Why Apple has to pay 14 billion euros in fine
The European Commission issued an order to pay EUR 13 billion in arrears of taxes in 2016, finding that Apple benefited from two Irish tax rulings that artificially reduced its tax burden.
The company said the order “defies reality and common sense,” Reuters reported. The Commission’s decision was also challenged by Ireland, whose low tax rates have helped attract big tech companies and prompt them to set up European headquarters there.
CJEU confirms EC decision against Apple
The payment order was appealed to the CJEU in Luxembourg, which sided with the EC on Tuesday.
“The Court of Justice has delivered its final judgment in this case and confirmed the 2016 decision of the European Commission: Ireland has granted unlawful aid to Apple, which Ireland must recover,” the CJEU said.
Apple expressed disappointment with the ruling. “The European Commission is attempting to change the rules retroactively and ignore the fact that our income was already subject to tax in the United States under international tax law,” the company said, as quoted by Reuters.
The ruling is final and not subject to appeal.
Deputy head of the European Commission on the penalty against Apple
Deputy head of the European Commission Margrethe Vestager The European Union will continue to take action against harmful tax competition and aggressive tax planning by EU countries and multinationals through legislative proposals and enforcement, she told a press conference in Brussels.
“Today is a great victory for the citizens of Europe and for tax justice. The Court of Justice confirms the decision of the European Commission from 2016: Ireland granted illegal aid to Apple, which it must now recover. And this judgment is final,” she said.
She added that this was a victory for “a level playing field in the single market and tax fairness”. “In these tax rulings, the majority of the taxable profits – of Apple’s two Irish subsidiaries – were attributed to stateless ‘head offices’. These head offices existed only on paper. No tables, no chairs, no business. The profits were therefore not taxed anywhere. For example, in 2011, one of Apple’s Irish subsidiaries reported profits of around €16 billion. Of this, thanks to the tax rulings, only around €50 million was taxable in Ireland. So this subsidiary paid less than €10 million in taxes in Ireland in 2011 – an effective tax rate of around 0.05% of total annual profits,” she explained.
In her opinion, the case is symbolic because it showed that even the most powerful technology companies can be held accountable. “No one is above the law,” Vestager emphasized.
From Brussels Łukasz Osiński (PAP)
