Apple escaped a record Irish tax bill of 13 billion euro ($14.9 billion) today after a lower European Union court in Luxembourg ruled in favor of the multi-national tech giant. Bloomberg says that the ruling can still be appealed by the European Commission. However, the judges might have put the kibosh on any such plans by issuing a rebuke of the EC by pointing out that their case failed to meet the "the requisite legal standard" in an attempt to show that Ireland's tax deal was against the law because it gave Apple an unfair advantage.
Apple dodges a $14.9 billion bullet-for now
Back in August 2016, the EC came to the conclusion that Apple had managed to avoid paying income taxes on most of the profits it made in Ireland from 1991 through 2015. At the time, Europe's antitrust regulator ordered Ireland to demand €13bn in back taxes after calling Ireland's tax-scheme with the company illegal. Apple CEO Tim Cook called the original ruling "political crap." Cook's comment mirrors a statement made by Dan Neidle, a tax lawyer with Clifford Chance. Neidle said that "The commission’s intent seemed to be a political one: to punish Apple for its overall tax planning, rather than to reach a result that accorded with the legal or economic position. The court has, quite rightly, followed the law and not any wider political objectives."
European Union Competition Commissioner Margrethe Vestager was behind the push to get Apple to pay the back taxes. Over the last five years she has tried to reverse tax deals that some EU countries bestowed on large global firms like Apple and Amazon. Vestager said that the EU will study the court's judgment before deciding what its next step will be. The commissioner said in a statement, "If member states give certain multinational companies tax advantages not available to their rivals, this harms fair competition." She added that the EU "will continue to look at aggressive tax planning measures under EU state aid rules."
The Irish Finance Ministry said that it has always been clear that the two Apple units in the case never received any special treatment. Besides Apple, obviously cleared of having to pay the back taxes for now, the ruling also represents a victory for Ireland in a strange way. Voters in the country couldn't understand why it wouldn't try to collect as much money as possible from one of the wealthiest companies in the world. Apple is closing in on the valuation of Saudi Arabia's state-run oil company. Should Apple top the market capitalization of Saudi Aramco, it would become the most valuable firm in the world. Apple is current worth $1.69 trillion.
Sophie in ’t Veld, a Dutch member of the EU Parliament’s Liberal group, said that she doesn't understand why the ruling should be considered a victory for Ireland, especially since taxpayers will now have to pay the amount that Apple won't have to shell out. "Vestager has made a very valiant effort to use the tools that were at her disposal but we all knew from the start that those tools were not meant for the purpose." She said the decision will be welcomed by Ireland, but "I cannot see how you can be happy that you let a tech giant off the hook when we’re talking about paying 13 billion euros -- it will have to be coughed up by taxpayers now."
Apple argued that the profits targeted by the EU should be taxed in the U.S. and that the EU "retroactively changed the rules" to to determine what Apple owed it in back taxes. In other words, the tech giant said that the case "was not about how much tax we pay, but where we are required to pay it." Apple notes that it "has paid more than $100 billion in corporate income taxes around the world in the last decade and tens of billions more in other taxes."