Key Takeaways
- Apple received illegal tax benefits from Ireland and must pay a 13-billion-euro ($14.4 billion) bill, Europe’s top court ruled Tuesday.
- The European Commission first made the judgment in 2016, but an appeals court later ruled that the Commission had not found enough evidence that Apple received a “selective advantage” from the tax rulings.
- The EU’s Court of Justice on Tuesday ruled in favor of the Commission, and said sales using intellectual property owned by Apple’s Irish subsidiaries should be included in the company’s tax base in Ireland.
Apple (AAPL) must pay a 13-billion-euro ($14.4 billion) tax bill after the Court of Justice of the European Union (EU) on Tuesday overturned a lower court ruling on Irish tax breaks for the tech giant.
In 2016, the European Commission, the EU’s executive arm, said Apple used intellectual property held by its Irish subsidiaries in products sold around the globe, meaning that sales using that IP should have been included in the reported tax base for the Irish companies.
The Commission estimated at the time that Apple had received 13 billion euros in tax benefits, ordering the tech giant to pay back the allegedly overdue taxes. In 2020, an appeals court said the Commission had not provided sufficient evidence that Apple had received a “selective advantage” from the Irish tax rulings.
Lower Court Found To Have Used ‘Erroneous Assessments’ of Tax Law
However, the Court of Justice said Tuesday that the lower court used “erroneous assessments” of tax law when ruling that the Commission needed more evidence of an advantage for Apple. An EU court advisor said last year that the case should be set aside because of the errors by the General Court.
The ruling comes a day after Apple unveiled its newest slate of iPhones and Apple Watches.
Apple did not immediately respond to Investopedia‘s request for comment. A spokesperson told Bloomberg the company is “disappointed” in Tuesday’s ruling.
Apple shares were less than 1% lower at $219.30 an hour before the opening bell Tuesday. They are up about 14% this year.