An adviser to the European Union’s top court dealt a major blow to Apple in its $14 billion tax dispute with a bloc on Thursday, after recommending a lower court ruling in favour of the iPhone maker should be set aside due to legal errors—a setback for Apple as EU officials argue the company used its Irish headquarters to get an unfair tax deal.
The recommendation is a blow to both Apple and the Irish government.
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Key Takeaways
- Advocate General Giovanni Pitruzzella found that the General Court “committed a series of errors in law” in its 2020 ruling, according to a European Court of Justice press release.
- The General Court ruled against the EU’s demand for around $14 billion (€13 billion) in back taxes from Apple—backed by allegations the company unfairly benefited from two separate Irish tax rulings that lowered its tax rate to 0.005%.
- Pitruzzella recommended that the bloc’s top court should nullify the 2020 judgment and send it back to the General Court to make a “new decision on the merits.”
- While the opinion isn’t binding in such cases they usually provide a strong pointer on what the European Court of Justice’s final ruling on the matter will be.
- The Irish government reiterated its stance that it provided no special treatment or “state aid” to Apple, which maintains its European headquarters in Ireland, and the iPhone maker said it believes the General Court’s ruling “should be upheld.”
- Apple’s stock was down 0.26% in premarket trading early on Thursday.
Surprising Fact
The Irish government collected around $15.2 billion (€14.3 billion) from Apple in 2018 and put it in an escrow account as the case made its way through the court. The amount was mostly made up of Euro bonds and has now shrunk in value to $14.3 billion (€13.4 billion), according to the Irish Times.
What To Watch For
The EU’s top court is expected to issue a ruling on the matter in the next few months. According to the Financial Times, a ruling against Apple could result in other countries within the EU and even the U.S. claiming a portion of that $14 billion amount.
Key Background
The case against Apple was led by EU antitrust chief Margrethe Vestager—as part of Brussels’ wider effort to curb its members from offering favourable tax deals to foreign companies. Vestager’s order was made in 2016 as she argued that Apple’s reduced tax payments to Ireland equalled a form of state grant to the company, giving it an unfair advantage.
Both Apple and the Irish government vehemently opposed the order and took that matter to court. In 2020 the EU General Court ruled in favor of Apple and the Irish government, saying Vestager and the bloc failed to adequately demonstrate their claims.
This article was first published on forbes.com and all figures are in USD.
