Apple has been advised that it will not have to pay Ireland 13 billion euros (£ 11.6 billion) in tax arrears after winning an appeal to the country’s second highest court. ‘European Union.
It follows a record decision by the European Commission against the American tech giant in 2016.
The EU Court said it had quashed the decision because the Commission had failed to prove that Apple had broken the competition rules.
It is a blow for the EU which tries to repress the alleged tax evasion.
However, he has the right to appeal to the highest European court, the Court of Justice of the European Communities, within 14 days.
“This case was not about the amount of taxes we pay, but where we have to pay them,” Apple said in a statement. “We are proud to be the largest taxpayer in the world because we know the important role that tax payments play in society. “
- Irish EU court appeals Apple tax decision
The Irish government – which had also appealed the decision – said it had “always been clear” that Apple had received no special treatment.
“The exact amount of Irish tax has been charged … in accordance with normal Irish tax rules. ”
The European Commissioner for Competition, Margrethe Vestager, who carried the case, said that she would “study the judgment and think about the next possible steps”.
In some parts of Ireland, there will be relief that an agreement that encouraged Apple to invest was not canceled after the event.
But the feeling is far from universal. A spokesperson for Sinn Féin said it was a bad day for the Irish taxpayer who would draw negative attention to the country’s international tax reputation.
The case is an example of a larger question of whether multinational corporations pay as much tax as they should. The decision is a setback for those who say they should pay more.
But efforts by governments to agree on new ground rules continue, while some, including Britain, are taking unilateral steps to raise taxes on some of the big tech companies.
The European Commission launched the action after claiming that Ireland had allowed Apple to allocate almost all of its EU revenue to an Irish head office that only existed on paper, thereby avoiding pay tax on EU income.
The commission said it was illegal aid given to Apple by the Irish state.
However, the Irish government has argued that Apple shouldn’t have to pay back the tax arrears, saying its loss was worth it to make the country an attractive home for big business.
Ireland – which has one of the lowest corporate tax rates in the EU – is Apple’s base for Europe, the Middle East and Africa.
In its decision on Wednesday, the Luxembourg Court agreed with this position, saying that there was not enough evidence to show that Apple had received illegal state aid.
The move could be bad news for Ms. Vestager, who spent much of her time in the office campaigning against the tax schemes she deemed anti-competitive.
Last year, it lost a lawsuit against Starbucks, accused of having owed 30 million euros in back taxes in the Netherlands. Decisions regarding Ikea and Nike’s tax agreements in that country are also expected soon.
Jason Collins, partner and tax manager of Pinsent Masons, a law firm, said: “Apple’s victory shows that European courts are not willing to label state aid as tax advantageous, even when they are designed to attract foreign investment – provided the rules are applied consistently.
“It will be a very welcome outcome for the other multinationals who have followed this affair closely. ”
However, he said Brussels was likely to appeal and the EU’s efforts to combat tax evasion would continue.
“We hope that the EU will continue to press in this area,” he said.