Apple and Ireland win appeal against €13bn EU tax bill

Judges rule European Commission ‘wrong to declare’ Dublin gave Apple special treatment through low taxes

Apple had been accused of enjoying illegal state aid through tax breaks in Ireland (AFP)

Apple and Ireland have won a court appeal over a €13.1bn (£11.9bn) bill in back taxes that the EU had said the iPhone maker owed.

A European high court on Wednesday ruled in favour of the technology giant in its legal battle with the European Commission, which had alleged the firm had an illegal sweetheart deal with Irish authorities.

Judges in Luxembourg annulled the commission’s 2016 ruling that Apple had benefited from illegal state aid through two Irish tax breaks that artificially reduced its payments for more than two decades to as low as 0.005 per cent in 2014.

The commission was “wrong to declare” Dublin had granted Apple “a selective economic advantage and, by extension, state aid”, the EU’s second-highest court said. The ruling added the commission “did not succeed in showing to the requisite legal standard that there was an advantage”.

Welcoming the decision, Apple said: “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.”

Ireland’s finance ministry said it had “always been clear that there was no special treatment provided” to Apple and the correct amount was “charged in line with normal Irish taxation rules”.

The commission can appeal on points of law only to the European Court of Justice within the next two months.

The €13.1bn is being held in an escrow account, meaning the money cannot be released until there has been a final determination in the European courts over the validity of the decision.

Ireland’s open economy is based on low corporate taxation and other incentives to attract multinationals.

Apple pays significantly below the standard 12.5 per cent imposed on corporations in the country. But the California-based firm said it paid €504m (£456m) tax on profits generated in Ireland between 2003 to 2014 in line with the nation’s tax laws.

Tim Cook, the company’s chief executive, had previously called the EU demand for back taxes “total political crap”.

While taxation remains under the authority of EU member countries, the bloc is seeking to create a level playing field among the 27 nations by weeding out special deals including ultra-low tax rates with multinationals.

The Irish government opposes any effort to force it to change its taxation practices, which have tempted some of the world’s leading financial and technology firms to set up base in Dublin.