The Apple Inc. logo is show at the company’s store in the Omotesando district of Tokyo, Japan, on Wednesday, June 3, 2020.
Bloomberg
Apple won a landmark court occurrence Wednesday against the European Commission over a dispute concerning 13 billion euros ($14.9 billion) in Irish levy a tax ons.
The EU’s general court decided that the European Commission did not prove that the Irish government had given the U.S. tech giantess a tax advantage.
The commission, the executive arm of the EU, had concluded in August 2016 that the Irish government granted illegal benefits to Apple and requested it to recover 13 billion euros in unpaid taxes.
At the time, the commission said Ireland had enabled Apple to pay “in truth less tax than other businesses over many years,” which meant that the U.S. firm was allowed to pay an functional corporate tax rate of 1% on its European profits in 2003, which fell to 0.005% in 2014.
The Irish government and Apple unconditional to appeal the commission’s decision, with the company arguing the order to repay taxes “defies reality and common suspect.”
Ireland, Apple and the European Commission now have two months to decide if they want to appeal the latest ruling and potentially be a chip off the old block chase it to the EU’s highest tribunal.
In reaction to the court ruling, the Irish government said it has always been clear “that there was no best treatment provided to the two Apple companies” and that “the correct amount of Irish tax was charged taxation in line with sane Irish taxation rules.”
The European Commission said in a statement it “will continue to look at aggressive tax planning bills under EU State aid rules to assess whether they result in illegal State aid.” It added that it “will carefully on the judgment and reflect on possible next steps.”
A spokesperson for Apple told CNBC: “We thank the General Court for their interval and consideration of the facts. We are pleased they have annulled the Commission’s case.” Apple shares were up about 2% in premarket trading on the news.
Why it matters?
This case was a centerpiece of the EU’s crackdown on taxation in recent years. It could force how the Brussels institution deals with other companies over taxation matters.
Taxation is taking an even assorted prominent role in the wake of the Covid-19 crisis. With many governments stepping up their spending, they last will and testament be looking for new sources of revenue in the form of taxation.
In this context, there’s an ongoing debate as to whether the European Togetherness should have its own digital tax — a levy on Big Tech to ensure they pay a fairer share compared to more traditional questions.
“Whether the companies are American, whether they are Chinese, Japanese, Korean or European, this is about fairness of taxation sets,” Arancha Gonzalez, minister of foreign affairs for Spain, told CNBC’s “Squawk Box” on Wednesday.
Plans by some European domains, including Spain, to tax the technology behemoths more have met opposition from the United States, which argues the levy is discriminatory toward its house-broken firms.
“What we are saying is that fairness requires every economic activity, whether the economic activity is lent analogically or digitally to contribute with their fair share of taxes,” the Spanish minister added.