Apple has been ordered by the European Court of Justice (ECJ) to pay €13 billion ($14.4 billion) in back taxes to Ireland, marking the conclusion of a 10-year legal dispute over the company’s tax benefits in the country. This ruling follows a 2016 decision by the European Commission that Ireland had provided Apple with illegal state aid by granting the company “undue tax benefits” between 1991 and 2007.
The case began in 2014 when the European Commission launched an investigation into Apple’s tax arrangements with Ireland, where the tech giant has its EU headquarters. The Commission’s findings led to the 2016 order for Ireland to recover the funds, sparking legal challenges from both Apple and the Irish government. In 2020, Apple won an appeal in the EU General Court, which annulled the Commission’s decision.
However, the Commission appealed that ruling, leading to this week’s final decision by the ECJ, which upholds the original 2016 verdict.
Apple Argues Tax Dispute Is About Jurisdiction
Apple has consistently maintained that the issue was not about how much tax it owes but rather about which government should receive the payment. The company claims it has always complied with tax regulations and accused the European Commission of attempting to retroactively change the rules. Apple also stressed that its income had already been taxed in the United States, in line with international tax laws.
In its SEC filing, Apple disclosed that it will incur a $10 billion tax charge by the end of its fiscal fourth quarter on September 28, 2024, as a result of the ruling.
Ireland Accepts the Decision
The Irish government, which had also appealed the initial ruling, reiterated in its statement that it has never provided preferential tax treatment to any company or taxpayer, describing the case as an issue of “historical relevance only.” Despite this, Ireland stated that it would respect the ECJ’s decision and begin the process of transferring the escrowed funds back to the state.
Apple Faces Increased EU Scrutiny on Other Fronts
This ruling comes at a time when Apple is also facing scrutiny in other areas within the European Union. Just hours after the ECJ’s decision, Apple introduced updates to its iPhone, Apple Watch, and AirPods product lines.
Meanwhile, Apple has been hit with other fines in the EU, including a €1.8 billion penalty in March 2024 for abusing its dominant position in the market for music streaming apps. Additionally, the company is under investigation as part of the EU’s Digital Markets Act, which seeks to regulate the practices of large tech companies such as Apple, Alphabet, and Meta.
Apple’s shares dropped by approximately 1% following the court ruling.
Featured Image courtesy of Yanice Idir/Alamy Stock Photo
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