In a significant ruling, the European Union’s Court of Justice has upheld a 2016 decision, declaring that Apple must pay a €13 billion ($14.4 billion) tax bill in Ireland—a verdict that strengthens the EU’s ongoing crackdown on preferential tax deals extended to major multinational corporations.
The court’s ruling on Tuesday overturned a lower court’s favorable decision for Apple, which had previously argued that the European Commission’s assessment was flawed. The ruling is a major victory for EU antitrust chief Margrethe Vestager, whose tenure in Brussels is nearing its end after two terms at the helm of the Commission’s efforts to ensure fair competition and tax compliance within the bloc.
The controversy stems from Apple’s tax arrangements in Ireland, where it was accused of benefiting from illegal state aid. In 2016, Vestager concluded that Ireland had allowed the tech giant to avoid paying its fair share of taxes, granting it special tax breaks that resulted in Apple paying far lower taxes than other companies operating in the country. The European Commission ordered Ireland to recover the €13 billion in unpaid taxes, a sum that, if reclaimed, would amount to the equivalent of approximately two quarters of Apple’s global Mac sales.
At the time, the move sparked fierce criticism, especially from the United States, with U.S. Treasury officials arguing that the EU was overstepping its bounds and threatening global tax reform efforts. Apple CEO Tim Cook was notably vocal in his opposition, calling the ruling “political” and accusing the EU of targeting U.S. companies unfairly. Even then-President Donald Trump joined in, claiming that Vestager’s actions were rooted in an anti-American sentiment.
Despite the backlash, the ruling sends a strong message in favor of tax fairness, aligning with the EU’s commitment to combatting anti-competitive practices and ensuring that corporations pay taxes proportionate to their activities within the bloc. Vestager, who has spearheaded similar investigations into companies like Amazon and Fiat, has long argued that preferential tax arrangements such as those given to Apple are illegal under EU state aid rules.
The case centered around two tax deals between Apple and Ireland, one made in 1991 and another in 2007. These agreements allowed Apple to assign profits from its European operations to a so-called “head office” in Ireland, which was, in reality, a paper entity with no physical presence. As a result, Apple was able to dramatically reduce its tax liability, a situation deemed unfair by the EU’s antitrust watchdog.
This latest legal battle comes after a previous win for Apple in 2020, where the General Court ruled in favor of the company, dismissing the EU’s claims. However, Vestager’s team appealed, and the EU’s top court has now ruled in their favor.
Though the legal fight may have an impact on the European operations of Apple and other tech giants, its long duration means that the final outcome is unlikely to alter Ireland’s status as a major hub for multinational corporations. The country has long attracted tech companies with its low corporate tax rate, particularly in the 1980s and early 1990s, and Apple was one of the first major U.S. tech firms to establish a presence in Ireland. Today, Apple employs around 6,000 people in the country, with its European headquarters located outside Cork.
While the EU has steadily been closing loopholes that allowed companies like Apple to benefit from such deals, Ireland in 2021 signed on to the OECD’s global tax reforms, which include a minimum tax rate of 15% for multinational corporations—a significant step towards international tax fairness.
Despite this victory, the legal battle may still be far from over. Apple has stated its disappointment with the ruling and continues to maintain that its tax arrangements were fully compliant with Irish law. However, the case reinforces the EU’s stance on tackling corporate tax avoidance, particularly in light of rising public scrutiny over the fairness of tax systems for large multinational corporations.
