European Court Rules Apple Must Pay €13 Billion in Back Taxes to Ireland

On September 10th, the European Court of Justice issued a final ruling on the European Union's lawsuit against Apple Inc. for tax evasion. The Court ruled that the Irish government had improperly granted tax benefits to Apple, and that Apple should pay 13 billion euros (approximately $14.4 billion) in back taxes to Ireland.

Based in Luxembourg, the European Court of Justice overturned the 2020 ruling of the General Court of the European Union, which had decided that Apple did not have to pay the back taxes. The Court supported the European Commission's original 2016 decision, finding that Apple had engaged in widespread tax evasion through its agreement with the Irish government, necessitating the repayment of 13 billion euros in taxes.

The ruling concluded a multi-year legal battle between Apple and the European Union. In 2016, the European Commission, acting as a regulatory body, determined that Apple had evaded taxes through its agreement with the Irish government, and ordered Apple to repay the 13 billion euros. Both Apple and the Irish government expressed dissatisfaction with this decision and took the case to the General Court of the European Union in 2020.

The General Court had ruled that the European Commission had failed to provide adequate evidence that the Irish government had granted Apple illegal tax benefits, rendering the Commission's decision invalid and relieving Apple of the obligation to repay the taxes. The European Commission, disputing the General Court's conclusions, brought the case to the European Court of Justice, which ultimately sided with the Commission.

In response to the final ruling, an Apple spokesperson stated that the company had not engaged in any special agreements and accused the European Commission of attempting to "retroactively change" tax laws. The Irish Ministry of Finance reiterated that Ireland had not granted any company specific tax benefits and noted that Apple had already deposited the 13 billion euros into an escrow account, indicating that the ruling was of "historical significance" rather than practical impact.

In recent years, the European Commission has frequently invoked the "State aid" clause to crack down on tax evasion by multinational corporations in Europe. In addition to Apple, the European Commission has investigated tax agreements between Fiat Chrysler and the Luxembourg government, Starbucks and the Dutch government, Ikea and the Dutch government, and Nike and the Dutch government. Consequently, Starbucks and Fiat have been ordered to pay between 20 million to 30 million euros in back taxes, while investigations into Ikea and Nike are ongoing.