Apple has been ordered to pay €13bn (£11bn; $14bn) in unpaid taxes to Ireland by the European Court of Justice (ECJ). The ruling marks the culmination of a long legal battle after the European Commission accused Ireland of granting Apple illegal tax advantages eight years ago. Despite this, the Irish government has consistently opposed the need for Apple to pay the tax.
The ECJ stated that its decision is final, declaring that “Ireland granted Apple unlawful aid which Ireland is required to recover.” In response, Apple expressed disappointment, accusing the European Commission of “trying to retroactively change the rules.”
In a related development, a separate ECJ ruling on Tuesday concluded a long-running case against Google, which was fined €2.4bn (£2bn) for market dominance abuse.
A Long Legal Battle
The ruling on Apple upholds the European Commission’s decision from 2016 after a prolonged back-and-forth legal process. The case concerned tax arrangements between Apple and Ireland between 1991 and 2014, during which profits generated by two Apple subsidiaries in Ireland were taxed under conditions deemed illegal, as other companies were not granted the same benefits.
The original ruling came as part of the European Commission’s efforts to clamp down on multinational corporations exploiting creative financial arrangements to lower their tax bills. However, the decision was overturned by a lower court in 2020 following an appeal by Ireland. The higher court has now reversed that verdict, citing legal errors in the lower court’s decision.
Apple issued a statement, saying, “This case has never been about how much tax we pay, but which government we are required to pay it to. We always pay all the taxes we owe wherever we operate, and there has never been a special deal. The European Commission is trying to retroactively change the rules and ignore that, as required by international tax law, our income was already subject to taxes in the US. We are disappointed with today’s decision as previously the General Court reviewed the facts and categorically annulled this case.”
The ruling comes just a day after Apple unveiled its new iPhone 16 range.
Ireland’s Opposition to the Ruling
Despite the ECJ‘s decision, Ireland has spent years resisting the recovery of taxes from Apple. The Irish government has argued that Apple should not be forced to pay back taxes, viewing its arrangement with the tech giant as crucial for making Ireland an attractive hub for multinational corporations.
Ireland, which boasts one of the lowest corporate tax rates in the EU, serves as Apple‘s base for operations across Europe, the Middle East, and Africa. While corporate tax rates are set nationally, the European Union has powers to regulate state aid, and in this case, it argued that Ireland’s low tax rates for Apple amounted to an unfair subsidy.
The ECJ‘s ruling represents a significant victory for the European Commission in its efforts to prevent large companies from bending tax rules.
A Tough Day for Tech Giants
On the same day, Google was ordered to pay a €2.4bn fine for abusing the market dominance of its shopping comparison service. The European Commission originally levied the fine in 2017, which Google had been appealing.
In response to the ruling, Google expressed disappointment, noting that it had already made changes in 2017 to comply with the Commission’s decision. At the time, it was the largest fine ever imposed by the European Commission, until it issued a bigger penalty of €4.3bn a year later, alleging that Google used its Android software to unfairly promote its own apps.