In 2016, Apple was ordered to pay 13 billion euros (about $ 15 billion) to Ireland as a refund of unpaid taxes that the EU considered illegal. Apple and Ireland appealed the suit. Now, four years later, the first round of legal battles has come to a conclusion: the EU General Court rejected the decision, which essentially means that Ireland and Apple won.
The EU commission will certainly appeal. Thus, a final decision on a corporate judgment of this scale will take many, many years to be reached.
Apple won't have to pay what the EU demands
As per the 2016 case, the European Union's request was based on the premise that Apple's low tax rate agreement with Ireland was 'selective' and not offered to other companies. As such, this agreement allowed the Cupertino company to have an unfair advantage.
Today's decision points out that the commission has failed to show that Apple received an economic advantage. As we will be reminded, this case is about tax arrears related to a tax rate reduction agreement between Apple and Ireland. Agreement that was negotiated for over twenty years, when Apple was a much smaller company.
So with this first round to give Apple victory, for Ireland it brings political strife. In the midst of an economic recession, critics of the Irish government believe that the country should be wishing for tax gains. Thus, with this fit, the country would receive a strong boost to its revenue.
Tech giants remain in the EU's sights
The tech giant and other big companies in the industry have been widely criticized for using complicated business structures. In this way, complex schemes make it possible to obtain very low tax rates in certain regions. For example, almost all of Apple's European operations are channeled through Ireland. This means that the Cupertino giant pays almost no tax in individual European countries, such as Portugal, for example. Apple's effective worldwide tax rate is around 20%.
There are ongoing conversations between countries and governments on how to redistribute the tax, so that multinational companies like Cupertino's company pay roughly equal proportions in all countries where they operate.