On Tuesday, the European Court of Justice (ECJ) delivered a significant blow to Apple, ruling that the tech giant must pay €13 billion (around $14 billion) to Ireland. This ruling is linked to Ireland granting Apple unlawful tax advantages.
What Is the Case About?
The case dates back to 2016 when the European Commission, the executive arm of the European Union (EU), accused Ireland of providing illegal tax benefits to Apple for nearly two decades. As a result, the Commission ordered Apple to pay €13 billion to Ireland. Apple’s European headquarters is located in Dublin, Ireland.
ECJ Reverses Lower Court’s Decision
The ECJ overturned a lower court ruling that had previously favored Apple, stating that the European Commission had not made errors in its assessment. The lower court had argued that the Commission’s analysis was flawed, but the ECJ rejected this view.
Following the European Commission’s 2016 decision, the €13 billion was placed in an escrow account until a final ruling could be reached. At the time, Apple CEO Tim Cook called the EU’s decision politically motivated, and the U.S. government also backed Apple in the case.
A Major Victory for EU Antitrust Chief Margrethe Vestager
According to Bloomberg, the ruling is a significant win for EU Antitrust Chief Margrethe Vestager, whose two-term tenure is coming to an end. Vestager has earned a reputation for taking tough action against major corporations. During her time in office, Google was fined €8 billion in three separate cases.
This latest decision is seen as a strong move against the trend of EU member countries offering special tax deals to large companies.
With Apple now required to pay the massive sum, this ruling sends a clear message to other corporations benefiting from such arrangements within the EU.
Update
Apple expects a one-time income tax charge of up to $10 billion in Q4 2024, following the European Court of Justice’s decision to uphold the EU’s 2016 ruling regarding state aid from Ireland. This will affect Apple’s effective tax rate for the quarter, linked to tax rulings between 1991 and 2014. The exact figures will be confirmed when Apple releases its Q4 results.
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