The European Court of Justice sitting in Luxembourg heard from representatives of both the EU Commission and Apple as it attempted to settle a bitter legal dispute over an unpaid €14 billion tax bill between the U.S. tech giant and the Irish government Tuesday, May 23rd.
The latest spat between the EU and American technology firms, the case stems from a 2016 ruling by the Commission ordering Apple to return billions worth of unpaid tax to the Irish state, claiming that the company unfairly benefited from a sweetheart tax deal between 2003 and 2014.
The case puts the Irish government at odds with the European Commission with Ireland wishing not to claim the tax windfall in fear of jeopardising relations with the American corporate world.
The Commission’s original decision was overturned by the General Court of the European Union in 2020 with the Irish state reluctant to claim the money owed due to a reputational fallout with American corporations.
The Commission claims that Apple paid an average tax rate of 0.005% on profits by directing money through its Irish operations. Any decision is expected to have major implications on the ability of member states to set corporate tax rates independently.
At a hearing of the Court of Justice, lawyers for Apple claimed that the Commission had miscalculated the company’s tax bill in Ireland; the EU maintained that the firm violated competition law due to its tax arrangements.
Apple argues that the Commission has not provided sufficient evidence to prove that the company violated state aid rules. EU officials admitted that their original case was heavily flawed.
A long-standing tax haven for American companies, Ireland is increasingly at the centre of a transatlantic schism over tech regulation, with Facebook’s parent company Meta slapped with a €1.2 billion fine by the Irish data regulator this week for mishandling the personal data of European consumers.
The Commission recently clashed with Apple over the rollout of new content regulation under the Digital Services Act—another attempt by Brussels to throw its regulatory weight around the tech world, to the detriment of American companies.
The Irish government is in the awkward position of wanting to refuse the €14 billion worth of unpaid revenue: the cost of protecting Dublin’s business model against EU overregulation and attempts to harmonise European corporation tax rates.
Apple has used Ireland as its European base of operations since 1980, employing approximately 6,000 people, and has endured perennial accusations that it cynically benefits from one-sided tax rates from the Irish government. Foreign multinationals employ approximately one-quarter of the Irish private sector workforce; Dublin is concerned that EU rulings could cripple the country’s American-oriented economy.
The economist Austin Hughes has explained the situation as unwinnable for the Irish government. In his assessment, Irish economic self-interest is pitted against a wish to placate Brussels.
It will be some months before the European Court of Justice comes to a final ruling, without the prospect of an appeal. The legal drama sets the tone for an expected bust-up with Twitter, also headquartered in Ireland, with the EU using tax and content regulation to come down hard on wayward technology companies the past year.
