In a significant blow to Apple, Europe’s top court ruled against the tech giant in its decade-long legal battle over taxes in Ireland. The European Court of Justice (ECJ) confirmed the original 2016 decision by the European Commission, which ordered Apple to pay €13 billion in back taxes, marking a major win for EU regulators in their ongoing fight with big tech companies.
Apple’s defeat came on the same day the company revealed new products, including updates to its iPhone, Apple Watch, and AirPods. Despite the buzz around the announcements, Apple shares dropped by 1% in premarket trading, signaling that the legal setback had investors' attention.
The Irish government, while a key player in this case, downplayed its impact, stating that the matter is now “of historical relevance only.” Ireland maintained that it does not give preferential tax treatment to any companies, including Apple. However, Apple will now face a one-time income tax charge of around $10 billion in the fourth fiscal quarter of 2024, following this ruling.
Apple's spokesperson responded by emphasizing that the case was never about how much tax the company owed but rather where the tax should be paid. “We always pay all the taxes we owe wherever we operate, and there has never been a special deal,” they said, accusing the European Commission of trying to retroactively alter the tax rules.
The conflict dates back to 2014, when the European Commission launched an investigation into Apple’s tax arrangements in Ireland, home to its EU headquarters. Two years later, the Commission declared that Apple had received illegal tax benefits from Ireland over the course of 20 years, ordering the company to pay the massive sum in back taxes. Apple and Ireland both challenged this decision, and in 2020, the EU General Court sided with the tech giant. But the victory was short-lived, as the case was later appealed to the ECJ, leading to this week’s ruling.
This case is part of a broader conflict between the EU and U.S. tech giants, with the European Union ramping up efforts to regulate everything from data privacy to taxation and competition. Apple has faced fines and investigations over the years, most recently being hit with a €1.8 billion antitrust penalty for dominating the music streaming app market.
As Apple navigates these regulatory hurdles, it’s clear that the company’s challenges in Europe are far from over. With the EU’s Digital Markets Act forcing companies to reshape their business practices, Apple, along with other tech giants like Alphabet and Meta, will continue to face intense scrutiny in the European market.
