Europe’s top court ruled against Apple on Tuesday in the tech giant’s 10-year court battle over its tax affairs in Ireland. The case stems back to 2016 when the European Commission ordered Ireland to recover up to 13 billion euros ($14.4 billion) in back taxes from Apple, CNBC reported.
The European Court of Justice’s decision comes hours after the company unveiled new products to revitalize its iPhone, Apple Watch, and AirPod lineups.
Apple shares were down about 1%.
In a statement, the Irish government said that the Apple case “involved an issue that is now of historical relevance only,” adding that its position has always been that it “does not give preferential tax treatment to any companies or taxpayers.”
Apple said in a filing on Tuesday that it will incur a one-time income tax charge of about $10 billion in its fourth fiscal quarter ending Sept. 28, 2024.
Politico reported the European Commission scored a surprise win against Apple that confirmed its €13 billion back-tax bill for one of the world’s richest companies.
The Court of Justice tossed out a lower court judgement that reversed the Commission’s decision that Apple’s tax arrangements with Ireland were illegal.
“Ireland granted Apple unlawful aid which Ireland is required to recover,” the Court of Justice said on Tuesday. It stressed that its ruling was the “final judgement in the matter.”
This is a massive win for Competition Commissioner Margrethe Vestager’s crusade against “aggressive tax planning,” mostly targeting U.S. multinationals, since previous cases have faltered in the European Union courts.
“It was a win that made me cry because it is very important,” Vestager told a press conference. “It is very important to show European taxpayers that once in a while tax justice can be done.”
The Apple case was part of a slew of probes aimed at how countries like Ireland and Luxembourg offered favorable tax treatment to hook the European headquarters of multinational firms.
ArsTechnica reported Apple has suffered a significant defeat after the EU’s top court ruled that the iPhone maker must pay 13 billion euros in back taxes, overturning an earlier decision in the Big Tech group’s favor.
The ruling relates to a 2016 case when the EU’s competition chief Margrethe Vestager said that Ireland had given the company an illegal sweetheart deal, amounting to a tax rate of less than 1 percent.
The European Court of Justice said on Tuesday in its final ruling that it “confirms the European Commission’s 2016 decision: Ireland granted Apple unlawful aid which Ireland is required to recover.”
A lower court had in 2020 quashed the commission’s order and the ECJ’s decision to overturn that ruling was unexpectedly decisive.
Apple chief executive Tim Cook has previously dismissed the commission’s position as “total political crap.” On Tuesday, the company said the EU was “trying to retroactively change the rules and ignore that, as required by international tax law, our income was already subject to taxes in the US.
In my opinion, this situation seems to be a long time coming. Apple might not like the outcome of the European Court of Justice’s decisions.