In a week in which some of the world’s richest individuals called on governments to raise taxes for the wealthy, Apple has benefitted from a court ruling that allows it to dodge a €13 billion ($14.8 billion) tax bill.
The European Union's general court has overturned a 2016 ruling that found that the tech giant owed millions of euros in back taxes to Ireland. Four years ago, it ruled that Apple’s Irish subsidiary had been given illegal tax breaks by Dublin, with tax rates so low they constituted "state aid".
However, the EU’s general court has now annulled this decision, citing lack of evidence to show that Apple had received illegal state aid or minimised its tax bill. In its ruling today, the Luxembourg-based court said: “The commission did not succeed in showing to the requisite legal standard that there was an advantage.”
Apple welcomed the ruling, saying in a statement: “This case was not about how much tax we pay, but where we are required to pay it. We're proud to be the largest taxpayer in the world, as we know the important role tax payments play in society.”
The Irish government, which appealed against the 2016 ruling alongside Apple, in an effort to protect its low corporate tax regime, also supported the general court’s decision. A spokesperson for the government said: “Ireland has always been clear that there was no special treatment provided. Ireland appealed the commission decision on the basis that Ireland granted no state aid and the decision today from the court supports that view.”
Apple has had manufacturing bases in Ireland since the 1980s, and currently employs around 6,000 people in Cork. Ireland’s corporate tax rate is 12.5 percent tax – one of the lowest in the EU. The government deemed the loss in Apple's back taxes worth it to maintain the country's reputation as an attractive home for large companies.
However, Apple’s disputed tax bill has drawn criticism from many in Ireland. In March, Sinn Fein leader Mary Lou McDonald said that the €13 billion could be used to help the Irish economy. Commenting on the general court’s ruling today, a Sinn Féin spokesman said that it was a bad day for the Irish taxpayer.
The ruling is also a major blow to the European Commission, which brought Apple’s case to the general court. It has been working to clamp down on tax avoidance by US firms in the European bloc.
Dutch MEP Paul Tang described the ruling as "unfair", saying: "I suspect that many people in Ireland think, ‘Why is there a company that pays 0.05 percent in taxes?' I pay more taxes than Apple, for that matter. Many people pay more taxes."
Tove Maria Ryding, a tax justice coordinator at the European Network on Debt and Development, had stronger words. She told the Guardian: “It shouldn’t take over half a decade to decide what a multinational corporation should pay in tax. This case illustrates that our corporate tax system is a mess and not fit for purpose.”
The European Commission has 14 days to appeal the general court’s decision at Europe's top court, the European court of Justice.