The European Union’s second-highest court has rejected a European Commission order to Apple to reimburse Ireland 13 billion euros (nearly $15bn) in back taxes.
Wednesday’s decision by the EU’s general court is a significant blow for the EU’s executive arm in its campaign to stymie profit-shifting by multinationals and limit the power of US big tech.
“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) TFEU1,” judges said, referring to EU competition rules.
Welcoming the ruling, Apple said: “This case was not about how much tax we pay, but where we are required to pay it. We’re proud to be the largest taxpayer in the world as we know the important role tax payments play in society.”
The European Commission’s historic ruling against Apple was delivered in August 2016 by Competition Commissioner Margrethe Vestager in a decision that put Europe on the map as a scourge of Silicon Valley.
The EU accused Ireland of allowing Apple to park revenue earned in Europe, Africa, the Middle East and India and sparing it almost any taxation.
Brussels said this gave Apple an advantage over other companies, allowing it to avoid about 13 billion euros ($14.8bn) in Irish taxes between 2003 and 2014.
EU officials argued that that constituted illegal “state aid” by Ireland.
Apple CEO Tim Cook slammed the accusation at the time as “total political crap” and an attempt by the EU to disrupt the way multinationals pay tax.
Apple says the profits in question were always intended to go to the US where they were eventually transferred after a tax reform there.
Ireland called it an “astonishing” interpretation of tax law.
The EU’s competition supremo, Vestager, has been accused by US President Donald Trump of “hating” the US.
He has slammed her as the “tax lady” because of the Apple case as well as the heavy antitrust fines imposed on Google.
Some observers have expressed doubts on the Apple case, wondering whether the EU was using antitrust law to crack down on tax optimisation strategies by multinationals.