Apple to pay €13bln in tax after EU antitrust chief wins case
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In 2016, the European Commission ordered Apple to pay 13 billion euros ($14.4 billion) in back taxes to Ireland, claiming that the iPhone company profited from two Irish tax judgments for more than two decades.
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European Commissioner for Competition Margrethe Vestager speaks during a media conference regarding an anti-trust decision on Broadcom at EU headquarters in Brussels, on October 16, 2019. (AP)
Europe's top court has supported EU antitrust head Margrethe Vestager on Apple's (AAPL.O) Irish tax arrangement and Google's anti-competitive tactics in two historic cases.
She applauded the decisions and called them a "huge win for European citizens and tax justice," while also hailing the Google decision as a significant victory for digital fairness.
In 2016, the European Commission ordered Apple to pay 13 billion euros ($14.4 billion) in back taxes to Ireland, claiming that the iPhone company profited from two Irish tax judgments for more than two decades, unfairly lowering its tax burden to as low as 0.005% in 2014.
The Court of Justice of the European Union supported Margrethe Vestager's position, affirming that "Ireland granted Apple unlawful aid which Ireland is required to recover," according to the judges. They noted that Apple's units in Ireland received "favourable tax treatment compared to resident companies," which did not benefit from similar advance rulings.
Apple criticized the ruling, asserting that "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 U.S."
Apple stated in a regulatory filing that it expects to register a one-time income tax charge of up to $10 billion in its fiscal fourth quarter, which ends on September 28.
Ireland, whose low tax rates helped encourage Big Tech to establish European headquarters, has also disputed the EU verdict, claiming that its tax treatment of intellectual property transactions is consistent with other OECD nations.
The Court also dismissed Alphabet (GOOGL.O) unit Google's appeal against a 2.42 billion euro charge imposed by Vestager seven years ago, the first of three significant fines leveled against the business for alleged anti-competitive acts.
The judges ruled that Google's conduct was "discriminatory and did not fall within the scope of competition on the merits," according to the case's specific market circumstances. Google expressed disappointment, noting, "This judgment relates to a very specific set of facts. We made changes back in 2017 to comply with the European Commission's decision."
The European Commission had fined Google in 2017 for using its own price comparison service to unfairly disadvantage smaller European competitors. Over the past decade, Google has accumulated 8.25 billion euros in EU antitrust fines. It is currently challenging two rulings related to its Android operating system and AdSense advertising service, and is awaiting judgments.
Google is also contesting new EU antitrust charges that could compel it to divest part of its adtech business, with regulators accusing it of favoring its own advertising services. Both recent rulings, C-465/20 P Commission v Ireland and Others and C-48/22 P Google and Alphabet v Commission (Google Shopping), are final and non-appealable.
Additionally, investigations are ongoing into tax arrangements involving Inter IKEA's Dutch operations, Nike's Dutch tax deal, and Huhtamaki's Luxembourg tax agreement.
