Apple Must Pay $14.4 Billion to Ireland in Crackdown On ‘Sweetheart Deals’

September 10, 2024:

Apple has been ordered to pay €13 billion ($14.4bn) of unpaid taxes to the Irish state, in a court ruling that ended a decade-long fight between Europe and the big tech company.

In a judgment handed down on Tuesday, the European Court of Justice (ECJ) agreed with a European Commission ruling in 2016, which found that for a period of more than 20 years Apple enjoyed illegal tax advantages that constituted state aid from the Irish government.

“The Court of Justice gives final judgment in the matter and confirms the European Commission’s 2016 decision: Ireland granted Apple unlawful aid, which Ireland is required to recover,” the court said in a statement.

“Today is a huge win for European citizens and tax justice,” Margrethe Vestager, the European competition commissioner, said in a statement on X. “Ireland granted illegal aid to Apple.”

The Irish government said that it will respect the decision of the court, and points to it being of “historical relevance only”, claiming that it dates back to revenues in 1991 and 2007 which are “no longer in force,” because it introduced changes to its tax regime. “The Irish position has always been that Ireland does not give preferential tax treatment to any companies or taxpayers,” the government’s statement read.

Dr Stephen Daly, a reader in tax law at King’s College London, says he is “stunned” by the decision, which has come after a lengthy back and forth legal battle that saw the European General Court find in Apple’s favour in 2020.

“I really didn’t see this coming,” Daly says. “I thought the Commission’s path to victory was incredibly narrow because it suffered some big defeats in similar cases against Fiat and Amazon. I thought this would be the same outcome. I’m also stunned because this is the biggest tax case in history: €13bn—which will be more than €14bn when interest is added on—will have to be paid back.”

The case relates to tax deals the Irish authorities struck with Apple in 1991 and 2007 to encourage it to headquarter two European subsidiaries in the country. Other companies were not offered the same favourable terms, leading the European Commission to accuse Ireland of giving Apple a “selective advantage.”

Ireland has long come under scrutiny for allegedly providing a tax haven for US firms. During his last stint in the White House, current presidential hopeful Donald Trump namechecked the country in a speech in which he vowed to bring “trillions of dollars” in tax revenues back to the US.

“For too long our tax code has incentivised companies to leave our country in search of lower tax rates,” he said in 2017. “It happens—many, many companies. They’re going to Ireland. They’re going all over.”

According to Daly, the ECJ decision is “not good for Ireland.” “Ireland has always tried to position itself as a country that provides generous tax rules but rules that are fair,” he says. “This certainly has harmed Ireland Inc.”

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