Apple has suffered a major setback in its long-running tax dispute with the European Union, as the European Court of Justice ruled that Ireland had granted the tech giant “unlawful state aid.”
This landmark decision, which overturns a previous ruling in Apple’s favour, orders Ireland to recover €13 billion from the company, a sum that had been held in escrow. The case, initiated in 2016 by Margrethe Vestager, the EU’s competition commissioner, argued that Apple received illegal state aid through sweetheart tax deals with Ireland. These arrangements allowed Apple to exclude profits made outside the United States from Irish tax, routing them through two Irish subsidiaries.
Experts say the ruling has significant implications for multinational corporations and EU member states, particularly in how they apply transfer pricing to allocate profits between jurisdictions. The decision underscores the EU’s readiness to challenge Big Tech’s tax practices and sends a clear message that preferential tax treatments are no longer tolerated. While Ireland has downplayed the ruling as being of “historical relevance,” it will proceed with releasing the funds from the escrow account.
Vestager hailed the decision as a victory for European citizens and tax justice, reinforcing her commitment to combating harmful tax competition. This judgement coincides with another win for Vestager, as Europe’s top court upheld a €2.4 billion fine against Google for anti-competitive practices, further demonstrating the EU’s resolve to regulate the activities of tech giants.
The recent ruling not only impacts Apple but also sets a precedent for future cases involving tax arrangements of multinational corporations within the EU.
