Ouch! Hours after launching its new iPhone 16 and watch, along with other products, Apple has been hit by a shock court ruling in Europe, forcing it to pay €13 billion in taxes.
This comes after the European Union's top court upheld an order for Ireland to recoup up to $US14.35 billion, plus interest, in taxes from Apple, marking a victory for EU competition officials in their efforts to rein in alleged abuses by big tech companies.
However, it is primarily an accounting decision, as the Irish government has been holding the more than €13 billion in a special escrow account, awaiting the court's decision. The European Commission, the executive arm of the EU, stated in 2016 that Ireland had granted Apple benefits of up to €13 billion, in violation of EU state aid rules, allowing the tech giant to pay substantially less tax than it owed.
The Commission asked Dublin to retrieve the money in allegedly unpaid taxes from 2003 to 2014, plus interest, an order that both Apple and the Irish government appealed.
Years later, the General Court of the European Union, the bloc's second-highest court, annulled the Commission's decision, stating that the body had failed to meet legal standards in proving that Apple had been illegally granted special treatment.
Now, the European Court of Justice has overturned that ruling, stating that the lower court's reasoning was flawed.
The Irish government downplayed the decision on Tuesday, stating that the issue is "now of historical relevance only" due to changes in its tax system since then.
It also said it would now begin the process of releasing assets from an escrow fund, which was estimated to be €13.8 billion ($US15 billion) at the end of last year, following the Court of Justice of the European Union’s (CJEU) order to recover the funds from Apple.
Ireland has long resisted the 2016 European Commission order, which claimed that the iPhone maker benefited from two Irish tax rulings for over two decades, artificially reducing its tax burden to as low as 0.005% in 2014.
"The Irish position has always been that Ireland does not give preferential tax treatment to any companies or taxpayers," the government stated.
Since the EU's 2016 order, Ireland has revised its rules regarding corporate residence, the attribution of profits to branches of non-resident companies operating in the state, and has aligned its tax rules with international agreements, according to the statement.
