Ireland has won an appeal against the European Commission's decision that the country gave Apple illegal state aid through advance tax rulings. The EU's General Court upheld the appeal brought by Ireland and Apple and said the Commission had not shown Apple was given an unfair advantage over other businesses.
The initial decision dates back to 2016, when the Commission ordered Apple to pay EUR 13 billion in back taxes to Ireland. The advance tax rulings granted by the Irish government in 1991 and 2007 for Apple's European headquarters in the country helped Apple lower its tax rate on European profits to as little as 0.005 percent in 2014, the Commission found. It considered this to be illegal state aid under EU rules and ordered Ireland to collect the unpaid taxes from Apple for the years 2003-2014.
Apple changed its corporate structure in 2014 so the system no longer applied. The company was still forced to pay the money to Ireland before the appeal was concluded.
Ireland's Department of Finance welcomed the court ruling in an initial comment. The country "has always been clear that there was no special treatment" provided to Apple's two local companies, and the correct amount of Irish tax was charged, in line with normal Irish tax rules, the department said.
The tax rulings covered the companies Apple Sales International (ASI) and Apple Operations Europe (AOE). These were Apple subsidiaries incorporated in Ireland but not tax resident in the country. While these companies hold certain Apple patents, the Commission did not show sufficiently that income generated by Apple in other countries based on the patents could be attributed to the Irish subsidiaries, the court said.
Furthermore, the "incomplete and occasionally inconsistent nature" of the contested tax rulings was not enough to prove they constituted illegal state aid, the court found. Nor was there any evidence to suggest the Irish authorities had selectively applied tax rules in Apple's case, according to the ruling.
The Commission may appeal the court ruling, within two months and 10 days of the decision. European Commissioner for competition Margrethe Vestager said the Commission will study the ruling before deciding on an appeal.
In a statement, she noted that the Commission had been successful in other cases contesting advance tax rulings and the court had previously upheld its right to question the national deals under state aid rules. While the Commission will continue to scrutinize such arrangements, "[s]tate aid enforcement needs to go hand in hand with a change in corporate philosophies and the right legislation to address loopholes and ensure transparency", she said.
