Apple isn’t short of cash, but today a European court overturned a previous decision demanding Apple pay $14.5 billion in back taxes.
Back in 2016, the European Commission (EC) announced that its investigation had revealed Apple enjoyed illegal tax benefits through its operations in Ireland. In total, the EC said Apple owed $14.5 billion and demanded payment. Apple chose to fight, stating at the time that, “Both Apple and Ireland plan to appeal the decision and we are confident that it will be overturned by the courts of the European Union.” The fight proved worth it as the decision has now been overturned.
The investigation undertaken by the EC looked at the operations of Apple Sales International (ASI) and Apple Operations Europe (AOE), both of which were incorporated in Ireland, but not tax resident. It was concluded in 2016 that the tax rulings Apple was operating under “constituted State aid unlawfully put into effect by Ireland.”
The ruling today by Europe’s second-highest court, the EU Court of Justice, explained, “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 the purposes of Article 107 TFEU. According to the General Court, the Commission was wrong to declare that ASI and AOE had been granted a selective economic advantage and, by extension, State aid.”
As The Verge reports, both Ireland and Apple are understandably happy about the decision, with Apple stating the case was, “not about how much tax we pay, but where we are required to pay.” Ireland’s Department of Finance also released a statement, saying, “Ireland has always been clear that there was no special treatment provided to [Apple]. The correct amount of Irish tax was charged, taxation in line with normal Irish taxation rules.”
The EC now has a decision to make: accept the result or appeal and move to the Supreme Court. If an appeal is lodged the Supreme Court will have the final say in the matter, but the EC must first decide if the Court of Justice was right and it doesn’t have the required evidence to prove its case conclusively.