Apple won a major court battle over taxes on Wednesday when the European Union’s second-highest court ruled the tech giant doesn’t have to pay $14.9 billion in back taxes to Ireland, striking down an earlier order by the European Commission to do so.
The victory in what has been a years-long fight stems from an investigation launched in 2014 by European regulators. Spearheaded by antitrust commissioner Margrethe Vestager, that resulted in a 2016 decision ordering Apple to pay upward of $14 billion in taxes and interest after the EC ruled Ireland had granted illegal tax benefits to Apple, giving the iPhone-maker selective treatment and competitive advantage.
Apple CEO Tim Cook had previously called the tax penalty “total political crap” and in an open-letter in 2016 said: “At its root, the Commission’s case is not about how much Apple pays in taxes. It is about which government collects the money."
Today the EU’s General Court sided (PDF) with Apple and Ireland in their joint appeal, noting the EC “did not succeed in showing to the requisite legal standard” that Ireland’s tax deal gave an unfair advantage at odds with EU state aid law.
The EC’s earlier decision was over two tax rulings issued to Apple by Ireland about the taxable profit of two Irish subsidiaries between 1991 and 2015. In a statement today, Vestager noted that in 2011 for example, one of Apple’s Irish operations recorded $22 billion in European profits but only about $60 million were considered taxable in the country.
The General Court determined the EC was wrong to declare that Apple was given a “selective economic advantage and, by extension, State Aid” and faulted in its line of reasoning.
There could still be an appeal and in her statement Vestager said: “We will carefully study the judgment and reflect on possible next steps.” She added the EC “will continue to look at aggressive tax planning measures under EU State aid rules” to see if they amount to illegal tax benefits.
“The Commission stands fully behind the objective that all companies should pay their fair share of tax,” Vestager’s stated. “If Member States give certain multinational companies tax advantages not available to their rivals, this harms fair competition in the EU.”
In a statement to Bloomberg, Apple said the firm had paid “more than $100 billion in corporate income taxes around the world in the last decade and tens of billions more in other taxes.”