Apple Slapped with €13 Billion Tax Bill: EU Court Victory for Tax Fairness

Apple Inc. has lost a major legal battle over a €13 billion ($14.4 billion) tax bill from Ireland. The European Union’s top court in Luxembourg has supported a 2016 decision that Ireland gave Apple an unfair tax advantage, which the EU said was against the rules.

Court Ruling and Impact

On Tuesday, the court overturned a lower court’s decision that had been in Apple’s favour. The lower court had claimed the EU regulators made mistakes in their evaluation. This ruling is a victory for the EU’s antitrust chief, Margrethe Vestager, who has been leading efforts to crack down on unfair tax deals.

Background

In 2016, Vestager accused Ireland of providing Apple with illegal tax benefits that allowed the company to pay much less tax than other businesses in the country. She ordered Ireland to recover the €13 billion from Apple. This amount has been held in an escrow account while awaiting the final court decision.

Reactions

Apple expressed disappointment with the ruling, noting that a lower court had previously ruled in its favour. The company’s CEO, Tim Cook, had previously criticized the EU’s actions, calling them politically motivated. The U.S. Treasury and former President Donald Trump also opposed the EU’s stance, arguing it could harm global tax reform efforts.

Broader Context

The case involved tax deals from 1991 and 2007, which allowed Apple to reduce its tax bill by assigning Irish profits to a “head office” that did not physically exist. The EU argued these deals were unfair and amounted to illegal state aid.

This decision is a significant moment in Vestager’s efforts to ensure fair tax practices, although she has faced setbacks in other cases. Apple’s move to Ireland was part of a strategy to benefit from the country’s low tax rates, which attracted many global companies. However, many tax loopholes have since been closed, and Ireland has agreed to a global minimum tax rate of 15% for multinational companies starting in 2021.