In a landmark ruling, the European Court of Justice has directed Ireland to recover €13 billion from Apple, marking a significant setback for the technology giant in its prolonged tax dispute with the European Union.
This decision overturns a previous ruling in Apple’s favour and mandates the recovery of funds that had been held in escrow. The case, initiated in 2016 by the EU’s competition commissioner Margrethe Vestager, asserted that Apple benefited from unlawful state aid through favourable tax agreements with Ireland. These agreements permitted Apple to exclude profits earned outside the United States from Irish taxation by routing them through two Irish subsidiaries.
Experts indicate that the ruling bears profound implications for multinational corporations and EU member states, particularly concerning the application of transfer pricing to allocate profits across different jurisdictions. The decision reflects the EU’s determination to challenge the tax practices of major technology companies and signals that preferential tax treatments will no longer be tolerated.
While Ireland has downplayed the ruling as being of ‘historical relevance,’ it has confirmed that it will proceed with releasing the funds from the escrow account. Vestager celebrated the decision as a triumph for European citizens and tax justice, underlining her dedication to combating detrimental tax competition.
This judgement coincides with another victory for Vestager, as Europe’s highest court upheld a €2.4 billion fine against Google for anti-competitive practices. Both rulings underscore the EU’s unwavering resolve to regulate the activities of technology giants.
The European Court of Justice’s decision to order the repayment of €13 billion by Apple sends a clear message about the EU’s stance on tax avoidance and state aid. The implications of this ruling will be closely watched by multinational corporations and EU member states alike.