Apple Wins Battle Against EU's €14.3 Billion Irish Tax Order

Cornelia Mascio
Luglio 19, 2020

While the Court did not object to the Commission's underlying legal theory that state aid could confer a selective advantage, it nonetheless sided with Apple on key factual points.

The European Commission had argued that Ireland's endorsement of Apple's Irish tax arrangements had enabled Apple to pay less tax than competing companies would be able to pay - that it had granted it a "selective tax advantage".

This seemingly gave Apple a great advantage over other companies avoiding Irish taxes from 2003 to 2014, a total amount of 13 billion Euros ($15 billion), said the EU.

The EC said: "The tax treatment in Ireland enabled Apple to avoid taxation on nearly all profits generated by sales of Apple products in the entire EU Single Market". For now, the €13 billion plus interest that the company had to repay Ireland remains in an escrow account in that country.

According to the EU's summary of the complex case, Apple set up its sales operations in Europe so that customers were contractually buying products from Apple Sales International (ASI) in Ireland, rather than from the shops that physically sold the products to customers in the EU.

So, to protect its image as an investment destination for large companies, the Irish government took the view that Apple should not be obligated to pay back taxes.

Vestager stated at the European Union that they will carefully study the judgment and decide on possible next steps and the Commission offers full support to the objective that all companies should pay their fair share of tax.

The Irish government welcomed the ruling, saying "there was no special treatment provided" to the USA company.

"This case was not about how much tax we pay, but where we are required to pay it", Apple said in a comment on the ruling.

Apple CEO Tim Cook delivers a keynote during the European Union's privacy conference at the EU Parliament in Brussels, Belgium October 24, 2018.

The ruling is an especially stinging defeat for Vestager, who has campaigned for years to root out special tax deals and better regulate the power of the big U.S. tech companies, including Google, Amazon and Facebook.

'Vestager has made a very valiant effort to use the tools that were at her disposal but we all knew from the start that those tools were not meant for the objective, ' said Sophie in 't Veld, a Dutch member of the EU Parliament's Liberal group.

"The trouble is that competition in digital markets can be fragile", she said. The rulings endorsed a split of the profits for tax purposes in Ireland.

US President Donald Trump even mocked Vestager as Europe's "tax lady" after she imposed many antitrust fines on Google as well.

Wednesday's ruling will hurt that.

While the verdict has been welcomed by Apple and the Irish government, critics have denounced it as a setback to the EU's tax collection efforts- which have become increasingly important in the wake of Covid-19's economic fallout. Here's all the Apple news you should have read this week.

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