Ireland Will Have to Recover 13 Billion Euros in Back Taxes from Apple

• In a decision passed by the European Court of Justice (CJEU) on Tuesday, Ireland will have to recover more than 13 billion euros in back taxes from Apple.
• The case follows a 2016 verdict by the EU commission which said that Ireland gave preferential treatment to Apple and allowed it to pay lower taxes.
• This decision was challenged by both parties and the General Court annulled the 2016 ruling in 2020.
• However, the CJEU has found Apple guilty of tax evasion and upheld the [previous verdict.

This is a bad day for Apple. On Tuesday, a European court announced that Ireland would have to recover more than 13 billion euros in back taxes from Apple.

Announcing the decision, EC Vice President Margrethe Vestager said Today is a big win for European citizens and for tax justice."

And it truly is. Tax avoidance is a critical issue. According to the European Parliament, tax avoidance costs the trading bloc up to 70 billion ($77.2 billion) annually.

Brief History of the Case

• The case goes back to 2016 when the European Commission found that Ireland had been giving undue tax benefits to Apple between 1991 and 2014, which is illegal under EU state aid rules.
• Hence, it was asked to pay a 14.3 billion ($15.8 billion) tax bill which included the 13 billion tax plus interest.
• However, this decision was challenged by both Ireland and Apple who said that the company paid the right amount of tax. Both parties have maintained the same stance since then.
• Ireland said that it gave no special treatment to Apple and Apple maintained that it received no state aid. As a result, the 2016 decision was annulled by the General Court of theEuropean Union in July 2020.
• But that was not the end of it. The European Commission appealed against this decision to the European Court of Justice (CJEU) which agreed that the General Court of the European Union was wrong in annulling the decision and thus restored it.

What Exactly Did Apple Do?

According to the investigation, Apple only paid 1% of corporate tax on its European profits in 2003 which went down to 0.005% in 2014. This is much lower than what other companies had to pay during this period.

So how did it get away with it? Apparently, Apple has been recording all of its profits of two Irish-incorporated subsidiaries to a head office, which does not exist in reality. These companies held the right to sell Apple products outside of America and helped the company avoid taxes on all the sales generated from it.

What Does Apple & the Irish Government Have to Say?

Needless to say, Apple is quite upset with this decision. An Apple representative said the company always pays all its taxes and the amount is just the same as everyone. There has never been a special deal between the company and Ireland.

This case has never been about how much tax we pay, but which government we are required to pay it to.' - Apple spokesperson

This means that the amount that the CJEU wants to be taxed has already been taxed by the US government.

The government of Ireland is also disappointed with this decision. It said that Ireland has never granted any preferential treatment to any business and it never will.

Google's Fine Upheld

In a separate case, the court dismissed Google's plea against the 2.4 billion fine imposed by the Commission in 2017. In this case, the original decision of the Commission was upheld by the General Court too but the company decided to appeal against it.

However, the CJEU sided with the Commission and said that Google has indeed abused its dominant position in the online search industry and denied users a fair choice.

Both the decisions passed by the CJEU are final and binding. Apple and Google can no longer appeal against it.

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