Apple's EU tax dispute

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European investigation into Apple's tax deal with Ireland
Type of project	State aid investigation under EU rules
Owner	European Commission
Key people	Margrethe Vestager, Tim Cook, Helena Malikova, Michael Noonan
Established	29 August 2016 (2016-08-29)
Disestablished	10 September 2024 (2024-09-10)
Status	European Court of Justice confirmed European Commission's ruling

Ireland and Others v European Commission
Court of First Instance
Decided 15 July 2020
Case	T‑778/16, T‑892/16
ECLI	ECLI:EU:T:2020:338
Chamber	Seventh
Language of proceedings	English
Court composition
Judge-Rapporteur Vesna Tomljenović
President Marc van der Woude
Judges Anna Marcoulli Jan M. Passer Alexander Kornezov
Keywords
State aid — Aid implemented by Ireland — Decision declaring the aid incompatible with the internal market and unlawful and ordering recovery of the aid — Advance tax decisions (tax rulings) — Selective tax advantages — Arm's length principle

European Commission v Ireland and Apple Sales International
European Court of Justice
Decided 10 September 2024
Case	C-465/20 P
ECLI	ECLI:EU:C:2024:724
Chamber	Grand
Language of proceedings	English
Court composition
Judge-Rapporteur Nils Wahl
President Koen Lenaerts
Judges Lars Bay Larsen (Vice-President) Küllike Jürimäe Constantinos Lycourgos Eugene Regan Thomas von Danwitz Zoltán Csehi Octavia Spineanu-Matei Marko Ilešič Jean-Claude Bonichot Irmantas Jarukaitis Andreas Kumin Niilo Jääskinen Miroslav Gavalec
Advocate General Giovanni Pitruzzella
Keywords
Appeal – State aid – Article 107(1) TFEU – Tax rulings issued by a Member State – Selective tax advantages – Allocation of profits generated by intellectual property licences to branches of non-resident companies – Arm’s length principle

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Apple's EU tax dispute refers to an investigation by the European Commission into tax arrangements between Apple and Ireland, which allowed the company to pay close to zero corporate tax over 10 years.^[1]

On 10 September 2024 the ECJ overturned the General Court ruling, restoring the European Commission decision. As a consequence Apple is ordered to pay €13 billion, in unpaid Irish taxes.^[2][3]

On 29 August 2016, after a two-year investigation, Margrethe Vestager of the European Commission announced: "Ireland granted illegal tax benefits to Apple".^[4] The Commission ordered Apple to pay €13 billion, plus interest, in unpaid Irish taxes from 2004–14 to the Irish state.^[5] It was the largest corporate tax fine (in fact a recovery order, technically not a fine) in history.^[6] On 7 September 2016, the Irish State secured a majority in Dáil Éireann to reject payment of the back-taxes,^[7] which including penalties could reach €20 billion,^[8] or 10% of 2014 Irish GDP.^[a] In November 2016, the Irish government formally appealed the ruling, claiming there was no violation of Irish tax law,^[9][10] and that the commission's action was "an intrusion into Irish sovereignty", as national tax policy is excluded from EU treaties.^[11] In November 2016, Apple CEO Tim Cook announced Apple would appeal,^[12] and in September 2018, Apple lodged €13 billion to an escrow account, pending appeal.^[13] In July 2020, the European General Court struck down EU tax decision as illegal, ruling in favor of Apple.

The issue was Apple's variation of the Double Irish tax system, which, from 2004 to 2014, Apple used to shield €110.8 billion^[8][14] of non–US profits from tax.^[15]

On 9 January 2015, Apple informed the Commission^[b] that it closed its hybrid–Double Irish, base erosion and profit shifting (BEPS) tool.^[16] In Q1 2015, Apple restructured into a new Irish BEPS tool called the Capital Allowances for Intangible Assets (CAIA) tool,^[14][17] also called the Green Jersey. Apple's Q1 2015 restructuring required a 12 July 2016 restatement of Irish 2015 GDP, which increased it by 26.3 per cent (later revised to 34.4 per cent); the restatement was called "leprechaun economics", and led to new EU inquiries in 2017,^[18][19] and accusations in June 2018, that Ireland was the world's largest tax haven.^[20]

Ireland's rejection of the EU Commission's "windfall" in back-taxes surprised some.^[21]

On 15 July 2020, the European General Court ruled that the Commission "did not succeed in showing to the requisite legal standard" that Apple had received tax advantages from Ireland, and ruled in favour of Apple.^[22]

The European Commission appealed the decision of the lower court before the European Court of Justice, the supreme court in matters of EU law.

In November 2023, the advocate general Giovanni Pitruzzella in his role of top adviser to the European Court of Justice, recommended that the European Court of Justice annuls the decision of the lower European General Court. This is because the lower court did not correctly assess "the substance and consequences of certain methodological errors that, according to the Commission decision, vitiated the tax rulings", according to Pitruzzella. The European Court of Justice's final judgement is expected in 2024, the court follows the recommendation of its advocate general around four times out of five.^[23]

On 10 September 2024 the European Court of Justice set aside the judgment of the lower General Court, which previously overturned the Commission’s decision, by reasoning that it contained legal errors. The Court of Justice stated: "[ECJ] gives final judgment in the matter and confirms the European Commission’s 2016 decision: Ireland granted Apple unlawful aid which Ireland is required to recover".^[3] The European Commission found that corporate tax rates as low as 0.005% paid by the tech giant represented an unlawful subsidy. Specifically because other companies were not permitted to obtain the same tax arrangements. As a consequence Apple must pay €13 billion, excluding interest, to the Irish Treasury.^[2][3]

Apple expressed disappointment with the court ruling, adding "The European Commission is trying to retroactively change the rules […]".^[2]

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