Apple lose €13bn sweetheart tax deal case in Ireland

US tech giant Apple has lost a €13 billion case in the European Union's highest court regarding the low tax bills it paid for years in Ireland, a surprise victory for Brussels in a campaign against sweetheart deals struck with multinationals.

The judgment, released Tuesday (10 September) by the EU Court of Justice, backs the European Commission, which said the corporate tax rates as low as 0.005% paid by the tech giant represented an unlawful subsidy, striking down a previous ruling from the lower-tier General Court.

"Ireland granted Apple unlawful aid which Ireland is required to recover", the Court of Justice said in a statement, giving a "final judgment" in the matter.

It's one of a pair of victories today in Brussels' battle against big tech, as Google lost a separate appeal against a €2.4bn EU fine for favouring its own services — bookending the career of Margrethe Vestager, whose double term as EU antitrust chief ends in a couple of months.

The Commission's victory means Apple must pay as much as €13bn — or potentially more, with interest and costs — to the Irish Treasury.

The Commission's initial finding, now confirmed, came after the LuxLeaks revelations of tax rulings which implicated Jean-Claude Juncker, the former Luxembourg leader who was at the time president of the EU executive. 

Vestager's action against big — and largely American — multinationals such as Starbucks, Fiat Chrysler and Amazon saw her badged by then-President Donald Trump as the EU's "tax lady" who "really hates the USA". 

The case represented an unusual, and controversial, foray by Brussels into tax policy — which is normally set by national capitals, with the EU only intervening if tax breaks distort the bloc's internal market. 

The legal case hinged on how the iPhone maker treated intellectual property income in its books — and whether the Commission was right to say those corporate profits should have been allocated to its European base in Ireland.

The EU's General Court found against the Commission in 2020, but, in an opinion prepared for the Court of Justice last November, Advocate General Giovanni Pitruzzella questioned the legal reasoning of the lower-tier tribunal.

In financial terms, it represents the largest case of the EU's tax campaign, which otherwise hasn't found a huge success in the courts.

The Commission lost legal challenges involving McDonald's, Starbucks and Engie, though in a recent interview with Euronews' Radio Schumann podcast, Vestager argued her crusade had nonetheless led to a series of national and international tax reforms.

Despite the billions it stood to gain, the Irish government opposed the Commission's case; the country has become the European hub for a number of US tech companies.

Michael McGrath previously defended the company as Ireland's finance minister — and is now himself due to move to Brussels to be European Commissioner, with his portfolio set to be announced by President Ursula von der Leyen tomorrow. 

In a statement, Apple said it was "disappointed" with the decision.

"We always pay all the taxes we owe wherever we operate and there has never been a special deal," a company spokesperson, adding that it is one of the largest taxpayers in the world.

"The European Commission is trying to retroactively change the rules and ignore that, as required by international tax law, our income was already subject to taxes in the US," added the company, which argues it has already paid $20 bn (€18bn) in US taxes on the same profits.

But the ruling has already been hailed by tax activists who have long called for the closing of what they see as corporate tax loopholes.

“This ruling exposes EU tax havens’ love affair with multinationals," said Chiara Putaturo, EU tax expert for the charity Oxfam, said in a statement. "It delivers long-overdue justice after over a decade of Ireland standing by and allowing Apple to dodge taxes."

The Commission and Irish ministry of finance did not immediately respond to a request for comment, though Vestager is due to speak to reporters later.