Apple Wins Fight Against European Commission On $15 Billion Tax Order

On Wednesday, the European Court of Justice has rejected an EU decision involving Apple subsidiaries in Ireland to pay $15 billion (13 billion euros) in back taxes. Four years ago, the Commission said that Apple benefits from the illegal state. For over two decades, these two Irish tax rulings were said to artificially reduce its tax burden, meaning that Ireland has failed to collect €13 billion roughly.

Referring to EU competition rules, judges in the commission said, “The General Court annuls the contested decision because the Commission did not succeed in showing to the requisite legal standard that there was an advantage for Article 107(1) TFEU1 [Treaty of the Functioning of the European Union].

In 2017, according to the commission said that Apple received illegal aid from the state and should have paid more taxes. However, the General Court says that the argument fails to represent any legal basis. The court wrote in a statement “According to the General Court, the Commission was wrong to declare that [Apple Sales International] and [Apple Operations Europe] had been granted a selective economic advantage and, by extension, State aid.”

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In Europe, Apple operated with its two main subsidiaries between the period of 2003 and 2014, called Apple Operations Europe and Apple Sales International. Since the times the allegations began, the company’s arguments have been straightforward. In 2016, Apple CEO Tim Cook said “The opinion issued on August 30th alleges that Ireland gave Apple a special deal on our taxes. This claim has no basis in fact or law. We never asked for, nor did we receive, any special deals.

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In 2018, the company has already started allocating money in case they had to pay back €13 billion. The saved money is currently sitting in an escrow account. However, the money might remain in the escrow account as the defeated side can again appeal the decision on points of law.