The Irish tax authorities should not reclaim the €13 billion tax breaks that Apple enjoys in Ireland. That is the view of the European Court of Justice. In the View of the European Commission, the state aid was unjustified and the American tech giant had to pay the amount, but the Court of First Instance is now overturning this decision: among other things, the Commission has not sufficiently demonstrated that the untaxed profits were actually made in Ireland.
In 2016, the European Commission ordered the Irish tax authorities to draw sloppy €13 billion plus interest on unpaid taxes from US tech giant Apple, having launched an investigation two years earlier into the tax arrangements or tax rulings that Irish tax authorities had with Irish companies Apple Sales International and Apple Operations Europe. In the Commission’s view, this was a form of illegal state aid, as Apple had to pay less tax for years than other companies based in Ireland.
Ireland and Apple then referred the matter to the European Court of Justice to overturn the European Commission’s decision: according to Apple’s lawyers, profits had to be taxed in the United States, where the company claimed to be adding value. The case against Apple and Ireland is one of the most important decisions taken by then-EU Commissioner Margrethe Vestager in her crusade against the omnipotence of EU multinationals. For the Commission and Vestager, who has since been promoted to Vice-President, there is a lot of political capital at stake.
The European Court of Justice now agrees with Apple and Ireland. The Commission err on the other that the Irish Branches of Apple enjoyed a selective economic advantage and thus also State aid, the judgment states. The fact that the Irish tax authorities did not ascribe all the profits that Apple made outside the Americas to the Irish branches of the company does not mean that the company has received unjustified advantages: the Commission has not sufficiently demonstrated that all these profits were in fact the result of the activities of those Irish branches and not from strategic decisions taken and implemented outside Ireland. , the court rules.
In addition, the Commission has not established sufficient serious errors in the tax rulings between Apple and the Irish tax authorities. ‘Although the General Court deplores the incomplete and sometimes inconsistent nature of the contested tax rulings, the errors found by the Commission alone are not sufficient to demonstrate that an undue advantage has occurred’, it said. Finally, the European Commission has not demonstrated that the Irish Apple branches received a selective advantage from the Irish tax authorities and were therefore favoured by other companies.
Dublin was already satisfied. “We welcome the decision of the European Court of Justice,” the Irish finance minister said in a press release. “There has never been any special treatment” for Apple. The company itself is also satisfied.