EU Court Backs Apple in Case Over $15B in Back Taxes

A European Union high court on Wednesday ruled in favor of technology giant Apple and Ireland in its dispute with the EU over 13 billion euros ($15 billion) in back taxes.

The Luxembourg-based General Court said that the multinational company does not need to pay the 13 billion euros that the EU Commission called for. The EU Commission had claimed that Apple had an illegal sweetheart tax deal with Irish authorities.

The ruling from the EU’s second-highest court on the 2016 decision can only be appealed on points of law.

The court said that ”the Commission did not succeed in showing to the requisite legal standard that there was an advantage.”

It said in a statement that “the Commission was wrong to declare” that Apple “had been granted a selective economic advantage and, by extension, state aid.”

The European Commission had ordered Apple to pay for gross underpayment of tax on profits across the European bloc from 2003 to 2014. The Commission concluded that Cupertino, California-based Apple used two shell companies incorporated in Ireland to permit Apple to report its Europe-wide profits at effective rates well under 1%.

Even though taxation remains under the authority of its member countries, the EU is seeking to create a level playing field among the 27 nations by making sure special deals including ultra-low tax rates with multinationals, like the one between Ireland and Apple, are weeded out. The Trump administration has said that the EU is unduly targeting U.S. companies.

The ruling comes at a time when tax income for EU nations is especially welcome because of the economic impact of the coronavirus pandemic. At a time when cash-strapped households are suffering, the EU wants to make sure multinationals making profits on the continent pay their fair share, too.

Meanwhile, the EU Commission was to unveil new plans to combat tax fraud only hours after the ruling in Luxembourg.

“In times like these when we are passing multibillion-euro economic stimulus packages, we cannot afford to waste a single cent in tax revenue,” said EU legislator Markus Ferber of the Christian Democrat EPP Group.