Apple and Ireland win €13bn tax battle against the EU

The ruling is a blow to the EU’s attempts to crack down on tax avoidance from tech giants although Google opted to stop using the Irish tax loophole in January after enjoying single-digit tax rates for many years.

The EC previously said that Apple paid an effective corporate tax rate of just 1 per cent on profits from sales made across the EU by routing them through a firm based in Ireland. It determined that this constituted illegal state aid given to Apple by Ireland.

The country’s open economy is based on low corporate taxation and other incentives to attract multinationals and it has vehemently opposed EU attempts to make it change its tax policies.

In a statement, Ireland’s Department of Finance said it welcomed the judgment: “Ireland has always been clear that there was no special treatment provided to the two Apple companies – ASI and AOE.

“The correct amount of Irish tax was charged in line with normal Irish taxation rules.

“Ireland appealed the commission decision on the basis that Ireland granted no state aid, and the decision today from the court supports that view.”

Referring to EU competition rules, the judges in the case said: “The General Court annuls the contested decision because the Commission did not succeed in showing to the requisite legal standard that there was an advantage for the purposes of Article 107(1) TFEU1.”

However, EU antitrust chief Margrethe Vestager has vowed to continue the fight against tax measures used by multinationals and said she would study the General Court’s ruling before deciding on the next step.

“The EC will continue to look at aggressive tax planning measures under EU State aid rules to assess whether they result in illegal state aid,” she said in a statement.

“At the same time, state aid enforcement needs to go hand in hand with a change in corporate philosophies and the right legislation to address loopholes and ensure transparency.”

The Commission can appeal against the General Court’s decision to the European Court of Justice. The appeal must be made within the next two months and ten days.

The €13.1bn is currently being held in an escrow account, meaning the proceeds cannot be released until there has been a final determination in the European courts over the validity of the commission’s decision.