Apple has won a Landmark Court Case in Europe today with the Court ruling that Ireland did not give Apple a Tax Advantage
Earlier today Apple won a landmark court case against the European Commission over a dispute concerning 13 billion euros ($14.9 billion) in Irish taxes.
The EU’s general court decided that the European Commission did not prove that the Irish government had given the U.S. tech giant a tax advantage.
The commission, the executive arm of the EU, had concluded in August 2016 that the Irish government granted illegal benefits to Apple and ordered it to recover 13 billion euros in unpaid taxes.
At the time, the commission said Ireland had enabled Apple to pay "substantially less tax than other businesses over many years," which meant that the U.S. firm was allowed to pay an effective corporate tax rate of 1% on its European profits in 2003, which fell to 0.005% in 2014.
The Irish government and Apple decided to appeal the commission’s decision, with the company arguing the order to repay taxes "defies reality and common sense."
Ireland, Apple and the European Commission now have two months to decide if they want to appeal the latest ruling and potentially take it to the EU’s highest tribunal.
In reaction to the court ruling, the Irish government said it has always been clear "that there was no special treatment provided to the two Apple companies" and that "the correct amount of Irish tax was charged taxation in line with normal Irish taxation rules."
The European Commission said in a statement it "will continue to look at aggressive tax planning measures under EU State aid rules to assess whether they result in illegal State aid." It added that it "will carefully study the judgment and reflect on possible next steps."
A spokesperson for Apple told CNBC: "We thank the General Court for their time and consideration of the facts. We are pleased they have annulled the Commission’s case." Apple shares were up around 2% in premarket trading on the news. For more on this, read the full CNBC report.
Statement by Executive Vice-President Margrethe Vestager
Margrethe Vestager spent two decades in the Danish Government before landing a job holding the world's biggest tech companies to account.
Since being named EU Commissioner for Competition Policy in 2014, she has taken action against Apple, Amazon, Facebook, Google and others.
In 2016, the Commission ordered Apple to pay €13 billion in unpaid taxes (the biggest tax fine in history).
Today, the EU Commission lost their case against Apple. Below is the full statement from Vestager's office.
"Today's judgment by the General Court annuls the Commission's August 2016 decision that Ireland granted illegal State aid to Apple through selective tax breaks. We will carefully study the judgment and reflect on possible next steps.
The Commission's decision concerned two tax rulings issued by Ireland to Apple, which determined the taxable profit of two Irish Apple subsidiaries in Ireland between 1991 and 2015. As a result of the rulings, in 2011, for example, Apple's Irish subsidiary recorded European profits of US$ 22 billion (c.a. €16 billion) but under the terms of the tax ruling only around €50 million were considered taxable in Ireland.
The Commission stands fully behind the objective that all companies should pay their fair share of tax. If Member States give certain multinational companies tax advantages not available to their rivals, this harms fair competition in the EU. It also deprives the public purse and citizens of funds for much needed investments – the need for which is even more acute during times of crisis.
In previous judgments on the tax treatment of Fiat in Luxembourg and Starbucks in the Netherlands, the General Court confirmed that, while Member States have exclusive competence in determining their laws concerning direct taxation, they must do so in respect of EU law, including State aid rules. Furthermore, the General Court also confirmed the Commission's approach to assess whether a measure is selective and whether transactions between group companies give rise to an advantage under EU State aid rules based on the so-called 'arm's length principle.
The Commission will continue to look at aggressive tax planning measures under EU State aid rules to assess whether they result in illegal State aid. At the same time, State aid enforcement needs to go hand in hand with a change in corporate philosophies and the right legislation to address loopholes and ensure transparency. We have made a lot of progress already at national, European and global levels, and we need to continue to work together to succeed."