had wrongly upheld complaints from Ireland, ASI, and AOE.
Vestager celebrated the ECJ’s ruling as a win for European citizens and tax justice. Apple, on the other hand, maintains that it has paid its taxes in full without any special deals with Ireland, expressing disappointment with the decision.
ECJ’s Decision Called ‘a Dramatic One’
The ECJ’s decision to enforce the €13 billion tax bill on Apple has significant implications for the tech giant and the broader industry. The ruling overturns the General Court’s findings and signals a strong stance by EU authorities against tax evasion.
From a financial perspective, Apple must now release the €13 billion held in escrow pending the case’s outcome. The ruling also aligns with the EU’s recent actions against big tech companies, emphasizing compliance with tax laws and fair competition practices.
Apple’s ongoing legal battles in the EU, such as the Digital Markets Act violations, show the increasing regulatory scrutiny faced by tech companies operating in the region. Compliance with EU laws and regulations is crucial for maintaining a fair and competitive marketplace.
Google’s Antitrust Ruling Upheld by ECJ
Google’s parent company, Alphabet, also faced legal challenges from the EU on Tuesday, with the ECJ upholding a €2.42 billion antitrust fine against the tech giant. The ruling affirmed the European Commission’s findings that Google had abused its dominant position in online search markets, favoring its own services over competitors.
The decision underscores the EU’s commitment to fair competition and digital fairness in the tech industry. Google’s compliance with EU antitrust regulations and ongoing investigations into its ad tech practices highlight the need for transparency and accountability among major tech companies.
The ruling against Google, along with previous fines and investigations, signal a broader shift towards regulating big tech companies to ensure a level playing field for all businesses. Compliance with EU laws is crucial for tech giants operating in the region to avoid financial penalties and reputational damage.