In a landmark ruling, the European Union's highest court has mandated that Apple Inc. must pay back billions of euros in taxes to Ireland, affirming a previous decision made by the EU's executive body in 2016. The Court of Justice of the European Union ruled on Tuesday that two Apple subsidiaries headquartered in Ireland unlawfully received tax benefits amounting to 13 billion euros, equivalent to approximately $14.3 billion, which constituted illegal state aid from 1991 to 2014. The court described these financial advantages as "unlawful" and directed Ireland to recover the entire sum from Apple.
This decision follows an extensive two-year investigation conducted by the European Commission, which concluded in 2016 that Ireland had granted undue tax benefits to the tech giant. Despite the initial ruling, the EU's General Court reversed the decision in 2020, siding with appeals made by both the Irish government and Apple.
However, the Court of Justice has now asserted that the General Court "erred" in its judgment, stating that the European Commission had indeed demonstrated sufficient evidence regarding the allocation of intellectual property licenses held by the Apple subsidiaries and the related profits generated from international product sales. This ruling by the Court of Justice is final and marks a significant moment in the ongoing battle over international corporate taxation.
Notably, following the announcement, Apple's stock saw a nearly 1% decrease in premarket trading. Responding to the court's findings, the Irish government indicated its intention to "respect" the ruling concerning the tax liabilities associated with Apple, initiating the process for transferring assets to an escrow fund within Ireland.
Furthermore, Ireland reiterated its commitment to providing equitable tax treatment to all corporations and individuals, emphasizing recent legal modifications that address how profits are attributed to branches of non-resident companies operating within the nation. Apple has yet to respond to inquiries regarding the court's decision.
However, a spokesperson expressed disappointment, noting that the General Court had previously reviewed the facts and annulled the case categorically. "We are disappointed with today's decision as previously the General Court reviewed the facts and categorically annulled this case," the spokesperson remarked in a statement covered by Bloomberg News.
As a result of this ruling, Apple is faced with potentially significant financial implications, and the global discourse on corporate tax practices is bound to intensify. Price: 219.44, Change: -1.47, Percent Change: -0.67 $AAPL.