EU court orders Apple to pay $14.4B in back taxes: ‘total political crap’

Apple must pay $14.4 billion in back taxes to the Irish government after the European Union’s top court rejected the iPhone maker’s appeal of a landmark 2016 ruling — which CEO Tim Cook denounced at the time as “total political crap.”

The European Court of Justice in Luxembourg on Tuesday upheld the decision by the European Commission that Ireland broke state-aid law by giving Apple an unfair advantage.

In 2016, the European Commission, which is the EU’s executive branch, determined that Apple received special tax deals from Ireland after the government allowed the company to locate its “head office” in Cork — even though the office existed only on paper and had no employees or real operations.

The arrangement with Ireland allowed Apple to pay an effective tax rate as low as 0.005% on its European profits in some years.

In 2016, the commission demanded that Ireland recoup the unpaid taxes plus interest from between the years 2003 and 2014.

Both Ireland and Apple appealed the decision. An appeals court sided with both parties and overturned the initial ruling, saying that the commission failed to meet the legal threshold in proving that Ireland sought to give Apple special treatment.

The high court, however, overturned the ruling on Tuesday.

“Today is a big win for European citizens and for tax justice,” Margrethe Vestager, the EU’s top antitrust regulator, said.

Apple shares dropped less than 1% after the opening bell.

“We are disappointed with today’s decision as previously the general court reviewed the facts and categorically annulled this case,” an Apple spokesperson said.

The company said it would record a one-time income tax charge of up to $10 billion in the fourth quarter ending Sept. 28 as a result of the ruling.

“This case has never been about how much tax we pay, but which government we are required to pay it to,” a company representative told The Wall Street Journal.

“We always pay all the taxes we owe wherever we operate and there has never been a special deal.”

Ireland has long stood out among its EU partners as one of the Continent’s most business-friendly countries thanks to its historically low corporate tax rate.

Google, Meta, Microsoft, Amazon, Intel and LinkedIn are among the tech firms that have established bases of operations in Ireland due to its lax tax climate.

In light of the ruling, Irish officials said they would soon begin transferring the $14.4 billion in funds, which are currently held in an escrow account, into government coffers.

While Ireland denied giving special tax privileges to any company, the government said it would respect the court’s ruling.

The EU’s top court also upheld a $2.67 billion fine that was imposed on Google by antitrust officials who accused the tech giant of anti-competitive practices related to its comparison-shopping service fares in search results.