Apple wins fight over $14.9 billion tax grab in blow to EU

Apple won its court fight over a record 13 billion-euro ($14.9 billion) Irish tax grab in a crushing blow to European Union Competition Commissioner Margrethe Vestager’s crackdown on preferential fiscal deals for companies.

Stephanie Bodoni and Aoife White for Bloomberg:

Apple EU tax. Image: Margrethe Vestager, European Commissioner for Competition
Margrethe Vestager, European Commissioner for Competition
While the EU General Court’s ruling can still be appealed, judges delivered a stinging attack on the European Commission for failing to show “to the requisite legal standard” that Ireland’s tax deal broke state-aid law by giving Apple an unfair advantage.

While the EU General Court’s ruling can still be appealed, judges delivered a stinging attack on the European Commission for failing to show “to the requisite legal standard” that Ireland’s tax deal broke state-aid law by giving Apple an unfair advantage. “The commission’s intent seemed to be a political one: to punish Apple for its overall tax planning, rather than to reach a result that accorded with the legal or economic position,” Dan Neidle, a tax lawyer with Clifford Chance said in a statement. “The court has, quite rightly, followed the law and not any wider political objectives.”

The Cupertino, California-based company had argued the EU wrongly targeted profits that should be taxed in the U.S. and “retroactively changed the rules” on how global authorities calculate what’s owed to them. The Irish finance ministry said the nation “has always been clear that there was no special treatment provided to the two Apple” units in the EU’s state-aid case.

Valentina Pop and Sam Schechner for The Wall Street Journal:

Margrethe Vestager, who is in charge of competition at the commission, said she would “carefully study the judgment and reflect on possible next steps” and vowed to continue investigations into national tax deals with corporations to establish whether they constitute illegal subsidies.

The 2016 decision against Apple earned Ms. Vestager the nickname “tax lady” from President Trump… The decision is a blow to Ms. Vestager…

Apple and Ireland on Wednesday applauded the annulment of the tax case. Ireland reiterated that it gave no special treatment to Apple, and said that the company had paid taxes according to “normal Irish taxation rules.”

Apple said that it supports international talks over how countries should divide up taxation rights for multinational companies. “This case was not about how much tax we pay, but where we are required to pay it. We’re proud to be the largest taxpayer in the world as we know the important role tax payments play in society,” an Apple spokesman said.

MacDailyNews Take: Miraculously, justice is served!

A company’s business success, regardless of degree, doesn’t mean some quasi-governmental political confederation headed by a dingbat gets to retroactively grab whatever sum they want.

The dunce Vestager is out of her depth.

Is Ireland its own country or merely a vassal state to a quasi-governmental political confederation that’s already been hit with one very significant defection?

The EU’s retroactive tax grab is a farce. — MacDailyNews, October 4, 2017

I think that Apple was targeted here. And I think that (anti-US sentiment) is one reason why we could have been targeted. People in leadership positions in several countries tell me that this is the agenda. I don’t know where that comes from. But what I feel strongly about is that this decision was politically based, of that I’m very confident. There is no reason for it in fact or in law… At a worldwide level, Apple pays income tax of 26.1 percent… I’d be the first to say that the tax system needs to be reformed and that it should be made simple and straightforward. But it should be talked about going forward, not in a way that retrofits the law to what others wish it was. It’s patently unfair and not what you expect from a developed country that has a history of rule and law.Apple CEO Tim Cook, September 1, 2016


  1. Well. Well. Well.

    Seems Apple’s legal team may have finally won one. If this ruling holds (and you absolutely can guarantee that the EU Competition Commission will appeal) it will be the first clear win for Apple’s legal department since the Franklin case.

    I certainly hope Apple’s position holds up on appeal. As I’ve followed this over the years, IMHO Apple should never have been dragged into this in the first place.

    Maybe Apple’s legal department can finally win a big one and see it through with a big win in the end. I’m very, very hopeful, but given Apple’s legal department’s track record over the past nearly 40 years, I’m not cofident.

    1. “You absolutely can guarantee that the EU Competition Commission will appeal.”

      No so fast. The court’s findings makes the chances of an appeal far less than you think. There is a good chance there will be no appeal at all and this is the final verdict in this matter.

      1. I believe the appeal will be automatic if only for show.

        I doubt it will be only for show and the EU Competition Commission will its their best to win on appeal. For the EU Competition Commission to lose in the end (which I believe they should lose) sets a strong precedent against any other money and power grabs like this one they are attempting against Apple. The EU CC won’t want that precedent on the books.

