Sarah Travers
In an unfolding legal drama that has captivated observers across the European Union, Apple’s prolonged battle over a staggering €13 billion ($14 billion) tax demand has encountered a significant hurdle. This development came as an influential adviser to the European Court of Justice (ECJ), Europe’s highest court, pinpointed legal oversights in a prior ruling that had favored the tech giant. The case, which has been a centerpiece in the EU’s rigorous stance against perceived unfair state aid, signals a crucial turning point in the bloc’s dealings with multinational corporations.
The backstory of this legal tussle is rooted in the EU’s aggressive measures against what it deems improper tax advantages extended to multinationals through preferential deals with member states. It was in 2016 when the European Commission, the executive arm of the EU, concluded that Apple had reaped the benefits of two Irish tax rulings. These rulings allegedly allowed Apple to slash its tax bill to an almost negligible 0.005% in 2014, a figure that has since become a symbol of corporate tax avoidance debates.
Apple’s countermove saw it successfully challenge the Commission’s 2016 ruling, with the EU’s General Court upholding Apple’s appeal in 2020. The General Court maintained that the Commission failed to demonstrate that Apple had received an unfair economic advantage.
However, Advocate General Giovanni Pitruzzella has now cast doubt on the General Court’s findings, suggesting that the lower tribunal re-evaluate the case after identifying a series of legal misjudgments. Although Pitruzzella’s opinion is not binding, the ECJ has historically aligned with the Advocate General’s recommendations in the majority of cases.
This twist in the saga comes as the ECJ prepares to deliver its verdict in the upcoming months, a decision that will be closely monitored by policymakers and corporations alike. The implications of this case extend beyond the borders of Ireland and the halls of Apple’s Cupertino headquarters, as it could redefine the landscape of corporate taxation within the EU.
Ireland, for its part, continues to stand firm on its stance that no state aid was provided to Apple and that the tech behemoth has settled its tax dues in full. In compliance with the initial tax order, Apple has deposited the contested amount into an escrow account, a move that underscores the company’s readiness to safeguard its interests while abiding by legal protocols.
As the case unfolds, the ECJ’s impending decision could potentially seal the fate of Apple’s tax dealings in the EU. It also poses a critical test for EU antitrust chief Margrethe Vestager, who has seen mixed results in her campaign against what she perceives as tax avoidance strategies by multinationals. While she has experienced setbacks with companies like Stellantis, Amazon, and Starbucks, her efforts have led to the dismantling of certain tax arrangements, most notably a €700 million Belgian tax scheme involving 55 multinationals.
As the countdown to the ECJ’s ruling begins, the outcome is set to have far-reaching consequences for corporate Europe and the governance of multinational entities operating within the EU’s jurisdiction.
