In a blow to EU regulators that had sought to paint Apple as corrupt, a lower court has ruled that Ireland’s tax deal with the firm was legal. Ireland had been ordered to collect $14.9 billion (€13 billion) in back taxes from Apple after the European Commission (EC) claimed that it had created an illegal tax shelter for the American corporation.
“The Commission’s intent seemed to be a political one, to punish Apple for its overall tax planning, rather than to reach a result that accorded with the legal or economic position,” Clifford Chance tax lawyer Dan Neidle said in a prepared statement. “The court has, quite rightly, followed the law and not any wider political objectives.”
Apple CEO Tim Cook, normally a gentleman in public, had likewise referred the original ruling against Ireland as “political crap.” An earlier Apple statement said that the case “was not about how much tax we pay, but where we are required to pay it.”
What this case is really about, of course, is that Apple was able to find a legal workaround to paying taxes in the EU, and that the EC, rather than working to close those loopholes, also sought to retroactively punish the firm for its transgressions. In other words, yes, Apple skirt paying many billions of dollars in taxes in the EU, but it lapses in EU’s tax laws were what allowed that behavior.
“I cannot see how [Ireland] can be happy that [it] let a tech giant off the hook when we’re talking about paying €13 billion,” EU Competition Commissioner Margrethe Vestager said of the ruling. “[That money] will have to be coughed up by taxpayers now.”
The European Commission officially disagreed with the ruling as well, of course.
“In 2011, Apple’s Irish subsidiary recorded European profits of $22 billion (€16 billion), but under the terms of the tax ruling, only around €50 million were considered taxable in Ireland,” the Commission noted in a statement. “The Commission stands fully behind the objective that all companies should pay their fair share of tax. If Member States give certain multinational companies tax advantages not available to their rivals, this harms fair competition in the EU. It also deprives the public purse and citizens of funds for much-needed investments, the need for which is even more acute during times of crisis.”
While the EU General Court’s ruling can still be appealed, it’s not clear yet if the EC plans to do so.