Apple’s $14.9 billion tax bill overturned by EU court

The ruling was delivered this morning.

What you need to know

• The General Court of the European Union has delivered its judgment in the case of Apple and Ireland.
• The court has annulled the previous ruling.
• The court said the Commission did not prove that the arrangement was a selective economic advantage.

The General Court of the European Union has overturned a ruling stating that Apple should pay nearly $15 billion in tax to the Irish Government.

#EUGeneralCourt annuls the decision taken by the @EU_Commission regarding the Irish #TaxRulings in favour of @Apple #Apple #EUCommission #StateAid pic.twitter.com/KoF6r1n82S

— EU Court of Justice (@EUCourtPress) July 15, 2020

Both Apple and Ireland appealed a ruling stating that Apple owed the country nearly $15 billion in tax payments and that arrangements between the two countries were unfair, and amounted to state aid.

In a ruling issued this morning the court stated:

"By today's judgment, the General Court annuls the contested decision because the Commission did not succeed in showing to the requisite legal standard that there was an advantage for the purposes of Article 107(1) TFEU.

According to the General Court, the Commission was wrong to declare that ASI and AOE (Apple Sales International and Apple Operations Europe) had been granted a selective economic advantage, and by extension, state aid.

The ruling further stated:

The General Court considers that the Commission incorrectly concluded, in its primary line of reasoning, that the Irish tax authorities had granted ASI and AOE an advantage as a result of not having allocated the Apple Group intellectual property licenses held by ASI and AOE and, consequently, all of ASI and AOE's trading income, obtained from the Apple Group's sales outside North and South America to their Irish branches. According to the General Court, the Commission should have shown that that income represented the value of the activities actually carried out by the Irish branches themselves...

The court also ruled that the Commission "did not succeed" in demonstrating methodological errors in the contested tax rulings which would have led to a reduction in ASI and AOE's chargeable profits in Ireland.

Whilst the court noted that the contested tax rulings were by nature "incomplete and occasionally inconsistent", the defects themselves were not sufficient in proving that Apple received an advantage akin to state aid. The court also stated that the Commission did not prove that the contested rulings were the result of discretion exercised by the Irish tax authorities and that, accordingly, ASI and AOE had been granted an advantage.

The case is likely to be appealed by the EU, limited to points of law, and brought before the European Court of Justice within two months and ten days of today. An appeal of the ruling is likely to extend the dispute by another 2-3 years. An appeal by the EU would need to demonstrate that the GCEU has incorrectly interpreted and applied the law to the facts of the case.

The Irish Government's department of finance said it "welcomes the judgement" in a statement to iMore:

We welcome the judgment by the General Court of the European Union annulling the Decision of the European Commission of August 2016, which alleged Ireland provided State aid to Apple.

Ireland has always been clear that there was no special treatment provided to the two Apple companies - ASI and AOE. The correct amount of Irish tax was charged taxation in line with normal Irish taxation rules.

Ireland appealed the Commission Decision on the basis that Ireland granted no state aid and the decision today from the Court supports that view.