EU's top court dismisses Apple's final appeal against order to pay Ireland 13B euros in back taxes

BRUSSELS -- Apple on Tuesday lost its last bid to avoid paying 13 billion euros ($14.34 billion) in back taxes to Ireland, in a finale to a dispute with the European Union that centered on sweetheart deals that Dublin was offering to attract multinational businesses with minimal taxes across the 27-nation bloc. The final decision by the EU’s top court was quickly hailed as a landmark victory over corporate greed.

“Today is a big win for European citizens and for tax justice,” said European antitrust Commissioner Margrethe Vestager, whose 8-year fight to impose the measure on the global tech behemoth brought her to tears when she finally heard she had won.

The ruling “confirms the European Commission’s 2016 decision: Ireland granted Apple unlawful aid which Ireland is required to recover," the European Court of Justice said in a press release summarizing its decision.

The case drew outrage from Apple when it was opened in 2016, with CEO Tim Cook calling it “total political crap.” Then-U.S. President Donald Trump slammed Vestager, who spearheaded the campaign to root out special tax deals and crack down on big U.S. tech companies, as the “tax lady” who “really hates the U.S.”

Vestager had accused Apple of striking an illegal tax deal with Irish authorities so that it could pay extremely low rates. The European Union’s General Court disagreed with that in its 2020 ruling, which has now been overturned.

It did not leave Apple much happier on Tuesday. "We are disappointed with today’s decision as previously the General Court reviewed the facts and categorically annulled this case,” Apple said in a statement. “There has never been a special deal," the company said.

Vestager said she was stunned by the last-gasp legal turnaround. “I had prepared for a stiff upper lip, facing a possible defeat. But, you know, it was a win that made me cry. Because it is very important to show European taxpayers that once in a while, tax justice can be done.”

Eight years ago, the ruling that found Ireland had granted a sweetheart deal that let Apple pay almost no taxes across the European bloc for 11 years dramatically escalated the fight over whether America’s biggest corporations are paying their fair share around the world.

The EU head office said that Ireland granted such lavish tax breaks to Apple that the company’s effective corporate tax rate on its European profits dropped from 1% in 2003 to a mere 0.005% in 2014. Apple has disputed such figures.

Vestager said that through the deals with the Irish government the company paid next to nothing in taxes while instead “Apple should have paid taxes worth 13 billion euros on all related profits in Ireland.”

“This means that the recovered taxes, which have been in an escrow account for quite some years in Ireland during the ongoing court proceedings, now must be released to the Irish State,” she said.

The government in Dublin said that “the Irish position has always been that Ireland does not give preferential tax treatment to any companies or taxpayers,” before adding that "Ireland will of course respect the findings of the Court regarding the tax due in this case."

Both Vestager and the Irish government noted that the country's corporate tax residence rules have since been changed so the provisions that allowed Dublin to offer Apple the deal no longer exist.

The ruling that has now been upheld was one of a number of aggressive moves by European officials to hold U.S. businesses, particularly big tech companies, accountable under the EU’s rules on taxation and fair competition.

The commission has also previously targeted Amazon, Starbucks and Fiat with tax rulings, which were later overturned on appeal.

The latest decision means corporations should still be on watch, said Varg Folkman, a policy analyst with European Policy Centre, a think tank.

“This was the big one," Folkman said. "It was the largest fine. By a long while. So the commission winning this is really saying that this is something that can happen to them as well.”

With one EU member offering unfair tax concessions to attract multinationals that others could not or would not match, it not only skewed multinational investments in the bloc but also gave global corporations massive sway to keep their taxes to a fraction of their revenue.

“Member states cannot continue the race to the bottom corporate tax policies that undermine European unity and social cohesion. Big tech companies like Apple should not be able to exploit their market power and avoid paying their fair share to society," said EU MEP Kira Peter-Hansen.

And Tuesday's ruling showed that authorities still have a bite.

“It shows taxpayers that there can be fairness," said Vestager. "And it has shown big companies that they are also not above the law when it comes to taxation.”

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Kelvin Chan contributed to this report from London.