The European Union’s highest court on Tuesday ruled that Apple must pay more than $14 billion in back taxes to Ireland that the California-based tech giant had long contested.
The case stems from a 2016 decision made by the European Commission that ordered Apple to pay Ireland 13 billion euros ($14.4 billion) in unpaid taxes. The commission found that Ireland’s tax break offers to Apple, where the company’s EU headquarters is located, were illegal.
In its ruling, the European Court of Justice said it was issuing the “final judgment in the matter” and said the tax breaks are “unlawful aid” that Ireland is mandated to recover from Apple. It also ruled that the company received illegal tax benefits over the course of about two decades, stretching from 1991 until 2014.
The court said Apple’s two units incorporated in Ireland enjoyed favorable tax treatment compared to resident companies taxed in Ireland that are not capable of benefiting from such advance rulings by the Irish tax authorities.
Tuesday’s ruling also sets aside a lower court decision that was handed down in 2020 that went in favor of the Irish government, who had sought to block the European Commission’s decision.
The lower court “erred when it ruled that the Commission had not proved sufficiently that the intellectual property licenses ... and related profits, generated by sales of Apple products outside the United States, should have been allocated, for tax purposes, to the Irish branches,” the Court of Justice wrote.
“In particular, the General Court erred when it ruled that the Commission’s primary line of reasoning was based on erroneous assessments of normal taxation under the Irish tax law applicable in the case, and when it upheld the complaints raised by Ireland,” it continued.
Both Apple and Ireland had appealed the European Commission’s decision in 2019.
The government also noted that the court’s decision Tuesday is “now of historical relevance only” because policies involved in the case ended in 2007 “and are no longer in force.”
Apple, in a statement, suggested that it disagreed with the top EU court’s decision. The firm has said that it has paid $577 million in tax, 12.5 percent of the profit generated in the country, in line with the tax laws in Ireland in the period between 2003 and 2014 that was covered in the European Commission investigation.
“The European Commission is trying to retroactively change the rules and ignore that, as required by international tax law, our income was already subject to taxes in the U.S.,” the company said.
Fellow U.S. tech giant Google also recently lost a court battle over a 2.4 billion euro ($2.6 billion) antitrust fine. The Court of Justice upheld a fine imposed on Google by the European Commission in 2017 for using its own price comparison shopping service to gain an unfair advantage over smaller European rivals.
