Apple must pay $14.4 billion in back taxes to the Irish government after the European Union’s top court rejected the iPhone maker’s appeal of a landmark 2016 ruling — which CEO Tim Cook denounced at the time as “political bullshit total”.
The European Court of Justice in Luxembourg on Tuesday upheld the European Commission’s ruling that Ireland violated state aid law by giving Apple an unfair advantage.
In 2016, the European Commission, which is the executive arm of the EU, determined that Apple received special tax deals from Ireland after the government allowed the company to set up its “head office” in Cork – even though the office existed only on paper and it had no real employees or operations.
The deal with Ireland allowed Apple to pay an effective tax rate of up to 0.005% on its European profits in some years.
In 2016, the commission demanded that Ireland recover unpaid taxes plus interest from 2003 to 2014.
Both Ireland and Apple appealed the decision. An appeals court sided with both sides and overturned the original decision, saying the commission failed to meet the legal threshold to prove Ireland sought to give Apple special treatment.
The high court, however, overturned the decision on Tuesday.
“Today is a major victory for European citizens and for tax justice,” said Margrethe Vestager, the EU’s top antitrust regulator.
Apple shares fell less than 1% after the opening bell.
“We are disappointed with today’s decision after the Supreme Court previously reviewed the facts and categorically overruled this case,” an Apple spokesperson said.
The company said it would record a one-time income tax charge of up to $10 billion in the fourth quarter ending Sept. 28 as a result of the decision.
“This case is never about how much tax we pay, but to which government we should pay it,” a company representative told The Wall Street Journal.
“We always pay all the taxes we owe wherever we operate and there has never been a special arrangement.”
Ireland has long stood out among its EU partners as one of the continent’s most business-friendly countries thanks to its historically low corporate tax rate.
Google, Meta, Microsoft, Amazon, Intel and LinkedIn are among the technology firms that have set up bases of operations in Ireland due to its weak tax climate.
In light of the decision, Irish officials said they would soon begin transferring the $14.4 billion in funds currently held in an escrow account to government coffers.
While Ireland denied granting special tax privileges to any companies, the government said it would respect the court’s ruling.
The EU’s top court also upheld a $2.67 billion fine imposed on Google by antitrust officials who accused the tech giant of anti-competitive practices related to the comparison shopping service’s prices in search results.
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