  2. As a UK citizen, I can’t be more pleased with this stunning verdict. Luckily my country is leaving the EU and not a moment too soon. Their burocracy is obscene and so are their ministers. Thank god for some common sense at last.

    1. Leaving the EU but still America’s poodle. The UK ceased being a relevant world power seventy years ago. Yet has tried to maintain the illusion of stature by being a very very junior “yes boss” partner with the U.S. I can understand your displeasure with the EU, but without it there’s nothing to restrain the U.S. in your dealings with it. Your valid issues with the EU will seem like love caresses compared to the economic reaming that awaits you from America.

  3. The retroactive nature of the fines was completely unfair. If the EU wants in enact fairer tax laws then do so and make that change moving forward. Punishing Apple retroactively was the easy way out.
    I believe international companies should pay fair taxes in the countries that they operate in. Using tax havens is wrong because those companies get away with pay less taxes and put a greater burden on the individual tax payer. But again it is up to the countries or economic unions to legislate to resolve this issue. I don’t see politicians having the guts to do that since most are subsidized by those lobbies in one way or another.

    1. It was never about paying less taxes, but where to pay those taxes. This ruling doesn’t lessen Apple’s tax burden, it only means that the $14.9B that has already been paid to the US Treasury, stays at the US Treasury, and doesn’t go to Ireland’s Treasury.

      This is about whether income tax should be paid, where a sale is made, (redundant since sales taxes and VAT and GST and HST, etc. are already paid), or where the IP is created and registered. Global tax authorities seem to support the position that the majority of taxes are paid where the IP is created and registered. In that case, the majority of Apple taxes should be paid in the US, and that is the case. If they want to change how income taxes are paid, then they need to create some new rules. I suppose France’s digital tax is potentially one of those new rules.

  4. Not sure I am following this correctly. I though Apple was doing this because the Tax rate in Ireland was less than that of the U.S.. But the I read this “The Cupertino, California-based company had argued the EU wrongly targeted profits that should be taxed in the U.S.” so did Apple Pay tax on these earning in the U.S.? I don’t think they did.

    1. Yes, they did. Back then, the foreign-earned US tax had yet to be repatriated, but after Trump’s corporate tax plan was passed, most US companies started repatriating their foreign earned income, as did Apple.

      One of the arguments that the EU competition committee cited was that while Apple had accounted for the US tax on foreign-earned income, they didn’t believe Apple would ever pay them, that’s why they had that ridiculous calculation of Apple’s supposed tax rate of 0.00something %. They didn’t count any of the US taxes that Apple had accounted for.

      1. They didn’t repatriate the disputed Irish taxes (or pay US taxes on them) because they were in escrow. Once there is a final judgment in Apple’s favor, the money will become an undisputed Apple asset and subject to US taxation (whether it is repatriated or not). If Apple loses, the money will go to Ireland without ever having been subject to American taxation.

  5. Great that all you fanboys think this is a great victory for the people, but it means that Apple pays 0.05% on its European revenue. This is for a company that has hundreds of billions in the bank.

    Of course that just means other tax payers, who can’t use tax-havens like Apple, have to make up for this shortfall (other here means me and you).

    And you still think this is a great result for you?

    1. “Of course that just means other tax payers, who can’t use tax-havens like Apple, have to make up for this shortfall (other here means me and you).”

      Or it could mean that the Government should reduce its spending and live within its means? That way there is no shortfall of anything …

    2. Zuluchenko,

      I’ll take your comment seriously when I see proof positive that national governments (USA especially) begin to rein in some of their outrageous budget-busting waste and extravagances over the past 57 years. The”Deep Swamp” is indeed a reality and the gargantuan appetite has grown at a frightening pace. The addiction of the super state to take and waste the $ that citizens trade portions of their lives for on a daily basis has never waned since JFK had a legitimate balanced budget.

      And don’t try to pull up the canard that Bill Clinton had one too. The then speaker of the House, Newt Gingrich, forced his hand (with the “workfare not welfare” and other bills he sponsored and passed). Clinton vetoed the budgets 4 times and then grudgingly signed the last one as he was being properly humiliated as desirous of ever larger spending. Later Bill claimed credit for what he resisted and was forced to accept. Then the Dotcom economy helped him to look good also.

    3. Good points, But remember we’ve moved beyond Orwell’s “Big Brother” in 1984 and have entered the Twilight Zone where people are worshiping corporations!

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