EU court rules in favour of Apple and Ireland in longstanding tax case

15 Jul 2020330 Views

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An EU court has ruled that Apple does not have to pay Ireland more than €14bn in unpaid taxes, with the Government welcoming the news.

After much anticipation, the General Court of the EU has announced that it will annul the decision calling for Apple to pay €14.2bn in alleged unpaid taxes covering an 11-year period between 2003 and 2014, including interest.

The court said that it came to this decision because the European Commission “did not succeed in showing to the requisite legal standard that there was an advantage” gained by Apple’s operations receiving the equivalent of State aid or better treatment than other companies.

“Although the General Court regrets the incomplete and occasionally inconsistent nature of the contested tax rulings, the defects identified by the commission are not, in themselves, sufficient to prove the existence of an advantage,” it said.

It’s expected that the European Commission will now appeal the judgement to the higher European court and will have two months to do so.

Government welcomes the decision

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In a statement, the Department of Finance has welcomed today’s judgement.

“Ireland has always been clear that there was no special treatment provided to the two Apple companies – Apple Sales International and Apple Operations Europe,” it said.

“The correct amount of Irish tax was charged taxation in line with normal Irish taxation rules. Ireland appealed the commission decision on the basis that Ireland granted no State aid and the decision today from the Court supports that view.”

In 2016, the European Commission directed Ireland to recover €13bn in unpaid taxes from Apple, plus €1.2bn in interest. The commission claimed in its case that two rulings in 1991 and 2007 issued by Revenue to Apple had “artificially lowered” the amount of tax that the tech giant would have to pay in Ireland, alleging this amounted to State aid.

This resulted in Apple having to pay a corporate tax rate of 1pc on its European profits in 2003, which decreased to 0.005pc by 2014.

Last September when Apple and Ireland appealed the European Commission’s 2016 ruling, lawyers representing Ireland said that the case was “fundamentally flawed”. Meanwhile, Apple’s legal team argued that its products are all developed and engineered in the US, meaning that attempts to tie profits from elsewhere in Europe to its Irish headquarters “defies reality and common sense”.

Colm Gorey is a senior journalist with Siliconrepublic.com

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