Slàinte!
The European Court of Justice (ECJ) has issued a final judgement in an eight-year legal case, and ordered Apple to pay the Republic of Ireland an eye-watering €13 billion ($14 billion) in unpaid taxes. In its ruling (via BBC) the ECJ said it “confirms the European Commission’s 2016 decision: Ireland granted Apple unlawful aid which Ireland is required to recover.”
The European Commission (EC) first accused Ireland of giving Apple illegal tax breaks in 2016, saying that over the period 1991-2014 all profits generated by two Apple subsidiaries in Ireland were booked creatively for tax purposes. The EC’s issue was not with the arrangement itself, but the fact that this arrangement was not available to other companies, therefore creating an unfair advantage for Apple.
This was appealed by, believe it or not, the Republic of Ireland itself. And it even got somewhere: the EC’s decision was overturned by the ECJ in 2020 on appeal. Today’s judgement supersedes that one, which the ECJ now says had “legal errors”, and concludes that Ireland “conferred on those companies State aid that was unlawful and incompatible with the internal market, and from which the Apple Group as a whole had benefited.”
Apple has little choice but to suck it up, so it’s having a bit of a whine.
“This case has never been about how much tax we pay, but which government we are required to pay it to,” says an Apple statement. “We always pay all the taxes we owe wherever we operate and there has never been a special deal.
“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 US. We are disappointed with today’s decision as previously the General Court reviewed the facts and categorically annulled this case.”
Cry me a river baby! The real question here is why Ireland has been so against this tax windfall, and the short answer is that it really doesn’t want to upset the Apple cart. Apple operates a huge campus in Cork that’s now in its fifth decade of operation, and employs around 6,000 people in the country (its total global workforce is around 57,000), on top of which it does pay a significant amount of corporation tax already (in 2022 it paid $7.7 billion on profits of $69.3 billion).
The Irish government had argued that Apple did not need to repay the unpaid tax, because the loss had been offset by the firm making the country a more attractive base for large tech companies. The EU basically countered that this amounted to state aid and an unfair subsidy. Ireland has said it accepts the ECJ’s final ruling, and the process of collecting the unpaid tax will begin.
In something of a red letter day for fans of corporate schadenfreude, the ECJ also gave Google a bit of a shoeing, ruling that it must pay a $2.65 billion (€2.4bn) fine for market dominance abuse relating to how it offered shopping comparisons to users. This fine was originally levied in 2017 and at the time was the largest ever issued, and Google’s been appealing it ever since.
“By today’s judgement, the Court of Justice dismisses the appeal and thus upholds the judgement of the General Court,” says the ECJ press release, confirming that the fine must now be paid. Google said it was disappointed with the ruling: “this judgement relates to a very specific set of facts. We made changes back in 2017 to comply with the European Commission’s decision.”
“Today is a huge win for European citizens and tax justice,” boomed EU antitrust chief Margrethe Vestager, who has spent much of her tenure pursuing the tax arrangements of Big Tech companies within the European Union. “In its final judgement, [the ECJ] confirms [the EC] 2016 decision: Ireland granted illegal aid to Apple.”
Both of these judgements are final. So go fetch that tiny violin.
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