In a landmark decision, the European Court of Justice (ECJ) has ordered Apple to pay $14.3 billion in back taxes. The ruling comes after the court sided with the European Commission, declaring that tax breaks extended to Apple by Ireland were illegal. This judgement, announced on Tuesday, is considered the final word on the matter, overturning a previous court decision from 2020 that had favoured the Irish government.
The case centres around tax breaks provided by Ireland to Apple, which have been deemed “unlawful aid.” The ECJ’s ruling requires Ireland to recover the tax breaks granted to Apple, which pertained to profits generated by two of Apple’s Dublin-based units from 1991 to 2014. According to Forbes, the decision has had an immediate impact on Apple’s stock, with shares dropping 1.2% in pre-market trading, just hours after the company unveiled its new iPhone 16 lineup.
Also read: Apple vs the US govt: Overpriced iPhones are a problem among other things
Why Apple has to pay
The saga began in 2016 when the European Commission ordered Ireland to collect approximately $14.5 billion in unpaid taxes from Apple. The Commission’s investigation found that two tax rulings issued by Ireland substantially and artificially reduced Apple’s tax obligations.
Specifically, the rulings allowed Apple’s effective tax rate in Ireland to fall from 1% in 2003 to a mere 0.005% in 2014. This ruling only applied up to 2014, as Apple restructured its operations in Ireland starting in 2015.
Also read: Apple under radar! How could the US govt lawsuit affect the tech giant?
Both Apple and the Irish government challenged the Commission’s order, leading to a 2020 ruling by the EU General Court that sided with them. However, the ECJ’s decision on Tuesday overturned this ruling.
Commenting on the ruling, EU’s antitrust chief Margrethe Vestager tweeted: “Today is a huge win for European citizens and tax justice. In its final judgement, ECJ confirms the European Commission’s 2016 decision: Ireland granted illegal aid to Apple . Ireland now has to release up to 13 billion euros of unpaid taxes.”
Follow Us
Ayushi Jain
Tech news writer by day, BGMI player by night. Combining my passion for tech and gaming to bring you the latest in both worlds. View Full Profile
